Covid-19; Indonesia Anticipate Mass Layoff, Issues Recovery Bonds

TEMPO.CO, Jakarta - The Indonesian government will issue recovery bonds in rupiah. The act is expected to reduce layoffs and maintain the cash flows of businesses amid the new coronavirus disease or Covid-19 pandemic.

"We are reviewing this," Susiwijono, secretary to the Coordinating Minister of Economic Affairs, said in an online press conference with the National Disaster Mitigation Agency in Jakarta, March 26. 

The scheme is being prepared as bailout amid job terminations in several industries as an impact of the coronavirus spread.

Pauline Suharno, secretary-general of the Indonesian Travel Agents Association, said that in the tourism sector people are getting fired. She hoped that the government can immediately provide additional incentives.

Susiwijono said the Recovery Bond can be bought by private companies or Bank Indonesia (BI). The proceeds will be distributed through a special loan with low interest, "to revive the business world," he said.  

There are terms and requirements applied. Companies seeking to obtain the special loan must not fire their employees and keep the current salaries for at least 90 percent of the workers. 

Prior to launching the Recovery Bond, Susiwijono said there will be some regulation changes in the form of a government regulation in lieu of the Law, also known as Perpu. This is necessary as the existing law only allows BI to buy bonds from secondary markets. 

The Recovery Bond is one of Indonesia's two strategies to minimize job termination due to the coronavirus pandemic. For workers, the government will provide Rp5mn cash assistance via Jamsostek for formal workers and the Pre-work Card for informal workers as well as the MSME sector.

FAJAR PEBRIANTO