Published On: Ming, Agu 30th, 2020

Jokowi’s economic reboot falters as Covid-19 led to plants shutting

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Manufacturing contributes nearly 20 per cent to Indonesia’s gross domestic product.PHOTO: REUTERS

Indonesia’s efforts to revive the economy took a stumble as coronavirus outbreaks forced factories in one of its biggest manufacturing hubs to shut.

South Korea’s LG Electronics, and Japan’s Suzuki Motor and NOK Corp were told to stop operating their facilities in Cikarang, West Java, after more than 300 workers in the industrial area tested positive for the new coronavirus.

President Joko Widodo has sought to turn the pandemic into an opportunity to set Indonesia on a path towards becoming a developed country.

He pledged to ramp up state spending after the economy fell into its first contraction in more than 20 years.

Meanwhile, the new clusters and the rising number of infections may keep offices and factories shut while consumers are opting to stay home.

“The prolonged local outbreak remains a major risk to the recovery, especially because economic centres are still hot spots,” Nomura Singapore economists Euben Paracuelles and Rangga Cipta wrote in a report.

“This will keep households and businesses cautious even if no lockdown is reinstated.”

Indonesia reported its biggest rise in new coronavirus infections for a third successive day yesterday, the health ministry website showed. Yesterday’s 3,308 cases take Indonesia’s tally of infections to 169,195, while 92 new deaths carried its toll to 7,261.

The surge in new cases could keep investors and Indonesians with higher spending power wary, said Mr David Sumual, chief economist at PT Bank Central Asia.

Spending by such consumers would otherwise bring a significant multiplier effect to the economy as they make bigger purchases, he added.

Manufacturing contributes nearly 20 per cent to gross domestic product, while household consumption accounts for about 60 per cent. (the stais times)

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