Beginning in December 2019 the novel coronavirus swept quickly through all regions of the world. COVID-19 has wreaked social, political and economic havoc everywhere and has shown few signs of entirely abating. The recent development and approval of new vaccines against the virus, however, now provides at least some reasonable hope that we may be coming to the beginning of the end of the pandemic. This volume collects papers from a conference organised by the Australian National University's Indonesia Project titled Economic Dimensions of COVID-19 in Indonesia: Responding to the Crisis, which was held 7–10 September 2020. It constitutes the first thorough analysis of the impact of the pandemic in Indonesia and government's initial response to its deleterious effects.

Collectively, the chapters in this volume focus for the most part on the economic and socioeconomic elements of COVID-19 in Indonesia. After the overview, the remaining chapters can be usefully organised according to three broad topics: monetary and fiscal affairs; trade, labour and poverty; and health, human capital and gender. We begin this introductory chapter by summarising the main points of each chapter. We conclude with a brief discussion of Indonesia's path ahead.

Overview

Hal Hill emphasises that the pandemic represents one of the most serious challenges faced by Indonesia in its 75-year history as a nation. While the country's health system has struggled to respond successfully, macroeconomic policy has been reasonably adept. COVID-19's impact on poverty and unemployment has been generally significant but varied in its severity across Indonesia's vast geography. Overall—thanks to good luck and effective management—negative economic effects have been restrained, at least as compared to those of other countries in the region. Hill argues it is unlikely that the crisis will force the Widodo administration to change its general policy direction in any fundamental way.

Monetary and fiscal affairs

Stephen Grenville and Roland Rajah discuss the two main tasks for monetary policy in the context of the ongoing pandemic: to mitigate short-term portfolio outflows and to help finance the budget deficit. The authors demonstrate that financial outflows, which rose considerably at the beginning of the crisis, quickly stabilised thanks to government intervention in the currency and bond markets.

Abstract

Prior to the COVID-19 pandemic, Indonesia's health system was already facing some daunting challenges: the increasing burden of non-communicable diseases (NCDs), including mental disorders, that threatens to drain the financial sustainability of the universal health system, and the persistent problems of maternal health, and infectious and nutritional diseases. Health and economic costs of NCDs from labour supply and productivity loss are likely to be high and increasing. This chapter discusses the channels through which the COVID-19 pandemic may have medium- and long-term impacts on NCDs and their risk factors. The immediate and long-term effects of the disruption of services, the ‘long-haul’ effects and the effects on mental health may further increase the burden that NCDs place on the Indonesian health system. Indirect effects through income loss and job loss, and long-term tolls on health workers, present challenges for those with NCDs to access services. The effects of the pandemic on NCDs are likely to be heterogeneous across socioeconomic gradients and may exacerbate the existing health inequities.

Introduction

At the end of August 2020, Indonesia was in the midst of a health crisis, with the COVID-19 pandemic showing no clear sign of slowing down. Official figures reported the number of positive cases had surpassed 120,000, with more than 7400 confirmed deaths. Several key economic indicators have also shown that the crisis has hit the economy in full force. By the first quarter of 2020, gross domestic product (GDP) growth had slowed markedly, and official poverty numbers had risen from 9.2 per cent in September 2019 to 9.8 per cent in March 2020 (Olivia et al. 2020). A number of non-representative rapid surveys have suggested that the employment shocks have been severe (Windya 2020; Purnamasari and Sjahrir 2020).

But the pandemic was first and foremost a health crisis. It has challenged the resilience of health systems in countries around the world, including Indonesia. By many accounts, the Indonesian government's immediate health response in dealing with the pandemic has been inadequate (Djalante et al. 2020; Olivia et al. 2020). The delayed response, lack of data transparency and logistical bottlenecks surrounding protective equipment and testing plagued the initial response and continued to be a problem even until August 2020.

Abstract

In Indonesia, and globally, there is increasing evidence that COVID-19 is having varying negative impacts on different social groups. Those already experiencing poverty are less able to take necessary measures to protect themselves, while vulnerable groups are in danger of being plunged further into poverty. Most notably, there are indications of deleterious impacts on women, particularly in regard to domestic and intimate partner violence, and time burdens. In assessing and projecting the impacts of COVID-19, in developing immediate responses, and in identifying longer-term policy directions, it is important to adopt a multidimensional definition of poverty and to ensure analyses are sensitive to gender and to those groups experiencing deepest deprivation prior to the pandemic. This chapter provides an overview of the implications of COVID-19 for people living in poverty. We draw on data from a 2018 study on multidimensional poverty in South Sulawesi, which used the Individual Measure of Multidimensional Poverty (IMMP) to demonstrate the value of measuring multidimensional poverty at the individual— rather than the household—level, and to identify the social groups that were experiencing multidimensional poverty prior to the COVID-19 pandemic. Those findings now have important implications for projecting how COVID-19 is likely to affect different social groups, and for COVID-19 responses.

Introduction

In Indonesia, and globally, there is increasing evidence that COVID-19 is having different negative impacts on different social groups. Those already experiencing poverty are less able to take necessary measures to protect themselves, while vulnerable groups are in danger of being plunged further into poverty. Projections also indicate the likely emergence of the ‘new poor’, those groups that had moved out of poverty but remain susceptible to shocks. Most notably, there are indications of deleterious effects on women, particularly in regard to domestic and intimate partner violence, and time burdens.

Projections of poverty indicate the likely impacts of COVID-19 in terms of income, but are less able to provide insights into the ways different social groups are likely to be affected by the combination of health crisis, economic downturn and declining incomes, and mobility restrictions. In projecting and assessing the impacts of COVID-19, in developing immediate responses, and in identifying longer-term policy directions, it is important to adopt a multidimensional definition of poverty and to ensure analyses are sensitive to gender and to those groups experiencing deepest deprivation prior to the pandemic.

Abstract

We examine the potential effects of COVID-19 on district government revenues, district and household spending, and ultimately local public service access. We find that the government forecasted decrease in economic growth and knock-on effects on central government budget revenues might lead to a 5.5 per cent decline in district intergovernmental transfer revenue, a 6.0 per cent decrease in district spending and a 7.5 per cent decrease in household spending. We estimate that the combined downturn in district and household expenditure would result in a 2 percentage point reduction in household access to local services from the projected baseline, a modest impact. We conclude that while COVID-19 may have a significant negative impact on local public services it will likely not derive from districts’ reduced access to funding or lower household spending. Central government has already organised a program of conditional cash transfers to needy households and this may help dilute any negative service effects related to declining household expenditure. Some observers have argued for a large increase in intergovernmental grants to combat the adverse effects of falling district spending. We do not advocate this approach, given the longstanding ineffectiveness of districts in using their considerable fiscal resources to enhance local service delivery.

Introduction

COVID-19 continues to have severe negative health and economic impacts across the vast majority of countries in the world. Indonesia has not escaped these destructive effects. As of this writing, Indonesia has experienced 320,000 cases of COVID-19 and 11,500 related deaths. Many observers believe these figures significantly underestimate the reality. Indonesia has not yet managed to ‘flatten the curve’ and COVID-19 cases and associated deaths are increasing at a rapid rate. COVID-19 is expected to have a large negative effect on economic growth in 2020 and possibly beyond into 2021. The Ministry of Finance estimates that the economic growth rate in 2020 may drop to between 2.3 per cent and −0.4 per cent from about 5.0 per cent in 2019.

COVID-19 will also likely have a substantial negative impact on local public service delivery, especially in the education, health, and water and sanitation sectors. Hard data are difficult to come by at this stage, of course, but anecdotal evidence confirms the expected adverse effects.

Abstract

Monetary policy has a limited role in the COVID-19 crisis, with the main macro challenge falling to fiscal policy. That said, Bank Indonesia has two important tasks. The first is to ensure the continuity of short-term portfolio inflows. So far so good: the outflows that occurred early in the crisis have largely stabilised, though vulnerability remains. We make several suggestions on currency and bond market intervention policy. The second, more challenging and unaccustomed task is to help fund the expanded budget deficit. An important element in Indonesian macropolicy has been fiscal discipline—with recent deficits funded largely by raising funds in the rupiah bond market. Faced with the COVID-19 crisis, Bank Indonesia is now directly purchasing government bonds, including some ‘burden sharing’ of the interest cost. This funding mode, often dubbed ‘money printing’, has become routine in many developed economies but is less common in emerging economies. It presents risks to macrostability and Bank Indonesia independence, particularly if the crisis persists, but is justified by the vital need for budget funding and the lack of alternatives. However, Bank Indonesia needs an exit strategy to limit this resort to unconventional funding. In the longer term, the emphasis needs to be on mobilising domestic savings as a more stable way to fund the budget.

Introduction

COVID-19 represents a twofold global challenge—how to handle the health aspects while softening the economic recession caused by the combined effect of imposed restrictions and the public's behavioural changes. The main economic task is to support the incomes of those put out of work and the viability of businesses in temporary forced hiatus. Thus the main macropolicy response is fiscal expansion.

Nevertheless, Bank Indonesia is playing several important roles. It is playing a traditional central banking function by cutting interest rates, ensuring adequate system liquidity and providing support for on-lending by banks. It has also intervened heavily in the currency and bond markets to stabilise these in the face of very large capital outflows, mostly in March and April. Finally, it is providing significant direct financing to the government—a process often (if incorrectly) called ‘money printing’.

Descent of Lord Jagatpramāṇa

It is told that in former times the island of Java (Yawaḍipa) was an unstable land mass, without mountains or inhabitants; a condition which prompted the Supreme Lord Jagatpramāṇa (Bhaṭāra Guru) to descend to earth, together with his consort Bhaṭārī Umā. Setting up an initial residence at Ḍihyang, the divine couple proceeded to perform yoga. The gods Brahmā and Wiṣṇu were then instructed to create human beings. Kneading lumps of clay, Lord Brahmā created the male and Lord Wiṣṇu the female, an act which is said to have taken place on the mountain named Pawinihan.

As already observed, the name Ḍihyang refers to the misty heights of the Dieng Plateau in central Java (see Figure 2). The fact that this region preserves some of the island's earliest surviving Hindu-Javanese temple remains can hardly be regarded as accidental, but rather indicates that the author of the TP acknowledged the antiquity of Ḍihyang, both as a “senior” religious centre and cradle of the Śaiwa cult in Java. This in turn implies that an ancient network of ascetic communities maintained an unbroken dialogue throughout the Hindu-Javanese period, impervious to the shifting of the royal courts and accompanying political turmoil. Both the inscriptional and literary records provide evidence of such a continuity. In the region of Dieng itself, R.D.M. Verbeek already noted the existence of a rock inscription displaying the Śaka date 1132 (AD 1210–11), and a stone image of Wiṣṇu dated Śaka 1216 (AD 1294–5) was reported by N.W. Hoepermans. More recently, S. Satari has proposed a fourteenth or fifteenth century dating for an important yoni pedestal preserved in the district of Petungkriyono (discussed below). Further indication of an ongoing tradition is provided by the Old Sundanese poem recounting the journey of Bujangga Manik. Composed in around the year 1500, this work is of particular interest for its reference to quite a number of religious institutions mentioned in the TP, several of which were situated in central Java. There is, in addition, a collection of lontar manuscripts popularly known as the Merapi-Merbabu corpus, preserved in the National Library at Jakarta.

The Old Javanese text of the Tantu Panggĕlaran (Pigeaud 1924, pp. 57–128)

Archaeological Record for the Tengger Highlands and Hyang Plateau

It was during a workshop at the KITLV branch in Jakarta in 2009 that I first discussed the possibility of a revised, English language translation of the Old Javanese Tantu Panggĕlaran with Stuart Robson, now Adjunct Professor of Indonesian Studies in the School of Languages, Literatures, Cultures and Linguistics at Monash University, Melbourne, Australia. The text of the Tantu Panggĕlaran had for many years held a special interest for me, as it belonged, like Prapañca's Deśawarṇana and the Old Sundanese Bujangga Manik, to that small group of literary works which offered a wealth of topographical data. I had already taken advantage of Robson's lucid translation of the fourteenth century Deśawarṇana, published in 1995, when endeavouring to trace the course of King Rājasanagara's journey through eastern Java, and imagined that the same linguistic skills applied to the Tantu Panggĕlaran would help to draw this valuable text out of its vacuum and place it in a firmer historical and geographical context.

Happily, the idea was met with enthusiasm, and our discussion ended with a tentative plan to produce a joint publication, comprising an English translation, followed by a commentary focusing on historical topography. Professor Robson noted, however, that a new critical edition of the Tantu Panggĕlaran would hardly be possible, as the whereabouts of the two principal manuscripts used by Th. Pigeaud for his dissertation were no longer known. Instead, he said, it would be better to work directly from the romanized text of Pigeaud's 1924 publication, which includes all of the variants encountered in the five manuscripts originally consulted.

Although the interest sparked by this initial meeting led to further dialogue over the next few months, there were no concrete developments. Time went by and the communication became less frequent, and then ceased entirely, as various other commitments took precedence.

Such was the condition until 2015, when suddenly, without warning, Professor Robson wrote to enquire whether I was still interested in the Tantu Panggĕlaran, as he had completed a first draft of the translation and was willing to send it to me! This came as an unexpected surprise, and without hesitating I sent an enthusiastic reply, reconfirming my commitment to our joint project.

Notes on Names and Titles Occurring in the Text

Mahāmpu Palyat and the Bhairawa cult in Java

It is told that Lord Guru became manifest in the form of Mahāmpu Palyat, a bhujangga of the Śaiwa denomination who practised austerities in a cemetery on Mt Hyang, following the rites of the Bhairawa order. Upon learning that there was an unusual ascetic residing in the realm of Brahmāloka, the reigning king at Galuh, named Mahārāja Bhatati, desired to meet him, and to that end summoned the entire community of wiku to participate in a royal ceremony. When, however, the king caught sight of Mahāmpu Palyat, whose attributes included a drinking cup in the form of a skull, as well as a bowl (kaṇṭora) containing human flesh, he was outraged and immediately ordered for the renegade wiku to be put to death. The two officials appointed to the task, Mpu Kalotan and Mpu Waju-kuning, went straight to Mahāmpu Palyat's hermitage on the following morning and carried out the king's orders, binding the ascetic with rattan and throwing him into the sea, before reporting back to the palace. When they returned the next day, however, they were surprised to discover the wiku sitting calmly in his hermitage as usual, as if nothing had happened. Twice more they attempted to kill the holy man, weighting him down with stones in the ocean and even burning him to ashes, but to no avail. Realizing that Mahāmpu Palyat was none other than the Supreme Lord Parameśwara himself, the two emissaries bowed low at the sage's feet and requested to become his disciples. After receiving ordination as Mpu Janaḍipa and Mpu Narajñāna, they returned to the capital, where they were installed respectively as teacher and court priest to Mahārāja Bhatati.

Leaving aside the more fantastic elements, it is noteworthy that both the historical and geographical setting of the above account are in accordance with the inscriptional record. As far as I am aware, the earliest dated reference to the worship of Bhairawa in eastern Java is to be found in the charter of Hantang, issued by the Kaḍiri king Mapañji Jayabhaya in the year 1135.

The text introduced here belongs to a category of prose literature composed during the so-called “age of transition” in Javanese history, spanning roughly the fifteenth and sixteenth centuries. This was a time which saw the decline and collapse of the island's last and greatest Hindu-Buddhist kingdom, with its capital at Majapahit, and the rise to power of a confederacy of Muslim coastal states under the leadership of Demak. In marked contrast to the preceding era, which has left us a rich legacy in the form of royal edicts preserved on stone and metal, as well as a substantial body of classical literature, this transition period is remarkable for its scarcity of reliable historical data. The literary work under discussion is thus especially valuable for its ability to shed some light on this poorly documented age, and thereby help to strengthen the bonds linking the past to the present. The text is further unusual for its subject matter, which comprises principally an account of the origin and development of the Śaiwa cult on the island of Java, with a focus on the numerous ascetic communities scattered throughout the countryside. As such, it provides a rare glimpse of life outside the court environment during the pre-Islamic period.

The essential message, as well as the author's intent, are already encapsulated in the title of the work, Tantu Panggĕlaran, introduced immediately following the invocation. This has been very aptly translated by Stuart Robson as “Threads of the unfolding web”. As already explained in the introduction to the text, the web refers here to the network of Śiwaite institutions, while the threads (tantu) may be viewed as its manifold permutations, whether in the form of sacred sites, holy orders, or established “lines” of continuity. In the commentary to follow an attempt will be made to disentangle some of these threads and clear a path, as it were, through what one writer once described as an “encyclopedic jungle of Śivaitic traditions”.

The narrative itself is made up of a series of episodes, beginning with the creation of the first human beings, the origins of civilization and transport of the holy Mount Mahāmeru from the Himalaya, followed by the gradual establishment of the institutions supporting the ascetic community.