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Businesses Count on Vaccine to Spur Middle Class Spending Next Year

Jakarta Globe
November 25, 2020 | 9:55 am
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A waitress cleans a table in an empty resturant in West Jakarta last month. (Antara Photo/Aprillio Akbar)
A waitress cleans a table in an empty resturant in West Jakarta last month. (Antara Photo/Aprillio Akbar)

Jakarta. Indonesian businesses have put high hope on the Covid-19 mass vaccination to return the confidence of 162 million Indonesian middle- and upper-income classes to start spending again next year.

"The game-changer next year is vaccination," Rosan Perkasa Roeslani, the chairman of Indonesia's Chamber of Commerce and Industry, said in Economic Outlook 2021 webinar, held by BeritaSatu Media Holding on Wednesday. 

Consumer confidence plunged following lockdowns that the government put in place to curb the Covid-19 pandemic from spreading. Although the government has eased some of the measures, many consumers at the middle and upper levels of the income bracket were still holding on to their savings and delay spending.

That dragged recovery as the top 20 percent Indonesians, which account for 45 percent of the country's total household spending, "still worry about the recession and the pandemic and tend to safe their money in the banks," Rosan said.  

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The middle 40 percent contribute 37 percent of the spending, but they also tend to "lose their income and had to save money and downgrade their lifestyle," he said. 

Despite making up 40 percent of the population, low-income consumers only account for 18 percent of the country's consumption. Therefore, the government's $13.9 billion pandemic cash transfers for the group would not be enough to spur consumer spending, Rosan said. 

"On the other hand, the vaccine would return the confidence among the consumers and businesses," he said. 

The government plans to provide 107 million people between 18-59 years old with the Covid-19 vaccine by the end of next year. Under the plan, the government would provide vaccines for free to 32 million people, including low-income families and frontline healthcare workers. At the same time, another 75 million could buy from state-controlled pharmaceutical company Bio Farma. 

According to a survey by the Health Ministry, Indonesian Technical Advisory Group on Immunization (Itagi), World Health Organization, and United Nations Children's Fund (Unicef), the majority of Indonesians would accept Covid-19 vaccination if the government provides it.

The survey asked close to 116,000 respondents across all 34 provinces in Indonesia on Sep 19-20. The survey found 74 percent of the respondents knew about the government vaccination plan. About 65 percent of the respondents expressed their willingness to participate in the program, while about nearly 8 percent said they would reject it. 

More than 27 percent expressed hesitation towards the government vaccination program. Most of the concerns revolved around vaccine safety (30 percent), effectiveness (22 percent), trust towards vaccine (13 percent), fear of side effects (12 percent), and religious beliefs (8 percent), the survey showed. 

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