Bank DBS Indonesia’s report “Regional Equity Outlook 2021: Taming Covid-19”, published in December 2020, predicts that only 38 percent of the global population will get vaccines by the end of 2021. By 2022, the global population is predicted to reach herd immunity after about 70 percent of the population gets vaccinated. Meanwhile, in Indonesia, President Joko Widodo received the first dose of the Covid-19 Sinovac vaccine on Wednesday (13/01/2021), marking the kick-off of a mass vaccination drive.
“Given the size of the world’s population and the limited production capacity, the challenges of vaccine logistics, distribution and administration, the vaccination process will take time,” said DBS analyst Kee Yan Yeo. Therefore, as stated by Bank Indonesia, vaccination alone is not enough. Compliance with strict health protocols (keeping a distance from others, washing your hands, and wearing a mask) is still necessary despite the vaccination drive as a prerequisite for economic recovery.
In the initial stage, vaccines will not be given free of charge. Approximately 75 million Indonesians are expected to pay for the Covid-19 vaccines. This is due to the limited government budget that can only provide free vaccines for 104 million people who receive BPJS Health subsidy. “After receiving input from the public and reconsidering, recalculating the state’s finances, I herewith announce that the Covid-19 vaccines will be available free of charge for the general public,” President Joko Widodo said in a speech at Merdeka Palace, Jakarta on Wednesday (12/16/2020), which was broadcast on the official YouTube account of the Presidential Secretariat.
On the same occasion, Jokowi also said that the first vaccines will be given to health workers, health care assistants, support workers in health facilities, members of the Indonesian Military and Police (TNI/Polri), law enforcement and other public service officers. The government also expects at least 70 percent of Indonesia’s population or about 182 million people will get vaccines. According to the President, the free Covid-19 vaccination programme is key to this year’s economic recovery.
The pandemic, which has been raging for nearly a year, has upended the global economy, affecting both developed and developing countries. In its report entitled “World Economic Outlook 2020: A Long and Difficult Ascent”, the International Monetary Fund (IMF) predicts that the global economy will plunge to minus 4.4 percent this year. The Organisation for Economic Cooperation and Development (OECD) made a quite similar forecast: minus 4.2 percent.
How the world and Indonesia deal with the pandemic will be key to economic recovery in 2021. Vaccines are the key weapon against Covid-19. There are 61 vaccine candidates currently in clinical trials. Several vaccines, including those produced by Moderna and Pfizer-BioNTech, have obtained Emergency Use Authorisation (EUA) in a number of countries. In Indonesia, the Sinovac vaccine has received EUA from the BPOM and is reported to have an efficacy rate of 65.3 percent.
Vaccine production and distribution process will be the next big challenge. Production capacity and the ability to distribute vaccines will determine the length of time required to achieve herd immunity through vaccination. A number of institutions said that the speed and ability of each country in handling the Covid-19 vaccination will vary.
DBS Bank economists predict that Indonesia’s economic growth will turn positive, with a growth rate of 4 percent next year. “To improve the national economy, Indonesia is less dependent on the tourism and transportation sectors, but reviving the domestic economy is crucial,” said Kee Yan Yeo.
With the kick-off of the vaccination drive, it is hoped that it is no longer necessary for the Indonesian government to reintroduce the strict social restrictions that have caused many companies to collapse during the pandemic. Apart from vaccination, economic stimulus from the Government and the Job Creation (Cipta Kerja) Law are expected to be additional “ammunition” for Indonesia’s economic recovery.
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