Covid-19 impact and responses: Indonesia

Updated on: 19 May, 2020

What is the current situation?

General information

As of 19 April 2020, there were 18,010 confirmed cases of Covid-19, of which 1,191 people have died and 4,324 people have recovered in Indonesia.

On 28 January, the Indonesia National Board for Disaster Management (BNPB) declared a state of emergency for one month. On 29 February 2020, BPNP extended the state of emergency  until 29 May 2020. On 13 April, the President declared the Corona outbreak as a national disaster.

(Source: Presidential Decision Number 12/2020 on the Decision of Corona Virus Outbreak as National Non-Natural Disaster, 13 April 2020)

Furthermore, the President issued several Presidential decrees and decisions to refocus governmental activities, such as the reallocation of budget and the procurement of goods and services due to the emergency health situation. This allows the government to take extraordinary measures, such as providing a mandate and flexibility to the financial authority to do anything needed to protect the stability of the economy.

(Source: Government Regulation in Lieu of Acts Number 1/2020 on the State Budget and Financial System Stability to Handle Corona virus pandemic and/or to Handle the Dangerous Threat to the National Economy and/or Financial System Stability)

An ILO survey shows that 2 out of 3 companies in Indonesia have stopped operations. The Indonesia Chamber of Commerce stated that the dismissals could reach 15 million people across all sectors. The Minister of Manpower stated that 3 million workers have been sent home and dismissed. About 1.7 million of the data has been cleaned or verified, while the remaining 1.7 million is still in the process of being verified. Among that 1.7 million, 552,066 workers (32.04%) are women, and 1,170,892 (67.96%) are men. The number of dismissed workers is 377,386 (as of 24 April, 2020). The provinces experiencing the highest impact are DKI Jakarta (318,223 workers), West Java (293,799), Central Java (228,985), Riau (146,482) and Jawa Timur (139,130). (Source: Presentation of Minister of Manpower, Ida Fauziah, in Gender Network Platform Zoom Meeting, 8 May 2020, facilitated by Fair Wear)

The data from Indonesia Textile Association said about 2.1 million workers in the garment and shoes sectors have been impacted. Data from the Association is supported by the Pre-Working Card registration data, which has reached 7.65 million people for all sectors.

As of writing, Indonesia has not implemented a country-wide lockdown. Limited domestic flights have been operating since the second week of May 2020, with strict conditions. The passengers should provide result of rapid test or polymerase chain reaction (PCR) or a doctor’s note, as well as assignment letter from their organisation. More domestic and international flights will be in operation by 1 June, 2020. Other modes of transportation such as ferry and intercity train also have resumed operations with safety measures and limited schedule. Since the third week of April, moslems in Indonesia having been celebrating the fasting month, where people tend to go outside to shop for food and visit friends or family. Meanwhile, the Eid Mubarak will be celebrated next week. Experts have said that the local restrictions are not effective anymore.

The Governors of most Provinces in Java and Bali issued travel restrictions in the third week of March, such as the closing of schools and visitors are no longer allowed in factories while work continues. Governmental offices in Jakarta were closed until until 19 April 2020. On 31 March 2020, the government issued a regulation that allows local government to propose the restriction of people and goods movement where Covid-19 cases are high. As of 1 April 2020, the access to Jakarta, Bogor, Tangerang and Bekasi has been restricted. The Ministry of Transportation issued a restriction that banned transport per the train, MRT, commuter line and highway. After the Ministry of Health issued the ‘High Scale Social Restriction’ on 7 April 2020, the Jakarta Governor prohibited gatherings of more than 5 people in public spaces. The restriction in Jakarta is in place until 22 May.

(Sources: Ministry Decision Number HK.01.07/Menkes/239/2020 on ‘the Decision of High Scale Social Restriction to Expedite the Corona Virus Handling’; PSBB Bogor, Bekasi, Depok Resmi Dimulai Rabu, 12 April 2020; Regulation Number 33/2020 on ‘The Implementation of High Scale Social Restriction in Corona Virus Handling in Special Region of Jakarta Capital City’; Governor’s Instruction of Jakarta Number 6/2020 on the Temporary Closure for the Office Operation to Prevent the Covid-19 Transmission, issued on 20 March 2020)

The National Police Department prohibited gatherings on 19 March 2020, including seminars, exhibitions, sport events and strikes. The instruction was followed by the temporary closure of the tourist industry, including cinemas, spas and other establishments. The Police Department also prohibited people to hoard products required for basic needs and not to spread fake news related to Covid-19. Although hoarding is limited, sanitary products that are important in preventing Covid-19 are difficult to come by. If it’s available, the store will limit the maximum quantity bought and sell it at a higher price.

(Sources: Circular Letter from Tourist and Creative Economy Office of Jakarta on the the Temporary Closure for the Tourist Industry to Prevent the Covid-19 Transmission, issued on 20 March 2020 and Information from Head of National Police Department Number Mak/2/III/2020 on the Compliance towards the Government Policies in Handling the Transmission of Covid-19)

The Indonesian healthcare system is precarious. Tests are available in hospitals. However, non-subsidised Covid-19 test packages are expensive and cost EUR 140 per person, which is not affordable for garment workers.

The situation with factory production

More than 2.5 million workers are employed in the Indonesian garment industry, most of which are women. Many orders have been cancelled due to the lockdowns of importing countries and the closure of retail outlets. (Source: Interview with Indonesia Textile Association, 27 March 2020) The Association also reported that 80% or 2.1 million of garment and shoes workers have been sent home. The utilisation of the factory has been declining to below 20%. The employers prefer to close the factories due to running out of cash flow.

Trade union FSP TSK SPSI, which focuses on textile, garment and footwear, revealed that the garment sector (51%) is the sector that has seen the highest impact from Covid-19, followed by textiles (31%) and footwear (10%). The most impact is from factories sending home workers (41%), followed by factories still operating (26%) and the 18% that are closed. Most of dismissed workers are women (73%) while 27% are men. Most of impacted workers (74%) have not received any social support from the government, 11% have received some social support and 15% did not know if that had or hadn’t. Regarding wages, 71% workers have received partial wages while 20% are unclear. Only 9% claimed to have received full salary payment.

(Source: Presentation of the The Chairperson of Garment Trade Union TSK SPSI, Roy Jinto Ferianto, in Gender Network Platform Zoom Meeting, 8 May 2020, facilitated by Fair Wear Foundation)

The factories are obliged to provide festive allowance at least 7 days before Eid Mubarak. However, due to a lack of cash, a lot of factories have postponed the payment or asked to pay in certain terms. The government and trade unions believe that the festivity bonus should be paid by employers. If employers have difficulties paying the bonus, employers and trade union or worker representatives should enter dialogue on how to pay the bonus. For example, the employees can be paid in two instalments, or it can be postponed altogether.

(Source: See the Minutes of Meeting of National Tripartite Assembly, 8 April 2020)

What are the government policies to support local businesses?

As an economic stimulus, the government prepared four types of tax relief for employers for the period of April – September 2020 with the value of IDR 22,97 trillion or EUR 12.93 billion. The four tax reliefs are as follows :

  • Salaries with a maximum of IDR 200 million of workers in manufacturing will not be taxed (PPh 21);
  • No import taxes for the 19 manufacturing industries (PPh 22) and zero corporate tax (PPh 25);
  • Value added tax restitution for exporting (PPN) and non-exporting companies (PPh 25);
  • Postponement of tax payment.

The Financial Service Authority has issued a regulation to support small-medium enterprises which have loans of less than IDR 10 billion. The creditor can receive credit restructuring including a reduced interest rate, longer credit term, less penalty and credit conversion. The local government of Jakarta is providing tax incentives and is reducing state tax. It will provide social support to workers impacted by Covid-19.

(Source: Regulation Number 33/2020 on ‘The Implementation of High Scale Social Restriction in Corona Virus Handling in Special Region of Jakarta Capital City’ 9 April 2020.)

Electricity for the 24 million households with 450 VA will be free. Seven million households with 900 VA will receive a 50% discount. This policy aims to support the small and medium enterprises that are hit by the coronavirus for the period April-June 2020.

What are the government policies and regulations to protect employees – the workers?

The Ministry of Manpower is responsible for the well-being of workers. No special task force has been formed, but responsibilities are distributed to the directorates to handle the impact of Covid-19. The Labour Inspection shall continue its work remotely, including technical assistance, socialisation, training, consultation and discussion with employers and trade unions. Reports and warning letters are encouraged to be sent online. The labour inspector may visit the workplace only for important tasks including checking the impact of Covid-19, subject to a safety protocol that the inspector must follow.

(Source: letter Number 5/228/AS.03.00/IV/2020 from the Directorate General (DG) of Labour Inspection and Occupation Health and Safety Creation has sent a letter to the Head of Provincial Manpower Office in regard to ‘The Implementation of Labour Inspection in Covid-19 Pandemic’ on 8 April 2020)

The government has waived the payment of BPJS for the next 3 months. As a way to pay BPJS, employers contribute about 10% of the worker’s basic salary plus fixed allowance. While the workers shall contribute 4%. Therefore, in total, 14% of worker’s basic salary plus fixed allowance shall be paid to BPJS.

The Ministry of Manpower has issued two Circular Letters related to the pandemic, namely: 

  1. Circular No. M/3/HK.04/III/2020 on Worker/Labor Protection and Business Continuity in the Context of Prevention and Control of COVID-19. 
  2. Circular No. M/67/HI.00.0-1/V/2020 on the Religious Holidays Allowance (THR) for 2020 During the COVID-19 Pandemic. 

The Circular on THR had been discussed with the National Tripartite. The Circular stipulates that governors should ensure that companies located in their respective provinces pay their employees their legally due annual religious holiday allowance (THR). The companies that are unable to do so due to economic disruption, caused by the Covid-19 pandemic, may do so by paying the bonus in instalments or delay the THR payment to a later date agreed upon between the employees and the employer as an alternative solution. The complaint post will be located at the provincial level. 

However, the Labor Union has spoken out against a circular issued by the Ministry of Manpower that would purportedly allow employers to cut religious holiday allowance (THR) and postpone the distribution of THR, amid the turbulence triggered by the pandemic. They argue that the circular letter violates Law No. 13/2003, Government Regulation No.78/2015 concerning Wages and Minister Regulation No.6/2016 concerning THR, which stipulates that every employer has an obligation to provide a religious holiday bonus to employees who have worked at the company for more than one year without any prior negotiation. The union also said the new circular does not need to be issued because the Circular Number 5/1998 is still valid.

The Government also allocated a budget of IDR 20 trillion for a ‘Pre-Working Card’ that gives a dismissed worker training and cash. The priority beneficiaries are informal workers and daily workers who are working in tourism and transportation industry. Workers who have the BPJS card will receive IDR 1 million per month for a maximum of 4 months. For those without a BPJS card, they will get IDR 600,000 per month for a maximum of 4 months. In addition to that, the workers will receive IDR 150,000 in cash for participating in the survey, plus IDR 1 million as an in-kind cost for completing online training. For comparison, the lowest minimum wage in Java and Bali is IDR 1,705,000 per month.

However, trade unions say that the Pre-Working Card is difficult to access by the workers who do not have IT capacity and an Android smartphone. While the workers can register online, the server often freezes, so many workers have failed to register. Trade unions believe that the Pre-Working Card should be reviewed since the policy was made before pandemic. Dismissed workers are not people who need training since they already have years of experience. Regarding the training materials, trade unions said that it is not fit for the current needs.  The need of workers is cash to survive.

(Source: Discussion result of Gender Network Platform Zoom meeting, 8 May 2020, organised by Fair Wear Foundation.)

The government has increased the budget for recipients of the ‘Cheap Basic Needs’ cards from IDR 150.000 to IDR 200.000 per family. The government also added 25% extra to the budget for supporting disadvantaged families through Family Hopes Program (PKH).

What are local stakeholders doing to lobby their government?

Trade unions sent letters to local governments, either to the governors or mayors, to urge them to follow the instructions of the Minister of Health and Minister of Manpower. This instruction states that employers need to provide a day off to workers and stop the operation of the factories to avoid transmission of Covid-19. However, the trade unions are not satisfied with the Circular Letter issued by the Ministry of Manpower as it does not contain sanctions, making it prone to non-compliance. Social NGOs are preparing an analysis of the impact of Covid-19 on the formal and informal sector, including the development of a database on what type of mitigation has been done by the employers.

(Source: Interview with garment trade unions and social NGOs, 26 March 2020)

What are local organisations doing to support and protect workers?

Trade unions are actively distributing information about Covid-19 to its members. They are also trying to have discussions with factory management. For example, on deciding on salary payment during the day off. Trade unions also sent letters to brands and the government, including the president, to attract more attention on the impact of Covid-19 on workers.

Some trade unions have managed to provide basic needs to their members, especially those who have lost their jobs. They also received support from communities and government organisations. The Minister of Women Empowerment and Child Protection for example, facilitated by Fair Wear Foundation, has distributed 239 goody bags for dismissed garment women workers in Jakarta.

What have been the responses and requests of business associations to support the industry?

The Indonesia Textile Association asked the government to provide tax relief, including the postponement of paying tax for 90 days, and to allow employers to postpone electrical and gas bills. The Association added that many employers have not received a loan relaxation from the banks.

What are international brands doing to support the suppliers and protect the workers?

Several shared suppliers of Fair Wear members informed Fair Wear that brands such as Adidas, Nike, H&M and Fanatic have not cancelled orders. Adidas requires the factories to report on the situation every day.

Relevant links for more information

Indonesia National Board for Disaster Management (BNPB)
Ministry of Health
Government of Jakarta
Government of Yogyakarta
Government of Central Java
Government of West Java
Government of Banten