Indonesia
Nations across the world are currently responding to the economic fallout of COVID-19 pandemic, with the economic sector bearing the heaviest blow compared to all other sectors.
Indonesia’s own new normal policy is, in truth, driven less by the country having achieved safety from the pandemic and more by economic pressure. This reality has direct implications for the advancement or decline of regional economies throughout the country.
Looking at projections from a number of leading global institutions on the outlook for global economic growth in 2020: in April, the IMF forecast a global economic contraction of minus three percent. In June, the World Bank projected global economic growth at minus 5.2 percent, while the OECD, shortly thereafter, cited a figure of minus six percent.
As for Indonesia, a recent webinar hosted by the Fiscal Policy Agency (BKF) in conjunction with the Organisation for Economic Co-operation and Development (OECD) projected that national economic growth by the end of 2020 (full year) could contract sharply between minus 2.5 and minus 3.9 percent should the coronavirus outbreak fail to be brought under optimal control.
Dompu Regency, a small district on the island of Sumbawa in West Nusa Tenggara (NTB), has also been significantly affected. Dodo Kurniawan, one of Dompu’s economists and a doctoral candidate at Universitas Brawijaya Malang, elaborated in detail in a recent piece that, whereas Dompu’s average annual economic growth had previously exceeded five percent per year, it has now fallen to approximately three percent.
One could argue and not without basis that this predicament is not unique to Dompu; many other regions are grappling with the same reality. But what makes this case particularly worth examining?
Amid the coronavirus pandemic, Dompu is on the verge of facing one of its most prestigious democratic moments, the Regional Head Election (PILKADA), set to be held in the near future. This transition of regional leadership will demand every possible effort and resource from those who seek it. Political manoeuvring is visible on all fronts, and therein lies the fundamental paradox: will the government be capable of restoring the regional economy, or will a damaging dualism emerge between the genuine public need to revive the economy and the politics of image-building aimed at consolidating power?
The term “turbulence” is by no means new in economic discourse, many economists have employed it to describe the fluctuating waves of a region’s economic performance. Turbulence bears a fitting analogy to commercial aviation: virtually every flight encounters turbulence, causing the aircraft to shudder and its passengers to grip their armrests. And so it is with economics, it can be analogised through many things, provided the argument holds.
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Dompu is the aircraft, and its regional economy is currently navigating serious turbulence. Most aircraft, admittedly, are experiencing the same but what makes this particular plane especially precarious is that it is about to take off precisely while facing severe turbulence. As its tenure of service approaches its climax, the pilot is forced to think hard, confronted with two airports of competing urgency, each demanding to be prioritised.
The Dompu regional government possesses a flagship commodity: maize (corn). This is evidenced by numerous awards received and is, by now, an open secret. It must be acknowledged and not denied that this near-decade-long mega-project has propelled Dompu Regency a significant step ahead of where it stood in previous years.
However, in recent weeks, the regional economy has weakened considerably as all national economic activity ground to a temporary halt, dragging the regional economic engine into a slump. Maize, very commodity that has been Dompu’s pride has now become a serious threat.
At this very moment, the people of Dompu Regency are in the midst of a simultaneous maize harvest having previously been steered into taking out loans from a number of banks. Not yet free of their debt, farmers are now compelled to sell their maize at depressed prices. In simple terms, the people of this region have fallen only to be struck again on the way down.
The hardship does not end there. During the pandemic, Micro, Small, and Medium Enterprises (MSMEs) in the region have faced a cascade of challenges from production obstacles caused by raw material shortages and capital constraints, to disrupted distribution and marketing channels resulting in income declines of up to 90 percent and large-scale employee dismissals.
The so-called win-win solution brokered by the government with maize investors has since spilled over into public knowledge. This sensitive information could not be fully concealed, and a significant number of activists and students have come to strongly suspect a conspiracy between the two parties.
For some time now, waves of protest have been mounted by the community dominated largely by students and youth from various villages across Dompu Regency demanding a price increase for maize, long positioned as the regency’s flagship commodity, yet considered far too low relative to its production costs.
The uncomfortable truth is that the root cause of all these problems is nothing more than weak governance and poor management on the part of the regional administration in mobilising relevant institutions to deliver visionary breakthroughs in addressing the economic challenges posed by the COVID-19 pandemic.
Furthermore, the looming 2020 Regional Election has rendered the orientation of economic recovery policy thoroughly ambiguous. The Regent of Dompu, widely alleged to be the sole architect behind the nomination of his own wife as the next Bupati candidate, now faces extraordinary pressure to deliver on multiple fronts simultaneously.
This is precisely what I referred to at the outset: a dualism of interests between the people’s economic recovery and the political agendas aimed at perpetuating power both of which demand the incumbent’s undivided attention. Looking back at even the most basic principles of management theory, virtually no two tasks executed simultaneously can both be completed with perfection. The defining question, then, is: which will be made the priority?
As a politician, the natural preoccupation is with one concern above all: how, within the increasingly narrow window of a leadership tenure approaching its peak, to restore the incumbent’s electability.
I find myself in agreement with Dr. Anggito Abimanyu, M.Sc., a lecturer at the Department of Economics and Business, Universitas Gadjah Mada, who wrote that the economy has now lost its rudder without any effective shock absorber — largely driven by the political motives of politicians. At this juncture, the role of academics is needed to restore the dignity and stability of our economy.
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For an academic whose thinking remains authentically grounded, the recommendation to those in power is straightforward: prioritise the economy first. Given that economic matters are the most fundamental of all, they must be given full and undivided attention. If this challenge can be overcome, the community will naturally conclude that this leadership is worthy of continuance.
In closing, I wish only to say this: the COVID-19 pandemic must be turned into a trigger for correcting both the regional and national economy steering it back toward the mandate of the Constitution. Among the policy recommendations that may serve as alternatives for the Dompu Regency Government are: the development of new stimulus packages for MSMEs, a grand design for local economic recovery, and most critically a commitment to government transparency regarding the handling of COVID-19. The moral message is clear: public trust in policymakers must be restored.
As civil society, we feel it is necessary to state plainly: this pandemic has worsened the hunger and poverty that were already pressing issues in this country, including in Dompu Regency. Nevertheless, this crisis carries the potential to serve as a turning point one that opens the door to food deglobalisation.
The Dompu Government can move swiftly to bring together all elements of society by strengthening solidarity, networks, and local collectivity including a return to local food staples such as maize itself and developing nested markets.
In this way, we collectively hope that this episode of regional economic turbulence can be navigated safely and toward a clear destination. We all know that turbulence is a problem that can strike at any time.
The first thing a pilot must do is remain calm, avoid panic, and stay focused. For us as passengers, we must have faith that the pilot can see it through.
