COVID-19’s Impact on Micro, Small, & Medium Enterprises and Tourism in Indonesia

Abstract

The COVID-19 containment and social restriction measures sent the Indonesian economy into a severe contraction of 5.32 per cent in Q2-2020, the first negative growth since 1999. Faced with a severe policy challenge to reconcile the conflicting imperatives of public health and economic sustenance, the government has loosened the restrictions on people movements. This in turn has elicited criticism that this could be premature, since infections have yet to peak. Micro, small, and medium enterprises (MSMEs) and the tourism sector have been badly hit. Around half of MSMEs have temporarily closed mostly due to a sharp reduction in demand and disruptions in the supply chain. Indonesia’s Chamber of Commerce has estimated that the potential loss to the tourism sector will reach USD35 billion, if the dire situation continues until the end of this year.