COVID 19: An Economic Doom’s Day for MSME’s

With over a million cases of the Corona Virus worldwide -and growing numbers as I speak- there is no doubt that this global pandemic is mortifying societies around the globe with an overall; economic mess. Not only is it punishing Indonesia’s regional economy, but it is detrimental to the micro, small and medium enterprises within the country.

In a statement issued in March, The Foreign Ministry in Indonesia claimed that “all foreigners or travelers who wish to visit Indonesia must obtain a visa from Indonesian missions in accordance with the purpose of their visit” and must include “health certificates issued by a relevant health authority”. With the country set to suspend its visa exemption policy, even more travel bans are being enforced by other nations around the Indonesian archipelago. Furthermore, a partial lockdown (PSBB) has been implemented in Jakarta urging all residents to stay home for 14 days.

While “social distancing” is indeed a a way to cut down the transmission of the disease, it has put a pause on the business world.

The tourism and travel support in Indonesia’s economy is largely significant with contributing $62.6 billion US dollars and almost 13 millions jobs. This makes Indonesia the “third largest Travel & Tourism economy in South East Asia” (WTTC). And now, having travelers around the world staying put where they are, travel industries are struggling to even survive.

In a recent press conference regarding the COVID 19 situation, President Joko Widodo said that he would be assisting the MSME’s in Indonesia by extending loan payment deadlines up to one year. With this approach, the government intends to help the Indonesian citizens remove a portion of the financial weight by delaying the payment date for individuals in vehicle services, food business, and more. The Financial Service Authority (OJK) would be implementing this relaxation in hopes to help lessen the heavy economic impact of the pandemic.

Although this might be a positive start to supporting Indonesia’s economy, it still may not be enough to help MSME’s. With the uncertainty of how long the crisis will last, there might be a possibility of dealing with the pandemic even longer than the extended loan deadline.Therefore, while the responsibility of the citizens to remain in their homes and practice “social distancing” is essential to eradicating COVID 19, it is also key for governments to financially support businesses. If we fail to act quickly, the economy will might as well be walking into it’s own trap.