This Week's Headlines (18 -24 Jun 2022)

24 Jun 2022


  Indonesian president to visit Kyiv,
 Moscow this month: Minister 

  Indonesian President and G20 chair Joko Widodo will visit the leaders of Ukraine and Russia
  this month to discuss the economic and humanitarian fallout of Moscow's invasion, his foreign
  minister said on Wednesday. 

  The summit of the Group of 20 major economies -- which will be held on the Indonesian island of
  Bali in November -- has been shrouded in controversy thanks to Jakarta's decision to invite
  Russia despite alleged war crimes in Ukraine. 


  Indonesia holds the rotating presidency of the G20 this year, and has come under pressure
  from some Western countries, led by the United States, to exclude Russia from the meeting. 


  Foreign Minister Retno Marsudi said Widodo would visit Kyiv and Moscow after representing
  Indonesia as a guest country at the G7 summit in Germany on June 26 and 27, becoming the
  first Asian leader to travel to both countries since fighting began. 


  "In the visit to Kyiv and Moscow, the president will meet with President (Volodymyr) Zelensky
  and President (Vladimir) Putin," Marsudi said in an online briefing on Wednesday. 


  Marsudi did not provide dates for Widodo's meetings but his security minister, Mahfud MD,
  was quoted by state media on Monday as saying the Indonesian leader would meet Putin
  on June 30. 


  A report by Russian state news agency Tass earlier this month, citing a government source,
  announced the same date. 


  The foreign minister said Jokowi would seek to tackle the global food crisis exacerbated by
  the war in Ukraine, which choked global markets and caused domestic shortages of
  cooking oil and surging prices for Indonesians. 


  "The president's visit highlights (Indonesia's) concerns on humanitarian issues, trying to
  contribute to resolving the food crisis caused by the war, as well as its impacts," she said. 


  The knock-on effects for Indonesia -- the world's biggest producer of palm oil -- pushed
  the government to impose a now-lifted export ban on the commodity in April. 


  Indonesia, like most major emerging economies, has tried to maintain a neutral position
  on the war and has called for a peaceful resolution to the months-long conflict. 


  Widodo refused to send weapons to Ukraine in response to a request from Zelensky,
  instead offering humanitarian aid. 


  Indonesia has invited Ukraine as a guest member of the G20 summit. Zelensky said he
  would attend at least in a virtual capacity, depending on the status of the war. 


  Source: Agence France-Presse




  Government faces calls for return to stricter
  pandemic curbs 


  The government faces mounting calls by health experts and medical professionals
  to reimpose stricter curbs as Indonesia continues to see a worrying increase in
  new COVID-19 infections fueled by the spread of the highly contagious
  Omicron subvariants BA.4 and BA.5.  


  The country has recorded more than 1,000 new daily COVID-19 cases for the past eight
  consecutive days, and on Wednesday, authorities recorded almost 2,000 new cases, the
  highest since early April. 


  The weekly caseload has increased by more than 100 percent in the past week from 3,688
  cases to 7,587, while active cases nearly doubled during the same period, from 4,734
  cases to 8,594. The number of fatalities has risen as well, from 38 deaths
  last week to 44 deaths this week.  


  The Indonesian Doctors Association (IDI) has called on the government to review its
  eased mask-wearing mandate to curb the spread of the virus.  


  “Considering the current circumstances, we advise the public to mask up both indoors
  and outdoors,” Erlina Burhan, a member of IDI’s central board, said on Tuesday
  as quoted by  


  Just last month, President Joko “Jokowi” Widodo announced that mask-wearing was no
  longer required outdoors, though he still recommended masks for crowded outdoor
  spaces, as well as for the elderly and those with underlying health conditions
  and acute coughing.  


  Erlina also called on the government to reimpose mandatory polymerase chain reaction
  (PCR) tests for domestic travel, which were lifted last month as well.  


  Separately, Tjandra Yoga Aditama, a professor of pulmonology and respiratory medicine
  at the University of Indonesia, said that aside from a reinstated mask mandate,
  the government should also increase its testing, tracking and genomic
  sequencing surveillance.  


  “The emergence of the BA.4 and BA.5 subvariants proves that projections for the
  COVID-19 outbreak are still largely unpredictable. Low testing and poor whole-genome
  sequencing will only make it difficult for us to monitor further developments,” Tjandra
  said in a statement on Thursday. 


  “We need strong epidemic surveillance as one of the key components of controlling the
  outbreak. We should find out when, where and how all new COVID-19 patients
  contracted the disease, if possible."  


  The rate of COVID-19 testing in Indonesia has dropped significantly following the
  peak of the Omicron-fueled third wave in mid-February. According to the national
  COVID-19 task force, last week the country conducted around 1.2 tests per 1,000
  people. The figure is still higher than the minimum testing rate of one test per 1,000
  population per week, as per World Health Organization recommendations, but fell
  drastically compared to February, when the government was able to test around eight
  people per 1,000 per week.  


  Both Erlina and Tjandra also urged the government to speed up COVID-19 primary vaccination
  and booster shots to improve public immunity against the coronavirus.  


  Indonesia’s vaccination coverage is the second-lowest in Southeast Asia, slightly above
  Myanmar, according to official statistics collated on the ASEAN website as of June 14.  


  As of Thursday, Indonesia has administered 369 million primary COVID-19 vaccine
  doses to 62 percent of its population. It is aiming to inoculate 70 percent of the
  country’s population by the end of the month. So far, only about 23 percent of
  the targeted 208 million people have received booster shots.  


  National COVID-19 taskforce spokesperson Wiku Adisasmito has promised to increase
  Indonesia’s testing capacity in the coming weeks.  


  "Our testing rate has relatively increased in the past three weeks, but we'll continue to improve
  it. We also urged those who experience flu-like symptoms or those who have been in close
  contact with COVID-19 patients to get themselves tested,” he said on Tuesday.  


  To help accelerate the third-jab rollout, the task force has also issued a circular mandating
  booster shots for people over 18 attending crowd-pulling events of more than 1,000
  visitors, while all children between the age of 6 and 17 at such events must
  be fully vaccinated.  


  The new provision also stipulates that attendees of events involving ministerial-level
  high-ranking officials must present negative PCR test results taken two days prior.  


  Large-scale events have largely returned to the country after the government recently
  eased COVID-19 restrictions to their lowest level.  


  Earlier this month, for example, the Jakarta administration brought back the annual
  Jakarta Fair exhibition in Kemayoran, Central Jakarta, which boasts daily
  attendance rates of roughly 100,000 people.  


  Indonesia announced its first confirmed cases of the BA.4 and BA.5 subvariants
  on June 8. Three foreigners and one Indonesian attending an international event
  in Bali had been exposed to the virus. 


  Preliminary data suggests that the subvariants are more contagious than the original Omicron
  strain and that they have contributed to a surge of infections in several countries,
  including South Africa, Chile and Portugal.  


  Studies have found that the new subvariants can circumvent immunity from prior
  infection and vaccination, although there is still no evidence to suggest they
  cause more severe symptoms. Health Minister Budi Gunadi Sadikin previously
  predicted that a BA.4- and BA.5-fueled wave of infections would peak in the second
  or third week of July, with daily new cases likely reaching up to 20,000 per day.  


  However, Budi assured the public that the wave would likely be less severe compared to
  the Omicron wave earlier this year or the Delta variant-fueled second wave last year.
  Based on data from South Africa, the number of cases and hospitalizations during
  the peak of the BA.4 and BA.5 wave was only one-third of that recorded during
  the Delta and Omicron waves, while fatalities amounted to a 10th of the cases
  from previous waves. 
  Source: The Jakarta Post




  Outlier Indonesia holds rate as it sees
  inflation manageable 


  Indonesia’s central bank held its benchmark interest rate at a record low again, saying
  inflation remains manageable as it cemented its place as an outlier on monetary policy. 


  Bank Indonesia left the seven-day reverse repurchase rate unchanged at 3.5% on Thursday,
  as predicted by 24 of 33 economists surveyed by Bloomberg. The rest expected policy
  makers to kick off the monetary tightening cycle with a 25 basis-point hike. 


  The move sets Indonesia apart from most central banks, which have begun raising borrowing
  costs to counter surging inflation. While domestic price gains are set to breach the central
  bank’s 2%-4% target this year, it has maintained that there’s no rush to tighten as state
  subsidies and higher reserve requirements are helping manage price pressures. 


  Governor Perry Warjiyo on Thursday said inflation will continue to rise, but should remain
  under control. The monetary authority sees consumer prices returning to target next year. 


  The rupiah’s reaction was muted, and the currency traded around 0.2% stronger against the
  dollar after the widely expected decision, while the Jakarta Composite
  Index was little changed. 


  It is “not a surprise given recent continued pronouncements that inflation has been more
  supply-driven rather than demand-led,” said Wellian Wiranto, an economist at
  Oversea-Chinese Banking Corp. “Although the governor’s comments have focused
  a tad more on inflation risks than before, its stated point that inflation should remain
  manageable means that it is not ready to hike policy rate in the near term.” 


  Still, the extended pause leaves Indonesia’s currency vulnerable in the face of
  accelerated rate hikes by the Federal Reserve and European Central Bank. The rupiah
  has weakened amid the dollar’s strength, with the local currency losing
  about 4% so far this year. 


  The central bank said it will support the currency in line with fundamentals, and
  that the pressure on the rupiah was in line with regional currencies. It sees the
  economy expanding 4.5%-5.3% in the current year, even as it flagged risks
  to global growth. 


  Here are some key points from Warjiyo’s briefing: 

  • Fed fund rate seen rising to 3.5% by the end of the year and 4% in 2023 

  • Oil price seen averaging $103/barrel this year amid continuing geopolitical pressure 


  Source: Bloomberg