Bambang PS Brodjonegoro: Less Contact Economy
Nino Eka Putra ~ FEB UI Public Relations Officer
DEPOK, Tuesday, 23/6/2020 – Kompas daily published an article written by Bambang PS Brodjonegoro, professor at FEB UI, entitled Less Contact Economy, in its Opinion column, page 6. Below is the article.
Less Contact Economy
The Covid-19 pandemic has a crippling effect on Indonesia’s economy.
A lack of procedures for various policies issued to deal with the pandemic, such as work from home, social distancing, social restrictions, and the large-scale social restrictions, in the past three months have shaken the economy. This is because labor-intensive economic activities, including the informal sector, have ceased operations. A lot of economic activities that require physical presence cannot continue operations, causing many people to lose their income.
As a result, in addition to a sharp slowdown in the economy, unemployment and poverty rates have increased. The Ministry of Finance predicted that in a tough scenario, the unemployment rate will increase by 2.92 million and the number of poor people will increase by 1.89 million. In a tougher scenario, the unemployment rate will increase by 5.23 million and the number of poor people will increase by 4.86 million. This situation should concern us. However, this does not mean that the various regulations were wrong because they were urgently needed in the current situation. The experience of many countries that were affected by the pandemic earlier than Indonesia shows that the coronavirus spreads easily and is deadly. Therefore, policies to limit social interactions must be implemented.
The question is, until when? There is no definite answer to this. Ideally, of course, until a Covid-19 drug or vaccine is found. The problem is, it will take time and the economy should continue to run. Moreover, human beings have an innate desire for freedom and no one can bear being restrained for so long.
Now, with no real indication that the pandemic will abate anytime soon, people have started to talk about how to resume economic activity. The reason is simple, delaying economic activity longer will worsen the condition of some members of society that is already in disarray. In this case, it is safe to say that we agree there is no need to question priorities between saving people’s lives and maintaining economic and business health. We have to continue our hard work to overcome the pandemic and find vaccines and drugs for Covid-19. The consortium set up by the Ministry of Research and Technology tries to play a real role here.
However, at the same time, we must also strive to minimize the effects of the economic downturn. Despite some relaxation, we cannot (or haven’t been able to) resume normal activities like before the pandemic. This is the first thing we must realize. Therefore, wearing a mask, keeping your distance, avoiding crowds, eating healthy nutritious foods, and washing your hands frequently are important.
Adopt new habits
People must live with the coronavirus until a vaccine is found and mass immunization can be carried out. The key is how to adjust to the situation and carry out economic activities while adhering to the Covid-19 protocol. This is what the new normal or adaptation to new habits is all about.
However, how can we adapt to new habits if pre-pandemic economic activity was done face to face and connote physical presence? Of course, it’s not easy, but we have to change and adapt. There have been lifestyle changes. We can adopt and operate what is coined as “less contact economy” (LCE) that is practically a substitute for face-to-face economic activity.
Lifestyle changes do not mean there are a completely new set of lifestyle. Long before the pandemic, some of us were used to doing transactions via the Internet, ordering goods or food via cellular phones, and having long-distance meetings with Skype or Facetime among other apps.
The PSBB have made more and more people accustomed to these things, especially when added with the need for distance learning for schools and colleges, as well as working from home. Online food sales, delivery, and logistics businesses are mushrooming. Therefore, the digital economy is central to the LCE concept. The digital economy can support the economy to remain productive during the pandemic. In fact, it can also create new types of work to reduce unemployment and mitigate concerns over rising unemployment and poverty rates.
The Ministry of Research and Technology sees several types of startup companies that in this new normal era actually have a great chance of success. The term is technology trends. This could be a breakthrough in the future of LCE as well as the future of the economy because it is part of Industry 4.0. The ten technology trends are online shopping, digital payments, tele-working or working from home, tele-medicine or remote medical services, tele-education and tele-training or distance education and training, online entertainment, Supply Chain 4.0, 3D printing or three-dimensional printing, robots and drones, and 5G technology.
Currently, the technology trends that are already in demand are online shopping and digital payments. Millennials and mothers have also started to abandon traditional shopping habits, at least for certain items. The transaction value has also increased rapidly during the pandemic. As an illustration, the value of Tokopedia’s gross merchandise value in 2019 was around Rp200 trillion. It is estimated that, due to the pandemic, the value can double in 2020! All we need now is the application. The more applications that can minimize direct contact, the easier it will be to adopt the ten technology trends. Thus, more and more people will be able to use them. Of course, the more the number of applications that comply with the prevailing laws and regulations is made available, the easier it is to adopt the ten technology trends.
ICT infrastructure
The adoption of these new habits also underlines the fact that information and communication technology (ICT) is no longer a luxury but a necessity. Therefore, the government and society need to see ICT infrastructure as a basic infrastructure in the same light as roads and power plants. We cannot deny that in the 21st century, ICT has become a basic human need.
Therefore, in order to accommodate the “less contact economy” concept, Indonesia needs to build ICT infrastructure as soon as posisble. The experience from three months of distance learning and various online activities to support the digital economy shows that we are still lagging in this area. Many regions in the country still suffer from the problem of weak phone signal, even blank spots.
End of 2019 data shows that last mile fiber optic penetration (connections to homes) is still very low. Although the backbone network already exists in provinces, only 80 percent of districts/cities, 35.7 percent of sub-districts, and 13.5 percent of villages are covered. Therefore, the need for investment in ICT infrastructure is very real and urgent.
There are several options for ICT infrastructure development. First, build ICT infrastructure to increase access to houses and public facilities and as many rural areas as possible. It is impossible for the private sector to do this, so funding must be made available from the state budget. Second, like the first alternative, but for villages that are relatively far from fiber optic Internet networks, the use of satellites already in operation is an option. Cooperation with the private sector is possible here. Third, we can launch our own satellites. Indonesia is one of six countries in the world, and the only one in Asia, that has an orbital slot for mobile satellite service (MSS). The MSS enables us to be connected directly to our cellular telephone devices so that they can function as satellite phones.
Whichever alternative is chosen, it will make our ICT infrastructure on a par with those of neighboring countries, and will certainly support a smooth economic activity without the need for physical and face-to-face presence. Therefore, LCE is an inevitable solution to the shift to the new habits. We really have to live in peace with Covid-19. It’s impossible to keep avoiding or hiding from the coronavirus because it is already around us. However, we can still carry out economic activity that minimizes physical contact. Like it or not, we have to change. Old habits must be abandoned or modified. New habits and everything related to the 4.0 industrial revolution must be embraced and adopted. Countries whose governments, businesses, and people can adapt quickly will emerge as “winners” from this pandemic. They are also the ones who will without difficulty sail through the new normal. We certainly want this country to be included in that group. (hjtp)
Source: Kompas daily, Tuesday, 23 June 2020 edition, Opinion column, page 6.
(lem)