Entrepreneurs: Don't Let Indonesia's Economy Grow Negatively Until The End Of 2020

Entrepreneurs: Don't Let Indonesia's Economy Grow Negatively until the End of 2020

Shinta Kamdani (Liputan6.com/Herman Zakharia)

Jakarta - The Indonesian Chamber of Commerce and Industry (Kadin) predicts Indonesia's economic growth in the second quarter of 2020 will contract by -6 percent. This prediction has fallen sharply when compared with the realization of economic growth in the first quarter of 2020, which amounted to 2.97 percent.

Deputy Chairman of the Indonesian Employers' Association (Apindo), Shinta Widjaja Kamdani, said that negative economic growth is a risk that must be faced by all countries in the world.

"We should be more eager to strive for everything so that negative growth does not occur throughout 2020, as much as possible is limited to only one quarter, for example the Second Quarter which is currently at high risk of experiencing negative growth ," Shinta told Liputan6.com , Sunday ( 7/5/2020).

It is expected that in the following quarters, all parties can spur productivity, aggressively invite investment, channel stimulus, facilitate logistics support for domestic and foreign trade, ensure the smooth supply of goods throughout Indonesia, and ensure the reduction of the spread of outbreaks by increasing the effectiveness of outbreak control efforts at the regional and national level.

He further explained that economic growth would negatively affect all economic agents. Not only businesses but also the wider community. That is, nothing is not affected.

Instead, MSMEs, the lower middle class and the informal sector will be more depressed, because their capability to create liquidity to survive is very limited.

"For the formal economy, almost all of them have been negatively affected and this has been seen in the first quarter of 2020 report, where the 4 biggest economic sectors contributing to GDP (manufacturing, trade, agriculture and construction) all experienced a significant contraction in performance," he said.

Shinta said, if we do not want this contraction to continue, the government must actively accelerate the distribution of stimulus to businesses that need it, especially MSMEs and labor-intensive sectors, so that the level of layoffs does not increase, companies can continue to move, and economic activity is not stagnant.

On the other hand, he added that the government must also change the business climate and national investment to be more efficient, easier and investment-friendly and have a certain level of business certainty .

"So that companies that are already struggling with capital are not burdened, with regulations and foreign companies are also interested in investing in Indonesia, and creating jobs for workers who have been laid off during co-19," he concluded.

Previously, the Indonesian Chamber of Commerce and Industry (Kadin) predicted that Indonesia's economic growth in the second quarter of 2020 would contract by -6 percent. This prediction has fallen sharply when compared with the realization of economic growth in the first quarter of 2020, which amounted to 2.97 percent.

As stated by Kadin Chairperson Rosan P Roeslani and Deputy Chair of the Kadin Advisory Council Gita Wiryawan, in his statement on Saturday (07/04/2020).

"We at Kadin are of the opinion that there will be a contraction in economic growth between -4 percent to -6 percent in the second quarter of 2020," said Rosan P. Roeslani.

Moreover, he continued, given the progress of the handling of Covid-19 stimulus is still very slow. Absorption in various fields includes new Health 1.54 percent, social protection at 28.63 percent, business incentives 6.8 percent, MSME 0.06 percent, Corporations 0 percent and sectoral at 3.65 percent.

"This will make the pressure on health recovery, social security and economic networks more severe," he continued.

According to Rosan, the weak implementation of the stimulus will make Indonesia's economic growth contraction in the third quarter again at a negative growth level so that technically Indonesia is entering a phase of economic recession.

From the trade side, the surplus achieved in April and May in 2020 was due to a decline in imports (-18.6 percent Year on Year or YoY in April and -42.2 percent YoY in May) which was higher than the decline in exports (-7 percent YoY in April and -28.95 percent YoY in May).

Considering the significant role of the raw / auxiliary material group (around 70 percent) of total imports by the end of May this year, it is estimated that domestic production for the benefit of domestic consumption and exports will continue to be impacted for some time to come.

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