New Normal: How COVID-19 Pandemic Affects Economic Development in West Papua

Economic Development

The entire world is currently dealing with COVID-19 pandemic and struggling to survive. Thus, as if that is not enough, the outbreak is also affecting our economic development—especially in remote regions such as West Papua. This happens mainly due to Indonesia large-scale social restrictions (Pembatasan Sosial Berskala Besar Indonesia) that results in the restriction of trading, travel banning, lockdowns, and physical distancing.

Based on the latest data of Worldometer, there have been 200,035 Coronavirus cases in Indonesia with 8,230 casualties and 48,847 are still fighting against the deadly disease. In West Papua and Papua regions alone, the total cases have hit 4,148, with 3,286 recovered and 50 were dead. No wonder, the government is facing a big dilemma: whether to apply lockdowns or not. However, lockdowns may affect the country’s economic development.

Since China was the first country that had been affected by the outbreak, it urgently declared lockdowns resulting in a massive disruption on global export-import chains. That certainly includes a problem of the trading chain between the country and Indonesia. Many of Indonesia’s companies or industries are suffering from economic loss because of this issue. Some of which are food and beverage as well as tourism industries.

Therefore, the “new normal” activities have been effectively allowed by the Indonesian government to help solve the economic loss. Several shopping centers, schools, restaurants, offices, and factories in some parts of the country have recently been open with health protocols applied.

On the other hand, in both Papua and West Papua Provinces, even some communities of indigenous people have decided to do their lockdowns. This is a good fact considering that health should always be prioritized, but it is also a bigger challenge for the government as the outbreak is already slowing down the region’s economic development.

The Real Challenges

Economic Development

The Provincial Government (Pemerintah Provinsi) of West Papua estimated that Papuans have suffered from a weakening of their economic performance by IDR 5.10 trillion. Out of the total impact, 30.8% or the equivalent of IDR 1.57 trillion is the direct impact of closing access to prevent the outbreak from spreading. The following are the sectors in which the province has experienced regression of its economic development.

Transportation Sector

With the closure of access to and from West Papua Province through airports and ports, there may be a reduction in revenue from the transportation sector. Based on data from some airport managers in the region, the average passenger movement is 177,800 people every month, with an estimated lost income of IDR 380.6 billion a month.

Meanwhile, on the marine transportation sector, based on data from PT Pelindo, the average arrival in Papua and West Papua Provinces is 14,415 people, while the average departure is 15,306 people. The estimated income lost is IDR 17.8 billion per month. That can contribute to the slowdown of economic development in the regions.

Retail Sector

During the first quarter of 2020, the retail sector in West Papua has also been suffering from economic loss. Operating hour restriction of traditional markets from 4 pm—8 pm is one of the factors contributing to the decrease in income of the local traders. They who sell pickled fish, Noken (tribal Papuan woven bags), and Areca (Betel) nuts usually operate all evening.

The estimated loss of income during a three-month lockdown is IDR 26,848 billion. The number is from an average of IDR 100 to 300 thousand per night, gained by each of the 1,492 business actors of small and medium enterprises.

Tourism Sector

On the tourism as well as the food and beverage sector, in hotels and restaurants, there is only 7—10% for room occupancy rates. There are also no meetings, incentives, conventions and exhibitions at all during this pandemic.

In an interview, Omah Laiani Ladamay, the head of Industry and Trade Cooperatives, small and medium-sized enterprises (Usaha Kecil dan Menengah) and Manpower of Papua Province, stated that during the pandemic, there had been 2,826 workers dismissed. The total income loss is between IDR 9,938 billion and IDR 29,814 billion per month based on the provincial minimum wages of IDR 3,516,700 in Papua and IDR 2,881,160 in West Papua.

The Potential Solutions

Economic Development

West Papua is rich in potential natural resources from sectors of mining, agriculture, tourism, fishery, and forestry. One of the most famous areas in the province, Raja Ampat Regency, is not only well-known for its beauty; it also produces pearls and seaweed. In addition to that, South Sorong Regency offers the one-of-a-kind tribal weaving industry known as Timor fabric.

Besides, there is also fragrant syrup made of nutmeg that can be found in Fak-Fak Regency—not to mention exquisite natural tourism sites, such as Cenderawasih Bay National Park (in Teluk Wondama Regency) and Rumberpon Island.

During this pandemic, nonetheless, infrastructure and economic development in West Papua have to be slowed down as health should come first. Therefore, to help solve economic crisis during this hard time, by the end of March 2020, the central government declared to release Lieu of Law (Perppu) to allocate IDR 405.1 trillion to the entire provinces—including West Papua.

Furthermore, The COVID-19 Economic Impact Management Team in West Papua has proposed a social fund policy from the allocation mentioned above, for all the local farmers, fishermen, small and medium business owners, as well as workers who lost their jobs during the pandemic. There will also be more new land openings to support regional food security and economic stability.

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