GENERAL NEWS AND HEADLINES

KPU plans health protocols
The Jakarta Post, p.1

The General Elections Commission (KPU) is preparing health protocols to prevent COVID-19 transmission during the 2020 simultaneous regional elections, which the government has insisted on holding in December despite the health risks.

The move follows a decision by the government and the House of Representatives on May 27 to hold the regional elections on Dec. 9 to elect 270 regional leaders, comprising nine governors, 224 regents and 37 mayors.

Critics have urged policymakers to reschedule the elections to 2021 over fears the COVID-19 outbreak could continue late into the year — and even beyond it — and put voters and election organizers at risk of contracting the disease.

KPU commissioner I Dewa Kade Wiarsa Raka Sandi said, however, that health protocols and their strict implementation would be sufficient to protect voters and KPU officers from infection.

The KPU is also adjusting some election procedures, including limiting the number of election campaign participants permitted to be present in indoor facilities to 20 people. It will also prohibit candidates from hosting campaign events that could attract massive crowds, such as music concerts, sporting events, bazaars and blood drives. The commission will still allow candidates to install and distribute campaign props, but it is also advising them to look to social media to campaign.

 

Political tension hampers COVID-19 measures in East Java
Koran Tempo, Berita Utama

Epidemiologist Windhu Purnomo of the Surabaya-based Airlangga University’s School of Public Health has asked East Java Governor Khofifah Indar Parawansa and Surabaya Mayor Tri “Risma” Rismaharini to end their quarrel. Windhu said the tension between the two leaders had hampered East Java from enforcing effective COVID-19 measures.

According to Windhu, the East Java administration has drawn up proper policies to manage the outbreak, including coordinating contact tracing activities in almost all districts and municipalities. Furthermore, the East Java administration has also increased its capacity to conduct polymerase chain reaction (PCR) testing on 2,000 specimens per day.

However, Windhu added, the provincial and municipal administrations in East Java could curb the spread of COVID-19 infections faster should their policies be more harmonious. “There are no coordination [between the provincial and municipal administrations],” Windhu said.

In the past weeks, Khofifah and Risma have quarreled over how to handle the COVID-19 outbreak. The most recent feud between the two leaders centered around two mobile PCR labs loaned by the National Disaster Mitigation Agency (BNPB). The mobile PCR labs were reportedly loaned for use in Surabaya but were taken over by the East Java administration’s COVID-19 task force and sent to Lamongan and Tulungagung regencies instead.

 

Govt yet to decide new educational methods nearing new school year
Kompas, headline

The government has scheduled the country’s 2020-2021 academic year to commence on July 13. However, nearing the start of the new school year, the Culture and Education Ministry has yet to decide whether students across Indonesia will continue to study from home or be allowed to return to school amid the COVID-19 pandemic. A number of parties have reminded the ministry to prioritize the safety and health of students and people working in schools.

So far, the ministry has formulated three different alternatives to be possibly adopted in the new school year. The first option is to continue implementing remote learning nationwide. The second option is to reopen all schools and allow all students to study at schools while implementing strict health protocols. Meanwhile, the third option is to apply a zonation system, in which only schools located in “green zones” would reopen, while schools located in “red zones” must remain closed. 

 

House mulls closed-voting system
The Jakarta Post, p.3; Kompas, p.2; Media Indonesia, p.3; Koran Tempo, Nasional

The House of Representatives is considering whether to change the current open-list proportional representation electoral system and raising the 4 percent minimum legislative threshold in a proposed amendment to the 2017 General Elections Law.

In Article 206 of the draft bill, a copy of which was obtained by The Jakarta Post, the House proposes changing the current system that allows legislative candidates with the most votes to automatically secure seats after the election into a closed-list system that will grant political parties the power to decide which candidates would represent them in legislative bodies. The House is also seeking to increase the legislative threshold from 4 to 7 percent as stipulated in Article 217 of the draft bill dated May 6.

Saan Mustopa, deputy chairman of House Commission II overseeing home affairs, told the Post on Friday that nine political party factions at the legislative body were still divided over the draft, saying only the ruling Indonesian Democratic Party of Struggle (PDI-P) and the Golkar Party had so far agreed to adopt the closed-list system.

The PDI-P and Golkar — the two largest political parties at the House and largest supporters of the government — have been rallying support for the revision since the beginning of 2020 as both parties argue that the closed-list system would reduce vote-buying and the fierce competition among candidates within a party or against those from other parties.

All factions were also still divided over raising the legislative threshold, with only the NasDem Party and Golkar agreeing on the 7 percent threshold, Saan said.

All factions, however, unanimously agreed to maintain simultaneous elections for the national legislature, regional representative councils and the presidency.

 

Ganjar, Emil’s electability soar
Media Indonesia, p.2

A recent survey conducted by Jakarta-based pollster Indikator Politik Indonesia found that the electability of Central Java Governor Ganjar Pranowo and West Java Governor Ridwan Kamil had soared amid the COVID-19 outbreak. In contrast,  that of Defense Minister Prabowo Subianto and former Jakarta deputy governor Sandiaga Uno had decreased.

The survey, which polled 1,200 people between May 16 and 18, found that Ganjar and Emil’s electability had increased to 11.8 percent and 7.7 percent, from 9.1 percent and 3.8 percent, respectively. Indikator Politik Indonesia executive director Burhanuddin explained that Ganjar and Emil’s increased electability was the result of both regional leaders’ intense interaction with their constituents amid the COVID-19 outbreak.

“[The increases and decreases] are intertwined with the “visibility” factor. In the past two months, the management of COVID-19 outbreak at the regional level has created a political stage for regional leaders. Leaders who have a large number of constituents and are clever enough to use the current circumstance to their benefit will reap electoral benefits, especially if they frequently appear in the media,” added Burhanuddin.

 

BUSINESS AND ECONOMICS NEWS AND HEADLINES

Businesses demand working capital stimulus to accelerate recovery
Investor Daily, headline 

Business associations suggest the government increase the economic recovery stimulus by adding working capital incentives. Even though the government has announced the national economic recovery (PEN) program budget totalling Rp 677 trillion (US$ 47.34 billion), they said the budget would not be enough for economic recovery.

Indonesian Chamber of Commerce and Industry (Kadin) chairman Rosan Perkasa Roeslani said the government had provided debt restructuring for corporations and micro, small and medium enterprises (MSMEs). However, without working capital, debt restructuring would be meaningless.

“We have proposed a corporation working capital stimulus for the next six months amounting to about Rp 300 trillion,” Rosan said, adding that the needs for MSMEs working capital would be around Rp 100 trillion. So, altogether, the working capital stimulus needed was Rp 400 trillion.  

Rosan also said the working capital stimulus should carry low interest rates, lower than prevailing interest rates. Otherwise, it would again burden businesses.

Indonesian Employers Association (Apindo) chairman Hariyadi Sukamdani came up with larger figures for working capital stimulus as Apindo wanted a one-year stimulus that would cover all sectors. According to Apindo calculations, the textile and garment (TPT) industry needs Rp 283.1 trillion, food and beverage (F&B) Rp 200 trillion, footwear Rp 99 trillion, hotel and restaurant Rp 42.6 trillion, and finally, electronics and household Rp 407 billion.

Also, Hariyadi proposed the government, through state electricity company PLN, lower electricity and gas rates for three months and eliminate the electricity minimum charge.

Institute for Development of Economics and Finance (Indef) economist Bhima Yudhistira said the current PEN stimulus budget was too small. “To accelerate economic recovery, the stimulus needs to be increased by above 10 percent of gross domestic product (GDP), with the highest proportion for social safety nets and MSME stimulus by above 70 percent,” he said.

 

SOE stocks rise, spur trade in capital market
Bisnis Indonesia, headline

The BUMN20 index, the price gauge of 20 listed state-owned enterprises (SOE), region-owned enterprises and their listed subsidiaries on the Indonesia Stock Exchange (IDX), rose 1.67 percent or 4.52 points to 275.28 at the end of trading last week. The increase was a  slight improvement after the index declined 29.48 percent year-to-date.

According to PT Samuel Sekuritas Indonesia research head Suria Dharma, the bounce was mainly due to returning foreign capital inflow. SOE stock prices that were discounted substantially have now been pushed up. However, Suria said investors should remain cautious of the alarming COVID-19 infection rate. He recommended state-owned banks and telecommunication company stocks since their performance had not been affected much during the pandemic.

During the COVID-19 pandemic, state-owned banks suffered the biggest correction. Bank Negara Indonesia, Bank Mandiri and Bank Rakyat Indonesia were the top three laggards on the index, followed by state-owned telecommunication company PT Telekomunikasi Indonesia and state-owned gas company PT Perusahaan Gas Negara.

Now, these battered SOE stocks have started to pick up and spur trade in the capital market as economic recovery brings positive sentiment.

 

Cooperatives dissemble shadow banking operation
Kontan, headline

The default case involving savings and loans cooperative (KSP) Indosurya Cipta and Hanson Mitra Mandiri has revealed that the institutions are rampant with shadow banking practices.

The so-called cooperatives, through their marketing and sales teams, have been collecting funds by offering savings products that are similar to banking products. They promise high interest and cashback offers to attract customers.

The customers neither have a membership card nor are on the cooperative’s members list. They were never invited to the annual membership meetings. Furthermore, they also never received the dividends that distinguishes investment in cooperatives from other kinds of financial institutions.

Cooperatives and Small and Medium Enterprises (SME) Ministry’s supervision deputy, Ahmad Zabadim, said the ministry would improve cooperation with the Financial Services Authority (OJK), the Financial Transaction Reports and Analysis Centre (PPATK) and law enforcement agencies to improve the supervision of cooperatives.

 

Govt to give Rp 4 trillion capital injection to PTPN
Koran Tempo, economic headline

The State-Owned Enterprises (SOE) Ministry is set to give Rp 4 trillion (US$288.39 million) in capital injection to state-owned plantation holding company PT Perkebunan Nusantara (PTPN) as a part of the national economic recovery (PEN) program to mitigate the impact of COVID-19 pandemic.

However, the ministry’s spokesman, Arya Sinulingga, said PTPN would not receive the capital injection in cash. Instead, the government will give a guarantee to financing institutions so the company could get lending. Arya added that the government was mulling over the mechanism, including the tenor and interest rate, which will be different for each SOE.

PTPN is one of the five SOEs to receive capital injection from the government worth Rp 19.65 trillion in total. The biggest fund recipient is national flag carrier Garuda Indonesia with Rp 8.5 trillion, followed by PTPN Rp 4 trillion, state-owned railway operator PT Kereta Api Indonesia with Rp 3.5 trillion, state-owned steelmaker PT Krakatau Stell with Rp 3 trillion and state-owned housing firm PT Perumnas with Rp 650 billion.

The capital injection for PTPN raises concerns regarding the urgency. Because PTPN is fully owned by the state, the company has the option of getting a state capital injection (PMN) instead. Furthermore, the company has been having issues in paying its debts worth Rp 71.95 trillion in total per April 2019. Therefore, PTPN’s ability to return the capital injection to the government is in question.

 

Indonesia’s COVID-19 budget swells, but still ‘not enough’
The Jakarta Post, headline

Indonesia’s 2020 budget deficit will widen further to accommodate a larger stimulus package, but economists and business representatives say it will still not be enough to prevent the economic consequences of the COVID-19 crisis.

Center of Reform on Economics (CORE) Indonesia research director Piter Abdullah said the government’s stimulus was “far from ideal” to counter the impact of the virus.

“The country needs a bigger health care budget to manage the outbreak […] If we are not ready, then there is a possibility of a second wave of the virus crisis,” Piter said in a statement.

“Meanwhile, the proposed budget for social protection is too small amid the threat of rising poverty.”

Finance Minister Sri Mulyani Indrawati announced on Wednesday she expected the budget deficit to swell to 6.34 percent of gross domestic product (GDP), an increase from earlier estimates of 6.27 percent in May and 5.01 percent at the end of March.

The state budget to fight COVID-19 is now Rp 677.2 trillion (US$48 billion), higher than the Rp 641.17 trillion allocation in May and the Rp 405.1 trillion initial allocation.

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