Widodo's COVID Challenge

Indonesia faces among the greatest challenges of any country in the Indo-Pacific in controlling COVID-19 and managing its consequences for the economy and society. But as Asialink senior adviser Donald Greenlees writes, one of the big problems facing authorities is obtaining a reliable picture on which to base decisions.

For Indonesian President Joko Widodo, running the world’s fourth most populous country in recent months must have been akin to piloting an aircraft through a thunderstorm without any instruments. He has had very little reliable data to go on, little idea where he is headed, and been grappling to keep from stalling.

The President and his government have been left with the feeling of being in the hands of the Almighty.  “Pray unceasingly,” Widodo told the country on May 14.

Widodo, who started his second term in October last year with an ambitious plan to eliminate poverty and turn Indonesia into a top-five global economy by the 100th anniversary of independence in 2045, now faces the bleak prospect that his final term in office will be consumed by reconstruction.

Gone almost certainly are some of the grand designs, like the relocation of the national capital to East Kalimantan by 2024 and the rapid expansion of manufacturing, technology, and tourism industries on the back of a tide of foreign and domestic investment. With them would go Widodo’s ideas of a legacy.

Like heads of government everywhere, Widodo’s immediate challenge is one of crisis management. But the scale and array of Indonesia’s challenges are greater than most – the downturn Indonesia now experiences could reverse years of work in reducing poverty.

Wherever Widodo looks, he faces uncertainty. In trying to manage the simultaneous health and economic crises in a vast and heavily populated country, Widodo has to work with at best an incomplete picture of the problems.

To those crises, he adds another source of unpredictability: the tolerance of his people. The longer they are unable to draw an income, the greater the risks to public security in the form of either an upsurge of crime or civil unrest.

Little wonder he turns to prayer.

It Can’t Happen Here

The Minister for Health, Terawan Agus Putranto, earned himself a special place in the coronavirus records in Indonesia when he described as “insulting” or “offensive” an academic study that warned of the likelihood of undetected infections in the country in early February.

The purpose of the Harvard University study had been to alert countries to the need for greater surveillance.

But Terawan was not alone in feeling complacent about the threat.

Medical researchers and the media fed fantastic speculation that the immune system of Indonesians, the hot and humid climate or the lower use of air conditioning might present a barrier to the virus’ transmission.

The important consequence of this ventilation of untested opinion was to sacrifice valuable time for planning countermeasures and delay their implementation. It meant authorities were playing catch-up from the moment the virus entered the population.

Healthcare workers greet an elderly couple at a local COVID-19 testing site, Surabaya City, Indonesia - June 1, 2020. Photo: Robertus Pudyanto.

It was not until  March 2 that Indonesian authorities publicly acknowledged the first infections. Then in mid-March, Widodo declared authorities proposed to withhold news about the virus’ spread to avoid alarming the public.

Although it defied what the World Health Organisation (WHO) regarded as best practice, it might be considered a moot point. Indonesia’s testing for COVID-19 has been too low to provide an accurate picture of the extent of infection.

Despite recent moves to increase the volume of testing, as a proportion of the population it remains low. 

But given the large number of people infected with the virus who show no symptoms, the picture health authorities and researchers have of the impact of the disease on the population is a mix of educated guesswork and modelling assumptions that have produced widely varying estimates of its spread.

The official WHO data shows that 32,033 were infected as of June 9. The official death toll stood at 1,883, the second highest in East Asia. The question is not whether these figures are understated, rather it is by what magnitude. Widodo has promised more testing, an acknowledgment that testing is vital to combatting the virus’ spread. But at the targeted 10,000 tests a day, it would take a year to reach a little more than one percent of the population.

The expectation of authorities is that the virus will peak this month. But insufficient data means they are flying blind: without a large sample of tests it is hard to identify and isolate the carriers.

Don’t Panic and Eat Well: The Containment Measures

The adoption of containment measures followed the same haphazard path as the identification of the scale of the problem. Complacency, based on incorrect assumptions about the risks COVID-19 posed, led to decisions initially being weighted in favor of maximising the level of private and commercial activity.

Widodo spent the early weeks of the pandemic reassuring the public. While on March 13 he set up a COVID-19 taskforce to coordinate the government’s response, he emphasised the importance of managing the situation quietly and calmly to avoid creating “a feeling of panic” or “unrest” in the community.

Following the advice of Terawan, an army general and medical practitioner, Widodo focused on disinfection of public spaces and provided folksy advice on exercising and eating well to boost immunity.  “Also, don’t get stressed because that disturbs the body’s immunity,” he said.

It wasn’t until March 31 that Widodo finally declared a “public health emergency”.  Employing a 2018 health quarantine law, Widodo issued a regulation to provide the legal umbrella for what it termed Large-Scale Social Restrictions or PSBB, an acronym that has now entered common usage in Indonesia.

The terminology allowed Widodo to avoid the use of the word “lockdown”, for which he had acquired a strange aversion that political observers allege was connected to political rivals having used it first.

Nonetheless, the government did take some decisive measures, like closing Indonesia’s borders.

Even then, the president settled on a needlessly bureaucratic process for approving PSBB measures. Individual provinces and administrative districts could propose movement restrictions, such as the shuttering of businesses and schools and limiting the size of gatherings, according to their varying circumstances, but only after obtaining the approval of Ministry of Health officials. While allowing for some variation made sense, the risk was a slow and patchy response.

Locals sell face masks in Malang, East Java, Indonesia - May 31, 2020. Photo: Muhammad IQbal, Shutterstock.

By this time, the government had already been wrestling with a number of provincial governors, most notably the governor of Jakarta, Anies Baswedan, over earlier attempts to impose stringent movement controls. Baswedan was sitting on top of the country’s biggest COVID-19 outbreak.

Baswedan, who defeated a Widodo ally in a bitterly contested election in 2017, rushed to implement restrictions only to find the Health Ministry in no hurry. “It’s as if we are proposing a project that needs a feasibility study,” an exasperated Baswedan told reporters. This was no surprise to WHO officials and diplomats who found the ministry in a state of confusion at the start of the outbreak.

The confusion reigned on another vital issue – whether to permit the annual exodus, or mudik, from the cities to the regions for the Idul Fitri holiday at the end of the fasting month.

Despite pleas from some governors for people not to travel back to hometowns, initially only state employees were to be prevented from leaving. It wasn’t until April 21, just before the start of the fasting month, that Widodo informed a limited cabinet meeting that mudik would be banned.

By then, as many as 1.4 million people already were likely to have left greater Jakarta.

The government’s approach to movement restrictions has since been toughened, and they remain in place.

Yet Widodo already is starting to turn his mind to a “new normal” as he readies to reopen the economy.

A Big “If”: Forecasting the Recovery

If the government has been flying blind in assessing the true impact of COVID-19 on the population, its visibility of what is happening in the economy has been little better.

Widodo had been reassured that GDP growth in the first quarter would remain relatively strong – the median forecast from analysts was for growth of 4.04 percent, which correlated with advice to the president from his own economic advisers.

This turned out to be woefully inaccurate. Growth in the quarter came in at 2.97 percent, the slowest since 2001. Widodo was dismayed and demanded answers over why the forecasts were so wrong, according to officials.

Worse is yet to come. The economy is expected to slow sharply in the second quarter. But the level of uncertainty is underscored by the wide band of predictions – they range from government estimates of a best-case 2.3 percent growth to a worst-case contraction of 0.4 percent this year.

Finance Minister Sri Mulyani Indrawati can only “hope” that government stimulus measures are enough to avert the worst case.

This uncertainty over what is happening in the economy now makes it difficult to predict the timing and the strength of the rebound. It also complicates the government’s planning, like how much to spend and how to target it.

Indonesia has a large, informal, cash economy. By some estimates, more than 60 percent of workers are self-employed in unregistered activities. The difficulty of estimating the impact of lost income from movement restrictions that disproportionately affect informal work is part of the reason for the wide band of growth estimates.

In addition to the cost of movement restrictions, the government has to contend with the global economic downturn. The prospects for the world economy in the year ahead are “highly uncertain”, according to the International Monetary Fund (IMF), although it predicts a contraction of three percent in 2020 before the return of strong growth in 2021.

Families await distribution of humanitarian assistance, Bali, Indonesia -  April 24, 2020. Photo: Alexey Zhilkin, Shutterstock.

For Indonesia, much depends on two factors: first, the performance of its major trading partner, China, which will be unable to match the level of support it provided for the global economy during the 2008 Global Financial Crisis; and second the success of its domestic virus containment and fiscal stimulus measures.

But the costs continue to rise as the government comes to terms with the magnitude of the downturn.  

Unveiling a new budget on May 18, Indrawati revealed total spending on Indonesia’s National Economic Recovery plan would reach IDR641.7 trillion ($65.6 billion) or 3.9 percent of GDP.

The new spending would allow welfare benefits to be broader and more generous and increase support to small and medium businesses.

The government also is ploughing IDR52.6 trillion into about a dozen beleaguered state-owned enterprises, including Garuda airlines and oil company Pertamina, and working with Bank Indonesia to ensure sufficient liquidity for commercial banks.

By June 3, the cost of the recovery plan had risen to IDR 677.2 trillion. Meanwhile, state revenue continued to slide, leaving forecasts for the size of the budget deficit intact for only a few days. The deficit is predicted to hit 6.34 percent of GDP, well beyond the five percent Widodo had set at the start of the crisis.

If all goes well, the IMF forecasts Indonesia could race back to 8.2 percent growth in 2021. But, given all the uncertainty, that is a big “if”.

A Presidential Legacy

The weakening economy contributes to the other unknown: the tolerance of Indonesians, particularly the newly unemployed, to a level of hardship not experienced in more than 20 years.

In the past, Indonesian communities have demonstrated they are remarkably resilient in hard times. And, so far, they have again.

But Widodo has repeatedly sought advice from security agencies about the risk of unrest. This concern has informed many of the decisions he has made in relation to COVID-19 containment measures since the crisis started. He need only look to the United States to see how any number of potential triggers might conflate with anxiety over disease and privation to arouse Indonesia's urban masses to civil unrest and looting.

All the current hardship and uncertainty about the future takes a political toll on Widodo. Even as he is embarking on his final term, it would be a mistake to assume he feels he has nothing to lose.

He is focused on his legacy and on his future political relevance. Only a year ago, there was talk of a constitutional change that would allow him to run for a third term. Widodo was certainly aware of those moves, if not quietly encouraging them.

In the tradition of most Indonesian leaders, he also sees his political influence being preserved by the next generation: His son and his son-in-law are running for mayor of the cities of Surakarta (Widodo’s old seat) and Medan later this year.

One would assume Widodo is reasonably secure. There is little left of the parliamentary opposition after he co-opted his former rival Prabowo Subianto to serve in the cabinet as defence minister. Islamist activists have struggled to regain the momentum they achieved at the end of 2016 when they put the government on the defensive.

Still, loyalties in Indonesian politics are always fluid.  If Widodo were to face a determined popular backlash over his handling of the pandemic, allegiances might shift. His government betrays that anxiety by harsh reactions to any criticism.

He has a lot riding on his ability to balance the health and economic imperatives. A key test will be the impact of the crisis on decades of work to reduce poverty. Widodo’s record there has been mixed.

Poverty has continued to fall, but the annual rate of reduction has halved since 2010 when compared to the seven years before then, according to the World Bank. Even before the latest shock, vulnerability to poverty remained high – 73.9 million individuals or 30 percent of the population were assessed to be either poor or at risk falling back into poverty.

This is why Widodo fears unrest. When he appealed on May 14 for Indonesians to pray, he had another, more important message for them. He urged them to “ask the Almighty… to be given patience to accept this disaster gracefully”.

It also was a plea for patience with his government. 

Donald Greenlees is senior adviser to Asialink, University of Melbourne, and visiting fellow at the Strategic and Defence Studies Centre, Australian National University.

This article first appeared on the Asialink website.

- Asia Media Centre