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Impact of Corona Virus on Indonesia's Trade And Research Center ECONOMIC AND PUBLIC POLICY DIVISION Expertise Agency of DPR RI Gd. Nusantara I Lt. 2 Jl. Jend. Gatot Subroto Jakarta Pusat - 10270 c 5715409 d 5715245 m [email protected] A BRIEF STUDY OF ACTUAL AND STRATEGIC ISSUES Vol.XII., No. 4/II/Puslit/February/2020 IMPACT OF CORONA VIRUS ON INDONESIA’S TRADE AND TOURISM SECTOR 19 Eka Budiyanti Abstract Nowadays the world is shocked by the spread of the corona virus which started in China. As a result of this virus, many residents of China and several other countries have died. The Chinese economy has suffered because of the many companies have to close. The fact that China is the second largest economy in the world and Indonesia's main trading partner, the disruption of the Chinese economy will affect the world economy including Indonesia. This paper studies the impact of the corona virus on the Indonesian economy and the efforts needed to overcome it. The most dominant impact occurs on trade and tourism. During January 2020, there was a decline in exports and imports to and from China. The number of Chinese tourists also declined dramatically. Efforts to be made to overcome this among others, are diversification of export shares to other countries; increase domestic production and consumption; and increase domestic tourism and tourists outside China. The House of Representative needs to encourage the government to anticipate it by maintaining the stability of the domestic economy. Introduction The economy in China Since the beginning of 2020, was shaken at the beginning of the world has been shocked by 2020, due to their economy has the existing of corona virus which been supported by the small and transmitted from China. The corona medium business sector. There virus caused panic in China and are around 30 million small and caused thousands of victims in medium businesses contribute more China. Other effects occurred that than 60% of China's Gross Domestic many small, medium and large Product (GDP). Furthermore, the Shanghai stock exchange also PUSLIT BKD companies are eventually forced to close their businesses temporarily. briefly declined to 9%, which is the Not only companies are closed, worst since August 2015 (merdeka. thousands of food / beverage com., February 18, 2020). businesses are also forced to close. By observing the current condition of the economy in China, (katadata.co.id, February 7, 2020). many analysts predict that China's Restrictions on the entry and exit economic growth could decline to of goods from and / or to China 5% in 2020. Most affected industries as well as several businesses or are manufacturing and tourism. factories which have been closed As we know, Wuhan City, where due to the corona virus pandemic the corona virus pandemic began, have disrupted the economy in is the center of the automotive China. Considering China is a industry in China. The contribution country whose economy is very of Wuhan City to the economy in influential in the world, it will China reached 1.6% (katadata.co.id, certainly impact the economies of February 7, 2020). other countries which become its The World Health trading partners, one of which is Organization has declared a global Indonesia. emergency status for the corona China is the main trading 20 virus pandemic. The world is partner of Indonesia and the origin alerted of this virus pandemic. Not country for import and Indonesia's only alerted of the spread of the largest imports and non-oil and gas disease, but also the impact which export destinations. Total exports may occur on the world economy. to China in 2019 reached USD According to IMF Managing 25.85 billion, while imports reached Director, Kristalina Georgieva, due USD 44.58 billion (katadata.co.id, to the corona virus pandemic, it is February 7, 2020). estimated that in the short period However, based on data there will be a slowdown in the released by Central Bureau of global economy (katadata.co.id, Statistics, non-oil and gas exports in February 5, 2020). The purpose of January 2020 decreased compared this paper is to observe the impact to December 2019. This decline of the corona virus on the economy occurred in most of the main in Indonesia, especially in the destination countries, one of which trade and tourism sector, and the was China, which reached USD government's efforts to anticipate or 211.9 million or decreased by 9.15%. overcome them. While the value of non-oil and gas imports in January 2020 also Impact of Corona Virus declined. The total value of non- Pandemic on the Trade Sector oil and gas imports during January According to the Coordinating 2020 was USD 9,670 million or Minister for Economic Affairs, decreased by USD 313.5 million Airlangga Hartarto, the rapid of or declined 3.14% compared to Indonesia's economic growth can December 2019. This was caused by be influenced by China's economic the decline in the value of non-oil growth. If the economy in China and gas imports from several major experiences delay of 1-2% it countries, one of which was China will impact on the decline of the from USD 4.07 billion to USD 3.94 economy in Indonesia by 0.1 to billion or down 3.08%. 0.3% on the Indonesian economy The corona virus pandemic 21 in China also have an impact on stopped flights to and from China Indonesia's agricultural trade. So far, as of February 5, 2020 which of exports of coconut palm oil is one course will affect the Indonesian of the biggest export contributors tourism sector. Many travel and to China. But in February 2020, the flight companies have suffered realization only reached 84,000 tons. losses due to flight stops to and This number is far compared to the from China. realization in the previous month, Since the enactment, the which is January 2020 amounting to number of Chinese tourists visits 487,000 tons and in the same period to Bali has decreased. In 2019, in 2019 reached 371,000 tons (finance. from 6.3 million foreign tourists, detik.com, 17 February 2020). 1,185,519 tourists or 18.2% came In the sector of food imports, from China. But in January to mid- Indonesia, which has a dependency February 2020 there were 22,000 of garlic from China, can only import Chinese tourists canceled their trips garlic from China by 23,000 tons in to Bali (tribunnews.com, February February 2020. This number also 14, 2020). This greatly affects the decline dramatically compared to economy of the Bali Province. imports the previous year which According to tourism reached 583,000 tons (finance.detik. observer, Herry Angligan, Bali com, February 17, 2020). In February tourism is at risk because of its 2020, the biggest decline in imports dependence on Chinese tourists. from China was also seen in fruit There were two water attractions commodities. The import of fruit companies in Bali were closed commodities declined significantly because 100% of the guests were by 78.88% from USD 160.4 million to from China. Non-Chinese tourists USD 33.9 million (katadata.co.id, 17 were also reduced because many February 2020). other countries' tourists delay their visit to Bali because of the closeness Impact of Corona Virus between China and Indonesia. So Pandemic on Tourism Sector the conclusion is, generally the Throughout 2019, the number decline of tourists in Bali reached of foreign tourist visits in Indonesia 50% (voaindonesia.com, February reached 16.11 million, an increase 12, 2020). of 1.88% compared to the number of tourist visits in the same period Efforts to Overcome in 2018, which amounting to 15.81 As a China's exports share, million. The most tourist visits in Indonesia was also affected which Indonesia during 2019 came from then affects Indonesia's trade Malaysia as much as 2.98 million balance. Therefore, the Government (18.51%) which was then followed of Indonesia needs to diversify the by China 2.07 million (12.86%) export markets of major destination (cnbcindonesia.com, February 3, 2020). countries, such as countries in Since the spread of the corona Africa or South America (Kompas, virus, besides imposing a policy of February 19, 2020). Furthermore, restricting imports of live animals the government also needs to from China, the Government has also optimize the use of domestic production which can meet demand quite attractive to other countries. in the domestic market (money. This occurrence can be used as an kompas.com, February 18, 2020). opportunity for Indonesia to attract It is time for Indonesia to reduce tourists visiting Indonesia. So the its dependence on imported goods government must start aggressively from China. promoting other tourist areas in For the trade of agricultural Indonesia and improve facilities products, the Ministry of and services in tourist areas. The Agriculture has tried to make government must also provide policy to anticipate the decline in incentives to travel and aviation agricultural exports to China. One companies as well as the tourism of the efforts made is to coordinate industry which is experiencing with exporters to utilize alternative losses due to flight terminations export markets (finance.detik.com, to and from China. But giving February 17, 2020). incentives is not the only solution 22 Furthermore, to anticipate to overcome this. The government the limited availability and price also needs to improve the quality increasing of garlic, the Ministry competitiveness and attractiveness of Agriculture has also tried to of domestic tourism (Kompas, find other alternative countries February 20, 2020). to import garlic and encourage The Minister of Tourism, domestic garlic production Wishnutama, stated that this (finance.detik.com, February 17, condition is a challenge and at the 2020).
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