Keeping the economy running in time of health crisis

By: Arwin Rasyid ( Founder & Chairman of TEZ Capital Group)

The COVID-19 pandemic has placed significant pressure on the national economy. The impact has been felt not only by large businesses but also by micro, small, and medium enterprises (MSMEs) and the wider community.

As the number of workers losing their jobs increases and business activity declines across various sectors, the need for swift and appropriate economic solutions becomes increasingly urgent.

Widening Economic Pressure

The crisis that occurred showed several main indications:

• The increasing number of unemployed, both in the formal and informal sectors

• Many business sectors were affected, including MSMEs which previously supported the national economy.

• A significant decline in business activity, particularly in the transportation, hospitality and retail sectors

• Pressure on the financial sector due to increasing credit risk

This condition shows that the economic slowdown is occurring across the board and is interconnected across sectors.

Dual Challenges: Health and Economy

In this situation, the government is faced with two main priorities:

1. Health care , including controlling the spread of the virus and providing health facilities

2. Economic recovery , through efforts to maintain business continuity and people's purchasing power

The balance between these two aspects is key to maintaining national stability.

Credit Relaxation Limitations

Various policies, such as credit relaxation, have provided businesses with room to survive in the short term. However, these measures are considered insufficient.

What businesses need now is not just payment relief, but also new liquidity to maintain business operations, pay employees, and maintain business continuity.

The Importance of New Liquidity Support

To keep the wheels of the economy turning, strategic steps are needed, including:

• Providing new loans with low interest and flexible tenors

• Collaboration between the government and banking in distributing stimulus

• Financing scheme that still pays attention to the principle of prudence

• Additional support for debtors who previously had a good payment track record

This approach allows business actors to not only survive, but also gradually restore business activities.

The Role of Technology and Financial Inclusion

Besides the banking sector, the use of financial technology (fintech) is also an important factor in accelerating aid distribution.

With the support of digital technology and data analysis, fund distribution can be done in:

• Faster

• Right on target

• Transparent

• Efficient

This also opens up opportunities to increase financial inclusion amidst the crisis.

Social Protection for the Community

For people who have lost their source of income, direct assistance is crucial to maintaining basic needs.

Direct distribution of aid to recipients' accounts is considered more effective than conventional distribution, provided it is supported by accurate data.

Conclusion

In facing the economic crisis, steps are needed that are not only defensive, but also proactive.

Credit relaxation is a first step, but providing new liquidity is a key factor in maintaining economic sustainability.

Through collaboration between the government, the financial sector, and technology, it is hoped that economic stability can be maintained and the recovery process can proceed sustainably.