Mass vaccination would be the only way to bring economic recovery to Indonesia, which has been pounded by the slowdown induced by the social distancing measures due to the COVID-19 pandemic, a senior University of Indonesia (UI) economist said Sunday.
Muhammad Chatib Basri, who served as finance minister under the administration of president Susilo Bambang Yudhoyono, said the primary engine of economic growth was consumption in the middle-to-upper income brackets, and the prolonged social distancing measures had adversely impacted those activities.
"Private investment will happen if we have an economy of scale, and we only have economy of scale if mobility happens. This mobility can only happen with social distancing and vaccination," Chatib said in a discussion organized by alumni organization AM64 on Sunday.
The senior economist said that given the difficulty in imposing discipline, the only option for Indonesia to ensure mobility was through vaccination.
"Social distancing can only happen effectively in places like China, in Wuhan, Singapore or Australia. As for us, we lack that discipline," he said.
Chatib expected that as the government-sponsored mass vaccination program gained steam, the country could expect a robust economic growth to return in the second half of this year.
"In the second half after vaccination, people will regain confidence and mobility will return. Economic recovery in the second half will be quicker," he said.
Indonesia's economy is expected to return to growth in 2021 after facing a recession this year, economists say, but unemployment and poverty may rise further as economic activity will remain sluggish.
Indonesia plunged into a recession for the first time in two decades as the economy shrank 3.49 percent year-on-year (yoy) in the third quarter after plunging 5.32 percent yoy in the second quarter. Household spending and investment, which together account for more than 88 percent of GDP, fell 4.04 percent and 6.48 percent yoy, respectively, in the third quarter.
On the issue of vaccination, the government has targeted to inoculate more than 181 million people this year.
As of Saturday, only 3.2 million Indonesians had received a second jab, and 7.1 million had received a first jab. Of the targeted 21.5 million elderly people, only 1.4 million have received a first jab and around 96,000 a second jab.
Deputy minister for state-owned enterprises Pahala Mansury meanwhile said the ministry would be on the front line in procuring vaccines from overseas manufacturers.
"The 426.8 million vaccine doses under the government program will be procured through Bio Farma," Pahala said referring to the state-owned vaccine manufacturer.