Nasori, Jakarta – The Indonesian government is bracing for the full impact from the coronavirus outbreak to hit its economy in around three weeks from now when the supply of key machineries and raw materials from China to Southeast Asia's largest economy is expected to grind to a halt.
"The peak of the coronavirus outbreak was on Jan. 20-30. With one- to two-month lag, its full effect would be felt here in March," Susiwijono, the secretary of the Coordinating Minister for Economic Affairs, told Antara news agency on Monday.
China is one of the main suppliers of raw materials and capital goods for Indonesia's manufacturing sector.
Indonesia imports close to $10 billion worth of boilers and other machineries and mechanical appliances from China every year according to the United Nations Commodity Trade Statistics Database (UN Comtrade).
China and Indonesia book more than $72 billion annual trade between them. The world's second-largest economy is also a key source for Indonesia's foreign direct investment.
Susiwijono said Indonesia still had some stock of raw materials for its manufacturing industry, but the inventory is projected to run out within the next few weeks.
"[A total of] 74 percent of our imports [from China] are raw materials and capital goods. They usually get replenished every one or two weeks. That's not going to happen [in the next few weeks," he said.
Indonesia's imports from China were already down 4.6 percent in January since the same month a year earlier, the latest data from the Central Statistics Agency showed.
There would also be a significant economic impact from the disruptions in air travels. Indonesia has rejected all travelers who had been in China 14 days or less before their expected arrival.
"This [coronavirus outbreak] will affect everything: traffic of goods, people, money," Susiwijono said.
The pneumonia-like disease – now called Covid-19, caused by the SARS-CoV-2 virus – has already disrupted China's economy.
Global investment bank Morgan Stanley has warned that China's economy might only grow by 3.5 percent in the first quarter this year should its manufacturing industry fail to recover from the outbreak fast enough.
There are more than 79,500 confirmed Covid-19 cases around the world, mostly still in China. But the outbreak is showing signs it might turn into a full-blown pandemic as South Korea and Italy saw a rapid spread of infection in the past few days.
"Changes are happening very fast from, economically and politically. We need to step very carefully in how we address Covid-19," said Susiwijono.
Susiwijono said the government is continuing to monitor the spread of the disease and has prepared measures to counter the economic downturn that might come with it.
"We're doing our best to get the omnibus bill on job creation and taxation passed as soon as possible so we can respond to these challenges," Susiwijono said, referring to the across-the-board law revisions that the government hope would reinvigorate investment in the country.
He said the government also wants to speed up the disbursement of its social assistance and village funds to increase people's purchasing power and prop up the economy.