Covid-19 impact and responses: Indonesia

Updated on: 16 October, 2020

What is the current situation?

General information

By 16 October 2020, there were 349,160 confirmed cases of COVID-19 in Indonesia of which 12,268 were fatalities and 273,661 recovered. Schools are still closed. Offices, malls and restaurants have been opened with limited of capacity.

The Large Scale Social Restriction (PSBB) Transition in Jakarta has been applied from 14-25 October. The regulation can be seen in the Governor Regulation DKI Jakarta Number 101/2020. Offices are asked to maximise the use of digital technology, to conduct work in shifts and to monitor visitors.

The Job Creation Bill (Omnibus Law) was approved by Parliament on 5 October, 2020. Despite objections from local government and civil society organisations, there is no sign that the government will issue Perpu (Government Regulation to Replace Law). Until now, an official version of the bill has not been publicly released. Based on the version that was discussed in Parliament, overtime hours per week has been increased from 4 to 8 hours. The bill stipulates lowering severance payments from a maximum of 32 times (of workers salary) to 25 times. Up to 19 times is to be paid by companies and 6 times will be paid by the government under the new unemployment benefit scheme. Job statuses are to become more flexible, which will benefit employers and sub-contractors/agents.

As of 11 October 2020, five Governors have sent a letter to the President to show their objection towards the Omnibus Law. The objection relates to massive strikes and rallies which occurred in some areas such as West Java, Yogyakarta, East Java, West Sumatra and West Kalimantan. The President in his statement said that the objection can submitted to the Constitutional Court (MK). Due to chaos in those strikes and rallies, more than 5000 people including 28 journalists have been arrested by the police.

Fair Wear, alongside other 14 organisations and brands, sent a letter to the President and Chairperson of the Parliament highlighting concerns over the Omnibus Law. Kindly see the letter here.

The Government of Indonesia has replied to the letter and has reached to us. A follow-up meeting is being arranged.

A public petition calling for the rejection of the Omnibus Law has been signed by almost 1.4 million people. Meanwhile, the Asia Europe People’s Forum collected support from civil society organisations to condemn the arrest of protesters.

The situation with factory production

Based on data from Better Work, around 130,000 workers in more than 200 factories have been impacted by Covid-19, which means that most of them have been laid off or dismissed. Most Fair Wear suppliers have been normally operating with safety measures. Few factories in Indonesia can produce the standard hazmat suits with local fabric. 

What are the government policies to support local businesses?

The government is giving an additional tax discount (PPh Article 25) from 30% to 50% for businesses.

As an economic stimulus, the government supports SMEs by disbursing cash assistance, reducing their burden in paying taxes and credit instalments from financial and non-financial institutions. An electricity discount is given to consumers (maximum 900 VA).

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

The government has several programs to support workers:

1. There is the staple food assistance that has been distributed to 4.2 million people based in Jakarta and surrounding area, which began in April and will run until December. For the first three months (April-June), the government provided IDR 600 thousand/month. For July-September, the amount was reduced to IDR 300 thousand/month.

2. There was a cash transfer programme which began it April. It ran for three months, and transferred cash via PT Pos Indonesia (the state-owned mail delivery service) to affected people outside the greater area of Jakarta.

3. The cash transfer initiative (IDR 600 thousand/month for three months) uses the ‘Village Budget’, and has distributed funds for more than 14 million people in rural communities since April 2020.

4. Consumers will also receive an electricity discount until December 2020. This is also for small businesses whose maximum electricity usage is 900 VA.

5. 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.

6. The government will support workers whose salary is below IDR 5 million (290 EUR) per month as of September 2020. This support will run for four months. Human Resources departments must register employees’ bank accounts to BPJS (Employment Social Security Administrator). Criticism of this programme relates to the coverage, as only 13 of 50 million workers will benefit. The government only provide a cash transfer for workers registered in BPJS, due to the availability of valid data of the beneficiaries.

7. The Ministry of Manpower announced that the regulation for the social security (BPJS) payment waiver has been finished and is currently on the desk of President. The government will apply waiver for the following elements:

  • Discount of up to 90% for accident insurance (JKK) and death insurance (JKm) for the next 3 months
  • Discount up to 70% for pension fund

What are local stakeholders doing to lobby their government?

Trade unions are working advocate against the Job Creation Bill/Omnibus Law.

What are local organisations doing to support and protect workers?

Local organisations have more focus on doing research and capacity-building with the trade unions and workers. Given the pandemic situation, both activities are conducted online. In addition to that, some charities have been initiated to support the most vulnerable groups, such as homeworkers.

However, since the Omnibus Law has been passed, social and environmental NGOs advocate the rejection of the law.

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?

Brands have shared best practices from other production countries on how to deal with safety measures. No suppliers have reported on production-related support from brands.

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
Government of Bali Article, ‘Sejarah Resesi Ekonomi di Indonesia
Ministry of Manpower
Travel Policy for Indonesia The Coronavirus Effect on Work, Life and Feelings