IMPACT OF NATIONAL DISASTER COVID-19, INDONESIA

TOWARDS ECONOMIC RECESSION

ENDANG NARYONO
STIE PASIM SUKABUMI
endang@stiepasim.ac.id

A. BACKGROUND
Covid-19 or the corona virus is a virus that has become a disaster and a global
humanitarian disaster began in December 2019 in Wuhan province in China, April 2020
the spread of the corona virus has spread throughout the world making the greatest
humanitarian disaster in the history of human civilization after the war world II, Already
tens of thousands of people have died, millions of people have been infected with the
conona virus from poor countries, developing countries to developed countries
overwhelmed by this virus outbreak. Increasingly, the spread follows a series of
measurements while patients who recover recover from a series of counts so that this
epidemic becomes a very frightening disaster plus there is no drug or vaccine for this
corona virus yet found, so that all countries implement strategies to reduce this spread
from social distancing, phycal distancing to with a city or country lockdown.

Table. 1
Development of Corona Virus Spread in the World
No. Negara Terinfeksi Sembuh Meninggal
1 USA 587.173 36.948 23.644
2 Spain 172.541 35.435 20.465
3 Italia 159.516 35.435 20.465
4 Perance 136.779 27.718 14.967
5 German 130.072 68.200 3.194
6 England 88.621 nn 11.329
7 China 82.249 77.738 3.341
8 Iran 74.877 48.129 4.683
9 Turki 61.049 3.957 1.296
10 Indonesia 3.954 426 459
Source: www.tirto.id

Indonesia is one of the countries affected by the corona virus with a population of
no. 4 in the world with a population of 270 million people this makes it very vulnerable
to the spread of this vius corona, data published in March 2020 announced there were 2
positive patients affected by the corona virus, 2 months later there was an increase of
thousands of percent of people infected with this virus, causing panic and fear throughout
the community and bring tremendous impact from starting panic buying people buy
staples in large quantities so that goods become scarce resulting in uncontrolled prices,
hoarding and smuggling of personal protective equipment such as masks and personal
protective clothing which makes the situation of the community increasingly haunted
Fright.

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 Table. 2
The Corona Indonesia Virus Development Chart
April 2020

Source: www.detik.com

Responding to this problem the government made policies by setting strategies and
policies in dealing with this vius corona in order to minimize the impact of this virus both
for health and socio-economic impacts due to this outbreak which include:
1. Encourage people to implement social distancing
2. Form a task force to accelerate the corona virus
3. Building a hospital specifically for corona virus patients
4. Establishing large-scale social restrictions in certain cities
5. Provide energy incentives in the form of free electricity for 3 months for 450 VA and
50% discount for 900 VA
6. Providing social safety nets in the form of a package of people's basic needs for 6
months
7. Providing incentives for people affected by layoffs by issuing a Pre-Employment Card
8. The incentive of relaxation of installment payments for victims affected by the corona
virus

The Government of Indonesia has allocated a budget of Rp. 405.1 Trillion to tackle
the spread of this epidemic and the impacts arising from this virus, such as decreased
public purchasing power, unemployment due to massive layoffs and the sharp rise in
poverty rates caused by this virus.

B. THE ECONOMIC IMPACT DUE TO CORONA VIRUS

1. Economic Growth
As a result of the global crisis from the period 2006-2019 economic growth was
constant at 5.1% due to the slowdown in the world economy which resulted in decreased
demand for export commodities, of course this will affect the government's current
account in generating foreign exchange and taxes. Indonesia's economic growth is
supported by high consumption and partly by the tourism business which is the backbone

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of the national economy and currently the national economy is ravaged by this corona
virus, the production sector cannot run due to lower demand and does not rule out the
possibility in the next 3 months if this problem this will not result in many production
sectors that will close their businesses, the tourism sector is devastated by this plague the
number of tourists dropped dramatically which resulted in thousands of hotels laying off
their employees because they did not bother paying their operational costs. This will
certainly be correlated with the rise in poverty and poverty that will occur so that in the
long run it will spur economic recession which is very frightening
The micro sector also faces a more dire problem of declining purchasing power
resulting in lower demand which causes losses to small businesses that are threatened
with bankruptcy and are unable to repay loans to banks, which in turn will create
snowballs where poverty and burial will increase rapidly. So that the year 2020 is the year
of determination in which the national economy will sink into a deep pit so that short-
term policies are needed to prevent an economic recession that will impact on social,
economic and political. The key in this issue is to increase the purchasing power of the
people so that the consumption sector can rise so that the production sector can run by
providing a social package for survival, the government buys agricultural products that
are not selling on the market today such as rubber with rubber purchases by the
government will increase people's purchasing power and create demand.

2. Budget Deficit Widened

The size of the stake than the pole is our budget structure where income is smaller
than the budget budget so that the shortfall is covered by both domestic and foreign debt.
With the corona virus outbreak putting pressure on the fiscal, the government has no
budget or budgetary allocation to tackle this outbreak, so that state expenditure will be
corrected, namely the budget cuts used to deal with the outbreak so that it can be ensured
there will be no development in 2020 and the deficit will widen in in 2019 the budget
deficit is 3% in accordance with the applicable law then in 2020 the government will
propose amendments to the budget deficit law 5% of GDP
The increase in the budget deficit will correlate to the increase in debt both domestic
and foreign debt which during 2016-2019 experienced a progressive increase.

Table. 3
Indonesian Debt Development

Source: www.galamedianews.com

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 The problem of Indonesia's debt so far has been the low tax ratio received compared
to the GDP rate so that in the long run it will put pressure on the fiscal, which is the aspect
of liquidity and solvency of the state in paying principal and interest debt which will
eventually dig holes and holes. Debt is indeed a leveraging strategy in economic growth
that is creating multiplayer in development but the problem now is that short-term debt is
used for long-term investment so that the fiscal end is always pressured by debt
installments due.
So that the widening budget deficit must be watched out by the government with
the current situation, lest Indonesia become a default country because if this happens
international confidence will disappear and international trade is disrupted, namely
export-import if this happens will result in a weak foreign exchange reserves of the
country where the theory of a healthy country must have foreign exchange reserves to
finance 6 months of imports. Proposing a change in the budget deficit to 5% must
inevitably be done even bitterly by closing the budget by 5% because if this is not done
it will cause more serious things namely the absence of development which will
ultimately make our economic growth worse.

3. Exchange Rates
Rupiah exchange rate during the last 3 months experienced a correction in
depreciating against the US dollar beyond the monetary crisis in Indonesia in 1997/1998
which had touched the amount of Rp. 16,800 / $ many do not believe it but in fact it
happens, the weakening of the exchange rate is caused by the collapse of the stock market
and money market where all investors withdraw their investment back
the country, which resulted in a sharp decline in the Jakarta Composite Index and
high demand for the US dollar, which caused the Rupiah to depreciate deeply due to the
collapse of the stock market and money market in Indonesia.
Table. 4
Development of Rupiah Exchange Rates

Source: www. suaratani.com

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 Table. 5
Joint Stock Price Index Development

Source: www. idx.co.id

2020 will be a very heavy year where humanitarian disasters that have been in front
of the eyes which until now have not found a cure and vaccines, on the other hand must
save the Indonesian economy that is nearing an economic recession. In response to these
problems, policy makers must have the right efficient and effective policy solutions and
strategies before the storm comes and Indonesia is too late to deal with it.
Weakening of the exchange rate will result in an increase in foreign debt if debt in
the form of foreign exchange will certainly be burdensome in sluggish economic
conditions accompanied by an increase in debt will certainly lead to large losses for
debtors, the number of our financial institutions that have debt in US dollars will further
aggravate the situation namely decreasing liquidity and banking solutions. If this is not
addressed, there will be a bank default which will have an extraordinary impact on the
Indonesian monetary sector, which in the end the government must liquidate the banking
sector or acquire with capital participation, of course, with current conditions the
government will not be able to do so. Government intervention through the Indonesian
bank is absolutely necessary so that national banking can meet the aspects of liquidity
and banking solvency, namely by releasing the dollar to the market in the hope that the
Rupiah can strengthen in accordance with what has been set by the government, both
private parties who have loans in dollars hold their debt in addition to saving his business
it also reduces pressure on the Rupiah against the dollar.
The Composite Stock Price Index was corrected in 3 months from 6,000 positions
to 4,600 due to investors selling their investments because Indonesia's economic
condition was thought to be weakening so HISG was declining and the Rupiah Exchange
Rate was weakening because the exchange rate and HISG were correlated with each
other. this short term. In increasing the JCI there is no other way than the government

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must with all efforts to overcome this corona virus outbreak so that there is positive
sentiment in the eyes of investors so that in the long run investors will return to the money
market and stock market, for the short term the government must intervene in the capital
market by making purchases the shares of companies conducting IPOs can run the stock
market and minimize the destruction of the money market and stock market in Indonesia
4. Per capita income
Indonesia is expected to become a developed country in 2030 because it has a
comparative advantage, namely demographic bonus where the productive age in 2030
reaches its peak even in 2019, America has established Indonesia as a developed country
by setting high taxes on Indonesia's export commodities. Currently the corona virus storm
comes melakan the foundation of the Indonesian economy, humanitarian disasters that
come have a great impact on the national economy, the stock market and the money
market is plummeted, weakening economic growth, depressed macroeconomic and
microeconomic make the economic situation of Indonesia even worse. .
The disruption of production activities in the real sector due to declining demand
causes companies to reduce production capacity to save their business and will
automatically reduce labor. Increasing the rate of unemployment will bring problems in
the economy because it will burden the family's burden and reduce income and
consumption which will ultimately increase
poverty and a very large social problem this will certainly be a problem for the
government both in the short term, the long-term impact of poverty will have an impact
on health, low education will certainly give birth to low quality resources so this layoff
problem must be watched out by the government by providing solutions real so that
people have income to fulfill their lives which includes:
1. The government as much as possible to minimize layoffs by providing incentives to
companies not to lay off jobs such as tax relief, and provide import duty relief for
production raw materials from overseas is expected to run production process activities
2. The government provides social security for employees affected by layoffs so that with
social security they still have income to meet their daily needs. In social security it is
better in the form of money not in the form of training because with money they will
have the purchasing power to drive consumption
3. Providing energy subsidies / incentives for the poor which includes water, fuel,
electricity and gas, it is hoped that these energy incentives can ease the cost of living
4. The government buys agricultural products which have been sluggish in the
international market such as rubber, cocoa, palm oil in the hope that the absorption of
agricultural commodities from the community has the purchasing power that will
create demand so that supply is created and will encourage the rotation of M1, M2 and
M3

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5. Unemployment
It has become a natural law that weak demand due to decreased purchasing power
will create a melt where it covers the open slurry of those who are not currently working,
closed slurry that is they are working but not in accordance with their education and
expertise. Weakening demand due to the decline in purchasing power resulted in the
efficiency of the production sector, then layoffs were carried out to reduce the burden of
operating costs, unification would bring a very large impact on the national economy
from the start of economic growth, GDP, inflation and per capita income.
Unemployment also has a serious impact on the socio-economic community that
will lead to social diseases such as rising crime, poverty, and low health and education
which will ultimately result in low quality human resources. This is a tough task because
creating jobs now is not easy even very difficult, of course, in the short term, the solution
is how unemployed people have the income to fulfill their lives, namely policies can be
carried out.
1. Health Insurance by Relaxing BPJS payments so that people are not burdened with
routine payments where they currently do not have income but continue to provide full
health services
2. Creating an economic multiplayer many micro businesses or medium companies that
are closed are empowered to make personal protective equipment (PPE) which until
now is scarce such as masks and health clothes with first given training to make PPE
so that small and medium businesses can live and can create jobs and reduce
unemployment which will ultimately increase community income,
3. The government creates labor-intensive jobs in the hope that it will create a large
number of jobs, although sometimes this is ineffective, it is just a waste of money, but
now it needs to be done amidst the recession storms that will threaten Indonesia
6. Poverty
Poverty is a major problem in Indonesia that must be solved comprehensively
because poverty has an endless chain of demons and has a devastating effect on marriage
and society.

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 Table. 6
Indonesian Poverty Rate Development

Source: www. gesuri.id

Poverty will create a large multiplayer where poverty will create Low education
with low Education eat low quality resources that result in not getting decent jobs and
low income, low income will create new poverty and so on. Every change of government
has always been the main focus in reducing the rate of poverty in Indonesia from starting
9-year compulsory education, education scholarships, the role of venture capital for small
economic actors to the subsidies of loans for poor people who have businesses but after
74 years of independence Indonesia is still just not yet free from poverty and made worse
by the spread of the corona virus which causes economic malaise will increase the rate of
poverty in society.
The poor will be most affected by this corona virus outbreak. This is due to the fact
that most of them work in the informal sector and do not have a steady income relying
solely on daily income and that too is not necessarily earned. So that with the development
of the Indonesian economy will further aggravate the poor in fulfilling their lives such as
the cost of living, education costs for their children, energy costs, if all of this cannot be
met, a great threat to national defense such as hunger and mass riots, so the government
must immediately make policies to save the community. poor who are getting worse,
short-term policies in the government that includes:
1. Relaxing the cost of education of children who go to school for the poor and provide
educational scholarships from elementary, junior high, senior high school to university
2. Provide energy incentives such as fuel, gas, electricity and water
3. Providing social security in the form of basic needs such as rice, sugar, flour etc.

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4. Providing social security nets in the form of money that can be taken every month
within the next 6 months with the hope that in the 7th month the outbreak will have
disappeared and the economy can live again
5. Creating employment-intensive jobs so that people have additional income to meet
their needs.
C. Conclusions
Corona virus, like a typhoon that hit a new flowering corn garden, came crashing
down, everything was very detrimental, but life must continue to not dissolve in sadness
and fear that Indonesia must rise from this economic downturn, there are a few points that
can be drawn from the above explanation.
1. Economic growth of our economy which is supported by public consumption, the
decline in purchasing power will result in a decline in the production market and a
decline in the offering of a decline in the offer will result in losses for companies and
ultimately taxation received by the government will decrease, so that the budget deficit
will widen in the future 5% of GDP. Increasing public purchasing power by providing
fiscal and monetary policy incentives needs to be done to increase public purchasing
power so that the production sector can run and create jobs and reduce unemployment
due to the corona virus outbreak in Indonesia
2. The budget deficit which is expected to widen at 5% certainly in the long run will
provide tremendous fiscal pressure but in no other way than to enlarge the budget
deficit range so that development continues to run, in the short term the government
must focus on the microeconomics to move the real sector if this will lead to a positive
correlation with the wheels of the national economy.
3. Exchange Rates and the Stock Market which are undergoing deep corrections, of
course, Bank Indonesia as the holder of monetary policy must intervene the Rupiah
Exchange Rate, Bank Indonesia Interest Rates to stabilize and rescezule foreign debts
of private companies and SOEs so as not to interfere with liquidity and company
solvability and finally to support the capital market, the government must buy shares
of companies that conduct IPOs in an effective effect so that the capital market
continues to run
4. Declining per capita income of the community which will have an impact on socio-
economic problems such as poverty and poverty in Indonesia must be watched out
because it will become a snowball if late tackling it will become an economic recession
that will bring our economic downturn in the long run, through economic incentive
purchases for entrepreneurs and the community, relaxation of the payment of banking
credit absolutely must be done so that the business world can resume and public
purchasing power rises with rising purchasing power will create demand and demand
in consumption, production and distribution. Of course, if this works, it will have a
positive impact on the Indonesian economy
5. Unemployment contracting due to the corona virus outbreak caused by a wave of
layoffs by companies affected by the corona virus outbreak. Providing incentives by

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 the government to companies not doing layoffs so that there will be no increase in
unemployment, providing social security to people affected by layoffs with the aim of
the people still having the purchasing power to fulfill their lives so that the real sector
can continue to run and in the short term can reduce poverty in Indonesia
6. High poverty has had an impact on per capita income and the low quality of Education
and Health, with this wave of conona virus exacerbating the poverty rate that exists in
Indonesia, providing socio-economic incentives, such as energy incentives, social
safety nets and assistance with staples. done as soon as possible so that we do not
become a problem of greater humanity such as hunger, riots that will threaten
Indonesia's national defense
Nothing is accidental and nothing is futile in this life all by the will of the almighty
God. Rest assured there is always glory behind the disaster. Revive my Indonesian people,
hopefully the storm will soon be over

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