The Impact of Corona Virus on Economy and Geopolitics: Indonesia’s Maritime Economy Potentials

  1. Basic

During four decades natural disasters have killed at least 60,000 people annually. These natural disasters include earthquakes, drought, plagues, and forest fires. Although surely, not only disasters are inherent in people’s memories, they take public attention and have impacts on different scales. Some experts say that to get the same level of media and public attention, starvation must have sacrificed at least 38,920 people, 2,395 people were drought, 1,696 plagues, and volcanic eruptions were only 1 person. Furthermore, to be able to get a lot of attention, a disaster must be: surprisingly frightening; ongoing, and; risk – uncertain or bringing uncertainty. Look at the picture below (Polymatter, 2020).

 

Corona Virus or Covid-19 managed to touch the four points above and others. The threat from the coronavirus is invisible, deadly, foreign, and is also rumored to continue to mutate. The number of confirmed cases of this coronavirus, as of April 27, 2020, globally was 2,971,240 people, with a death rate of 206,470 people, and a total of 833,578 patients recovered (John Hopkins University, WHO, 2020). What is even more dangerous and makes the coronavirus pandemic still difficult to predict and calculate precisely is because based on the data, eighty percent of positive confirmed cases show only mild symptoms, even showing no symptoms at all. This makes the risk level of exposure of the virus by patients with symptoms of sweating (hereinafter referred to as carrier) is high especially for the elderly and people who have a history of severe illness before. This has led to the choice of quarantine policy – be it regional quarantine, total quarantine – for at least 14 days by many governments and state authorities.

The points that are more frightening and fatal than the coronavirus pandemic are that we don’t know about this virus. Rather than it came from, how this virus spread, from what wild animals this virus began, and so on is crucial for research needs to find a drug or vaccine. More than that, this also has an impact on the uncertainty of when what should be like and how long the policies for handling and preventing the spread of this virus can end. This has led to an impact on uncertainty in various sectors and parts of people’s lives, especially social and economic. Therefore, even if the advice issued by the health authority sounds very simple – when sneezing, washing hands thoroughly after acting outside or touching items in public, enforcing physical distancing, and so on – the impact of this coronavirus pandemic is far greater than a minor health crisis. Even so, as with most other countries at this time, whether Indonesia is on the right track in handling Covid-19 is also still blurred. It must be admitted that we are currently in ignorance and the handling of Covid-19 is also still based on fragmented information or data. Uncertainty in information and data for handling the virus itself is further increased by the potential for tremendous impacts on the global economy and the ‘capitalization’ of this issue as a tool of influence by large-geopolitical countries.

  1. (Geo) Politics of Corona Virus

Certainly, the first step that we must pay attention to dealing with the situation in the mid-COVID-19 is how health care, social and economic impacts on society and the state are priorities. However, the handling of the coronavirus pandemic and efforts to be able to overcome its impact on the survival of the nation and other countries obviously cannot be separated from economic and geopolitical issues, especially the geopolitics of large countries. It cannot be denied that this issue was made a geopolitical issue and a tool of influence especially by the two major countries today, the United States and China. The test mechanism and data collection as well as the steps in handling the Covid-19 virus as if there were two-block, namely the United States (Trump) versus China (CCP) camps. It is undeniable that if the Chinese Communist Party leadership has committed, China can act very quickly and be able to issue policies that might require multiple layers of bureaucracy if this is done in a democratic country. An illustration occurs how China demonstrated its political effectiveness when it was able to very quickly build hospitals specifically for corona sufferers, convert universities, stadiums and various other facilities into temporary hospitals and be able to implement a total ‘lockdown’ on cities with a population of approximately 700 million people (according to New York Times estimates) with a very high level of effectiveness and discipline.

In the meaning of a similar ‘national brand-building’, Chinese diplomats were preoccupied with many things such as media interviews, the publication of media articles, sending aid (masks, medical staff teams, etc.) to centers for spreading viruses such as North Korea, Italy, Cambodia and including Indonesia, etc. China is currently trying hard to free itself from the outbreak of this pandemic by suggesting that the source of this virus could not originate from China but elsewhere. On the other hand, United States president Donald Trump often mentions this coronavirus as a “Chinese virus”, further compounding global racism that has even lasted long before the virus became a global pandemic. Even if the number of positive corona cases in the United States has now become the largest number globally with a death toll of 43 thousand people, in fact in the field, Trump’s approach is also more inclined to the political economy than looking at this issue as a health and humanitarian issue. Even so, the approach to other countries. In the short-term, there is no such thing as free lunch.

The United States, seeing the response it has given so far, Coronavirus is like a ‘blessing in disguise’ to launch Trump’s “American First” vision, despite the insensitivity of this statement. However, the United States also cannot walk alone to achieve this but requires an ally. Globally, there are approximately 40 countries that “he said” will be set by the United States for this event. And there are four frontline countries specifically Japan (allied), South Korea (Allied), India (somewhat like-minded), and Indonesia (uncertain – awkward) in these efforts. And if we pay attention, the four countries are the key countries in the Indo-Pacific region. On the other hand, the above statement is not excessive if we follow the logic that the economic impact of coronavirus cannot be known with certainty. Especially when it is increasingly complex and the breadth of the current global economy. But certainly, the impact will be very large. This is not only because of the level of life expectancy whose effects have begun to be seen at this time but because of the policy, economic, and mitigation steps that have been taken by countries now and in the future. The OECD has calculated that there will be a decline in world GDP of approximately 2 to 2.5 percent, which is a substantial rate of decline in world GDP (TIME, 2020).

China should grow by 6% this year. If we assume that this coronavirus only affects China (no domino/multilayer effect) economists say that China’s growth rate may now only be around 2 or 3 percent in the first quarter of 2020. If this happens and we Assuming that China’s GDP is at 6 percent in the remaining three quarters, then China’s annual GDP is down to 4 or 5 percent. But in reality, this number may also not be reached. Imagine how it will affect the global economy. Consequently, China’s position in the global economy, global supply chain, and global value chain is very different from when SARS 2003 occurred. This is if we only take China into account. If we add to the potential impact of this coronavirus on other countries such as Japan, Korea, and Europe, etc., then we will very easily conclude that a very large global recession is occurring. For Indonesia, the Minister of Finance of the Republic of Indonesia, Ibu Sri Mulyani also explained in the media that the prediction of GDP and Indonesia’s economic growth in 2020 is 2 (two) percent for the best scenario, 0 (zero) percent for the intermediate and minus two percent (-2%) for the worst-case scenario.

In handling Corona cases at the national level, four pillars are affected, namely medical, social, economic, and political/geopolitical. The first pillar, the health sector is the first pillar to be ‘tested’. Our national resilience in the health sector, from the effectiveness of health services to the availability of medicines and medical devices (including resilience of the supply chain), to the speed and update of research and laboratory and so on are the first to be “knocked” “. The second and third pillars, social and economic, are interrelated mainly due to the impact of the mitigation and health policies adopted by the government, not only by the Indonesian government at the national to the regional level, but also by other governments globally. Lock-downs or Large-Scale Social Restrictions (PSBB) cannot be denied to stop many social-economic activities and activities in various sectors. It is not only the economic wheel that has stalled – if not frozen – social policies adopted by the government such as freezing bank credit bills, cutting and eliminating electricity bills, social assistance to affected households and so on for approximately three months is a cost which is not cheap and has a high economic impact on the government.

These efforts are then pushed to the fourth pillar, specifically politics or geopolitics. Because in handling the three pillars above it is related to geopolitics. “Where is the source of funds or finance spent?” another state budget while the economy is “paralyzed”. In the end, “to whom or who will assist?”. To answer this question, even economists cannot be separated from geopolitical factors. You name it, in terms of medical or medical mastery. We cannot mention that our medical infrastructure is poor because it is also inaccurate, but it cannot be denied that our knowledge in the medical field is also still many holes. Even so the resilience of the supply chain or the strength of our knowledge in the supply network of medicines and medical devices, including tools for testing, also sporadic and not strong. Another question arises, “why doesn’t the United States appear?” It cannot be denied that the United States is politicized amidst this issue. They will not easily share or give information that they have to anyone, but only to people or parties who are considered ‘right’. Then again, there’s no such thing as a free lunch.

Indonesia’s Maritime Economic Potential

One thing we have also learned from the Covid-19 pandemic is that this pandemic makes the world aware that placing full trust in China as the global value chain is very risky. Simply say how the fate of mega projects under the Belt and Road Initiative China program in various parts of the world going forward. We have no other choice but to find the right formula as soon as possible to increase our national economic resilience – and various other fields. Noting the above explanation, it cannot be denied that Indonesia – always – is in “awkward position”. Indonesia’s foreign policy, free and active, certainly has many advantages as well as deficiencies. Then remembering the potential ‘crisis’ that we might or should face as a result of the coronavirus and the policies we take would certainly be heart breaking. Even so, as a warrior nation, a nation of religion (belief), and a nation that is always positive, the writer does not want to mention that we seem to be walking into a cliff.

As the largest archipelagic country in the world with 17,549 islands, Indonesia has three-quarters of its territory in the form of a sea with the second-longest coastline in the world, Indonesia’s maritime territory offers a lot of potentials. Even the economic potential in the maritime sector of Indonesia (hereafter the Maritim economy) is very powerful if we develop it seriously. IPB maritime and fisheries expert, Prof. Rokmin Dahuri,  stated that what is meant by the maritime economy as referred to above are all economic activities that take place in the coastal and oceanic areas, and in the upper landmasses which use raw materials from coastal and oceanic areas. And this field includes several sectors i.e:

 

  1. Catch fisheries
  2. Aquaculture
  3. Fishery and seafood processing industry
  4. The marine biotechnology industry
  5. ESDM (energy and Mineral Resources)
  6. Tourism
  7. Sea transportation
  8. Forestry
  9. Small island resources
  10. Maritime industry and services
  11. Non-conventional Natural Resources

If we calculated, the total potential of these sectors can contribute approximately 1.2 to 1.5 trillion USD per year and potentially absorb approximately 45 million jobs.

The Indonesian Institute of Sciences (LIPI) on the other hand states that an estimate of the potential value of the sea is valued at 1,772 trillion rupiahs, this figure is equal to 93% of the total opinion of the Indonesian State Budget in 2018 (Rahmadi, Praise. 2019). The approximate wealth in question is the number taken from the raw value of Indonesia’s potential wealth. That is, not including subjective calculations that make the value of wealth becomes different in each region. Lifting 1.772 trillion consists of 312 trillion from the marine sector, 45 trillion from coral reefs, 21 trillion from mangroves, 4 trillion from Lamu, 560 trillion from potential coastal wealth, 400 trillion from biotechnology, 20 trillion from marine tourism, 210 trillion from oil earth, and 200 trillion from sea transportation. Even so, the potential for non-tax state revenue (PNBP) from the maritime sector is very high. But unfortunately at this time, if we compare it with other countries or even with the tax revenue target for the sector itself, it cannot even be reached and is still far behind. Call it, Non-Tax State Revenue (PNBP) from the fisheries sector, deputy chairman of the DPR’s Commission XI RU, Achmad Hafiz, said it was still not optimal. Even though Indonesia has huge maritime resources.

 

Data from the Ministry of Maritime Affairs and Fisheries (KKP) shows the performance of fisheries sector tax revenue in 2018 is the highest in the last five years. Fisheries sector revenue in 2018 amounted to Rp 1.6 trillion, growing 22.6% compared to 2017 which amounted to Rp 1.3 trillion. As of August 2019, the fisheries sector’s tax revenue performance has reached Rp 1.3 trillion. This figure is only a difference of Rp 311 billion when compared to the taxation performance of the fisheries sector during 2018 (Katadata, 2019).

PNBP is one of the promising sectors for state revenue, in addition to taxes. So that PNBP is expected to save the state budget from a budget deficit and negative primary balance. To that end, he encouraged the optimization of PNBP in various sectors, including fisheries. According to him, during the last 5 years, the contribution of fisheries PNBP has never reached the target. For example, in 2018 PNBP in the fisheries sector only reached Rp 431.83 billion from the target of Rp 600 billion (DPR RI, 2019).

Based on the explanation above, we can see how big our maritime economic potential. If we manage optimally and seriously, we will be able to help solve various national problems, especially in the economic, development, and welfare sectors. It should even be able to become the main backbone of Indonesia’s economy and development as a maritime country – the world’s maritime axis. Thus, between the uncertainties and threats of the economic crisis that we may / must face as a result of this coronavirus pandemic, the maritime economy can be one of the key answers.

  1. Implications for Maritime Security

The coronavirus pandemic, for any and even developed countries, is a very large trial of national resilience in all sectors and aspects of life – not only health and medicine resilience but also economic and social resilience of society and politics to food security, etc. Its impact on the global economy has been roughly the author’s description before and in the end, it will also have an impact on the maritime sector and maritime security in Indonesia. Related to maritime security issues, perhaps along with the process of ‘deglobalization’ as a result of social distancing and coronaviruses, then maybe we will witness a slowdown in global transportation intentions by sea (energy, cargo ships, yachts, other commercial fleets). However, illegal activities in and from the sea may increase along with the possibility of more and more high demand from the world community/region for cheap commodities and the need to revive the national economy, for the country. Therefore, in the maritime domain, illegal activities including IUU fishing and smuggling of goods and people may increase. Especially in the territorial waters of Indonesia which have long been vulnerable to a variety of these activities, including in the North Natuna Sea, by illegal fisher from various countries such as Vietnam, Thailand, China, and others. Illegal activities in and from the sea may experience an increase along with the possibility of increasing and high urgency needs of the world community/region for cheap commodities and the need to revive the national economy, for the country. Therefore, in the maritime domain, illegal activities including IUU fishing and smuggling of goods and people may increase. Especially in the territorial waters of Indonesia which have long been vulnerable to a variety of these activities, including in the North Natuna Sea, by illegal fisher from various countries such as Vietnam, Thailand, China, and others. Illegal activities in and from the sea may experience an increase in line with the possibility of increasing numbers and the urgent need of the world community/region for cheap commodities and the need to revive the national economy, for the country. Therefore, in the maritime domain, illegal activities including IUU fishing and smuggling of goods and people may increase. Especially in the territorial waters of Indonesia which have long been vulnerable to a variety of these activities, including in the North Natuna Sea, by illegal fisher from various countries such as Vietnam, Thailand, China, and others.

In the case of major security issues, the process of globalization does not necessarily mean that countries will stay in their respective territories and take care of themselves, together with travel and transaction trends between countries which may tend to decrease in the future. But on the contrary, coupled with increasingly stringent use of the internet and increasingly complex information flows (post-truth) countries can be increasingly difficult to build trust (trust-building) between each other. Therefore, the potential for military threats or at least the trend of large military operations abroad by large countries still seems to be a scenario that we still have to face in the future. As an example, the coronavirus pandemic and its innate implications did not necessarily reduce the attention and operations of China and the United States in the South China Sea. Although during a coronavirus pandemic, China continues to move to strengthen its strength in the South China Sea, one of which is by strengthening its paramilitary force and continuing to take several provocative actions, one of which recently occurred when the Haiyang Dizhi 8 survey ship, escorted by the Chinese Coast Guard, to the Malaysian EEZ region of 337 KM from Kalimantan island two weeks ago (Reuters, 23 April 2020).

“China seeks to move the armed police directly under the command of the Communist Party’s Central Committee as well as the Central Military Commission (CMC), both of which are chaired by President Xi Jinping. It has been under CMC control since 2017. It also sets out the tasks of the paramilitary force, including handling emergency rescues and terrorist attacks, and includes guidance on safeguarding rights, law enforcement, defense and combat at sea, such as scenarios in which weapons can be used. ” (Huang, Kristin. 2020).

On the other hand, SIPRI states that the highest military expenditure in the last decade occurred in 2019 which was achieved by the United States which spent up to 732 billion USD on military spending (a 5.3 percent increase from previous expenditure) or equivalent to 38 percent of global spending / global military spending (AFP, 2020). And if we refer back to the data mentioned earlier, that about 60 percent of the US military and defense budget will go to the Indo-Pacific region. That means the coronavirus pandemic that we are currently facing does not necessarily reduce the ambition and geopolitical interests of the two big countries. Even so, the approach they are using now is increasingly complex and blurred at the same time-hybrid, greywarfare,

The above facts also remind us that even in the handling of the coronavirus pandemic, during the ongoing pandemic, the approach of the big powers cannot be separated from its geopolitical interests and approaches. Even so, we also cannot simply receive assistance or process data and information from the two countries without thinking about the geopolitical consequences, no free lunch. For the handling of this pandemic, for example, the test mechanism and the collection of positive case data, whether it is by testing the presence of viruses in our body or by conducting antibody tests – so, there are differences in the test kits used, it is crucial for decision making by the authorities health and government. Treating data as if the data presented is perfect can create unnecessary alarms in some places, and the dangerous sense of comfort in other places. This triggers uncertainty and makes the policy taken by the government confusing – especially in democracies where the government has less control over its citizens than China, for example – and sometimes not always right on target – the size of the peg rather than the pole.

 

  1. Conclusion

The coronavirus pandemic is a tough test for any country in the world today. No country can truly prepare for this crisis, even by developed countries. Not only is it a rigorous test for the system and resilience of the world’s health and medicine system, but this virus pandemic also tests and has an extraordinary impact on various fields and joints of people’s lives, economic, social and political systems of the country and politics and the global economy. Even so, the coronavirus pandemic also apparently did not dampen the global geopolitical ambitions and interests of the major powers. On the contrary, this pandemic issue should be used as an instrument of influence by them. Even so, Indonesia as a country that has a strategic position in the dynamics of international politics and security does not seem to be careless and must always properly and comprehensively calculate various aspects in every decision making. Likewise with the maritime security aspects, for example in the South China Sea region, a more innovative and creative approach also needs to be continuously developed by relevant authorities -NI Navy, BAKAMLA and so on- to face the trend of increasingly complex, hazy and gray potential threats ash (grey zone). For the Navy, the optimization of daily operations and the importance of finding new formulations of day-to-day operations that can be offered upwards (bottom-up) for these efforts may be crucial. On the other hand, the economic and social impact of the coronavirus pandemic is huge and difficult to predict. The maritime economy may be one of the key answers for the Indonesian people to be able to continue to be strong and rise from the impact of the coronavirus, and even become the main joint of the nation’s long-term development and economy. Perhaps, the coronavirus pandemic is also a strong call for experts, thinkers, actors, decision-makers and policy implementers in the maritime sector, etc. to be able to immediately move maximally and work on it with Indonesia’s maritime potential seriously. Not just “potential” but also makes “potential” come true and empowered. even become the main joint of the nation’s long-term development and economy. Perhaps, the coronavirus pandemic is also a strong call for experts, thinkers, actors, decision-makers and policy implementers in the maritime sector, etc. to be able to immediately move maximally and work on it with Indonesia’s maritime potential seriously. Not just “potential” but also makes “potential” come true and empowered. even become the main joint of the nation’s long-term development and economy. Perhaps, the coronavirus pandemic is also a strong call for experts, thinkers, actors, decision-makers and policy implementers in the maritime sector, etc. to be able to immediately move maximally and work on it with Indonesia’s maritime potential seriously. Not just “potential” but also makes “potential” come true and empowered.

 

Reference

RI Ministry of Finance. 2020. “Our APBN Press Conference April 2020”. Accessed from: <https://www.youtube.com/watch?v=HA8s98Unaio>

Polymatter. 2020. “The Politics of Coronavirus”. Accessed from: <https://www.youtube.com/watch?v=1Pb01T3Ew4Y&t=282s>).

TIME. 2020. “Coronavirus: How The COVID-19 Pandemic Will Impact The Global Economy”. Accessed from: <https://www.youtube.com/watch?v=IgYOzCThIzc>

AFP. 2020. “Military Spending Surged 19 trillion USD: 2019 Biggest Increase”. Accessed from: <https://www.scmp.com/news/world/europe/article/3081643/military-spending-surged-us19-trillion-2019-biggest-increase>

DPR RI. 2019. “State Revenue of the Fisheries Sector Still Lacking”. Accessed from: <http://www.dpr.go.id/berita/detail/id/25374/t/ Reception + State + Sector + Fisheries+ Still + Minim>

Huang, Kristin. 2020. “China Military: Beijing Seeks to Boost Arms Police Coastguard: Tension Rise in the South China Sea”. Accessed from: <https://www.scmp.com/news/china/military/article/3081789/beijing-seeks-boost-armed-police-coastguard-tensions-rise-south>

Katadata. 2019. Fisheries Sector Tax Revenue reaches 13 Trillion Rupiah “. Accessed from: <https://databoks.katadata.co.id/datapublish/2019/09/11/agustus-2019-p receipt-Pajak-Sektor-perikanan-reach-Rp-13-trillion >

Rahmadi, Praise. 2019. “The potential of Indonesia’s marine wealth is equivalent to 93 percent of the 2018 State Budget Income”. Accessed from: <https://www.gatra.com/detail/news/411647/ekonomi/lipi-p Potential- richness- sea-Indonesia-setara-93-income-apbn-2018 >

Reuters, April 23, 2020. “Malaysia Urges Peaceful Resolution to South China Sea Stand-Off With Beijing”. Accessed from: <https://www.scmp.com/news/asia/southeast-asia/article/3081234/malaysia-urges-peaceful-resolution-south-china-sea-stand)>

 

 

 

 

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Heni Sugihartini

View posts by Heni Sugihartini
Heni Sugihartini was born in Sumedang on November 21, 1993. In 2011 she studied at Program of Study in International Relations, Padjadjaran University, Bandung. She started her career in July 2016 as editorial staff and analyst at the Defense and Maritime Studies Forum (FKPM).
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