We Will Monitor Economic Impact of Coronavirus Outbreak: Finance Minister

Minister of Finance answers reporters’ questions after meeting with President Jokowi, at the Presidential Palace Courtyard, Jakarta, Monday (2/3). (Photo by: Ibrahim/PR).

The Government is monitoring economic impacts of coronavirus outbreak since it will affect the country’s demand, consumption, investment, and also in terms of production, Minister of Finance Sri Mulyani said.

“Wuhan, Hubei is one of the sources of manufacturing industry production that is large enough for other supplies so we anticipate that disruption occurred in the city will affect both the demand and supply sides,” Sri Mulyani said after meeting with President Joko “Jokowi” Widodo, in the Presidential Palace Courtyard, Jakarta, Monday (2/3).

The Government, according to the Minister, has continued to coordinate from the side of the financial sector, as like last week turmoil in all capital markets, financial markets, and state securities occurred.

“We are coordinating with Bank Indonesia, with the Financial Services Authority (OJK), with the Deposit Insurance Corporation (LPS) to examine whether the dynamics are still in the same range as other countries,” the Minister said, adding that the Government would not overreact, but it observes the situation in great detail thoroughly, and prepares all the measures so market movements would not be misused by anyone to take advantage.

We also see that market mechanism will be maintained so that stability or the adjustment mechanism will run as smoothly as possible, Sri Mulyani said.

The same thing, according to the Minister, is also applied by the OJK and Bank Indonesia, be it in the stock market, securities market, or exchange rate, each of which had an intervention instrument.

“The aim is for the market to react relatively more rationally to the possible impact of the global coronavirus outbreak,” Sri Mulyani said.

If we look at the economic projections as in the People’s Republic of China, the Minister continued, the production of manufacturing industry fell very deep to the level of 35 and it will certainly be anticipated for its effect on the production sector. “Now we see in the production sector of raw materials, whether it is in terms of plastics, textiles, footwear, then steel, chemical, all of which are very big influences from China. Because they are almost 20-30% even for certain industries 50% of the raw material comes from China,” the Minister said.

If China experiences a delay in production due to the coronavirus outbreak, it will definitely affect Indonesia, Sri Mulyani added.

“So, we will also see what measures we can take to support the acceleration of imports of raw materials which may now be in a rather thin position in various manufacturing industries,” the Minister said.

For this reason, President Joko “Jokowi” Widodo has called on his cabinet ministers to facilitate the import of raw materials, for example, a reputable importer.

“As many as 40% of our imports should be released to procure raw materials so that they are not obstructed by licensing and others. The main thing is they import it so that the production can still run well,” the Minister said.

The entrepreneurs, continued the Minister, called for restitution to be accelerated and the Government would continue to make improvements and accelerate the restitution so that the points regarding the raw materials could be immediately carried out.

“Minister of Industry will meet with us later as well as Minister of Trade. We will see a map of the manufacturing industry that is most affected,” the Minister said, adding that if it goes to our State Budget as previously stated, the effect would be on economic growth, oil prices, and current exchange rate.

We focus on our State Budget as an instrument to maintain the stability of financial sector and the resilience of economic sector, so our financial sector can be maintained, the Minister said.

The Government, according to the Minister, is not alone, and therefore continues to coordinate and synergize with Bank Indonesia, the OJK, and from the real sector with Coordinating Minister for Economic Affairs.

Regarding the budget, Sri Mulyani said that Minister of Health Terawan Agus Putranto had taken measures to first identify, detect, then prevent the spread of the coronavirus.

“We will hear from Minister of Health regarding the budget needed,” the Minister said, while reiterating that the Government will continue to see the development of the coronavirus outbreak on the country’s economic impact. (TGH/EN)

Translator: Muhardi

Reviewed by: Mia Medyana Bonaedi