Government Interventions Reduce Pandemic Socioeconomic Burden

The country with the world’s largest Muslim population has the 8th largest number of COVID-19 infections among all OIC member countries. The World Health Organisation (WHO) repeatedly warned from a catastrophic impact of the ongoing pandemic on the economic prospects and social structure of the Southeast Asian nation. According to the IMF, Indonesia's growth slowed in the first quarter of 2020 to three percent year-on-year, mostly driven by reduced consumption and investment as containment measures were intensified in late February.

Therefore, the government has been working to curb the spread of the highly contagious outbreak.In this regard, together with announcing economic stimulus packages, a number of initiatives have been envisioned to alleviate the burden on the most affected groups of the community. On the first of July, the government pledged to help over 17,000 tourism workers in North Sumatra currently reeling from the negative impacts of the novel coronavirus disease. The news was announced by the Province's Tourism Office Head, Ria NovidaTelaumbanua.

Telaumbanua said that the Ministry of Tourism and Creative Economy has offered 16,100 packages of basic necessities and ready-to-eat food items for the affected tourism workers in North Sumatra. In reference to the reopening of tourist destinations in the province, shementioned that the North Sumatra provincial administration had left the decision on the district and city governments since they were aware of the COVID-19-related situation in their administrative areas.Tourism is Indonesia's third most important non-oil source of foreign revenue, after timber and textile products.

In a different sector, the government rolled out new housing loan subsidies amid the COVID-19 pandemic for 175,000 low-income families nationwide and increased the salary ceiling for eligible recipients to RP 8 million for all types of housing from the previous RP 4 million for landed houses and RP 7 million for low-cost apartments.It has also launched a public housing savings programme (Tapera), which requires employers and workers to contribute to a mortgage loan scheme similar to universal healthcare insurance.

Although the World Bank warned that the government’s housing subsidy programme designed to resolve the country’s mounting backlog might backfire by hampering property industry growthand leading to the construction of lower quality homes, the director of the financing strategy unit at the Public Works and Housing Ministry,HerryTrisaputraZuna,responded that the housing market still required the government’s intervention in the form of subsidies. “We cannot rely solely on the market and need to make some interventions,” he said.