Indonesia’s COVID crisis: the case for Australian aid

By Donald Greenlees, Senior Adviser, Asialink

The coronavirus pandemic has exacted a huge human toll on Indonesia, placing strains on the health system and setting back years of work in poverty reduction. Asialink senior adviser Donald Greenlees argues what Australia now does to help its closest Asian neighbour meet both challenges will be long remembered.

Two weeks after an earthquake and tsunami devastated Indonesia’s Aceh province in 2004, Alexander Downer travelled to Jakarta to attend an international donor conference. If ever Indonesia needed the support of friends, it was now.

The scale of the human and property loss in Aceh was immense. The death toll from the 9.1 magnitude earthquake — one of the largest ever recorded — and subsequent tsunami that swept along the west and north coast of Sumatra Island on Boxing Day was estimated at up to 200,000. Whole towns and settlements were laid waste for kilometres inland.

Within days, the Howard government declared it would donate $US 1 billion to Aceh’s recovery and reconstruction – the largest single aid pledge ever made by Australia.

Downer, as foreign minister, then headed to Jakarta to discuss the details of how funds should be disbursed and what more could be done. As he entered the donor conference, then president Susilo Bambang Yudhoyono saw him across the room. Yudhoyono walked over, took Downer by the hand, and thanked him profusely.

“I will never forget this,” Downer recalled in an interview. “It was a huge event. We put a billion dollars into help Indonesia and they were so grateful. I will never forget the gratitude of president Susilo Bambang Yudhoyono… He clasped my hand in both his hands and with tears in his eyes thanked me… It made a huge statement about the importance of Australia.”

yudhoyono howard
The actions of the Howard Government in the aftermath of the 2004 Indian Ocean Tsunami were greatly appreciated by then-Indonesian President Susilo Bambang Yudhoyono. Image credit: @SBYudhoyono, Twitter. 

When Australia was trying to gain entry as a founding member of the East Asia Summit in 2006, the support for Indonesia in a time of profound loss was not forgotten.

“I had two countries that really, really went out of their way for us,” said Downer. “One of them was Japan — and that won’t come as a surprise to you — and the other was Indonesia.”

A year ago, Yudhoyono’s successor Joko Widodo memorably stated Australia was Indonesia’s “closest friend”. He said so in the context of recalling Australia’s contribution to the 2004 tsunami and the death of nine Australian Defence Force personnel in a helicopter crash during the response to another earthquake that hit the Indonesian island of Nias in 2005. Widodo’s comment might seem like hyperbole, a nice thing to say when addressing the Australian parliament. But a process of elimination suggests it’s probably true.

Now, again, we have to show it.

Indonesia is experiencing another tragedy. The COVID-19 pandemic had officially infected more than 1.5 million people as of 31 March.  Of those, 40,858 had died. Both numbers are likely to be significantly understated. Even with low rates of testing, about 20 percent come back positive – it has been as high as 42 percent.

The economic picture is just as dire. The economy contracted 2.2 percent in 2020. While the OECD estimates growth to return to 4.9 percent this year — a number that would be the envy of developed economies — it is too slow to make a real dent in poverty and meet Indonesia’s development goals. There also is a high risk of the recovery being stifled by a surge of infections and the imposition of new mobility restrictions.

The contraction since the first COVID cases were publicly confirmed on 2 March last year put as many as 8 million people at risk of falling into poverty, according to the World Bank. This is in part because 60 percent of Indonesians work in the informal economy where mobility restrictions have a huge impact.

Workers are sprayed with disinfectant upon arrival at work to prevent the spread of COVID-19, Jakarta, Indonesia - July 13, 2020. Image credit: ILO Asia-Pacific, Flickr. 

The disruption to schooling and the increased necessity of the young to support principal breadwinners could have flow on effects for years – even before COVID hit Indonesian children were estimated to reach only about half their potential productivity at adulthood because of the lack of access to a complete education and good health.

Beyond the humanitarian impulse, Australia has a range of pragmatic reasons to see a prosperous and resilient Indonesia. A democratic, socially stable, and institutionally strong Indonesia will be less likely to export political and security problems. It will more easily withstand external interference or blandishments by major powers to obtain influence over its foreign and security policies. In strategic terms, it can act as a bulwark against threats from the north. And it will be a more valuable economic partner for Australia.

Despite having successfully held four direct presidential elections, Indonesian democracy remains fragile. There has been a steady decline in the willingness of government to tolerate dissent. The integrity of democracy is constantly challenged by the political-business elite. Religious and social conservatives threaten to overturn the plurality guaranteed by the constitution. By inflicting more hardship on the population, the COVID crisis might fuel anti-democratic and militant nationalist sentiments.

For Australia to invest in supporting Indonesian recovery from the COVID health and economic crises is surely money well spent. When it comes to giving at a time like this, it is hard to know how much is enough. The Morrison government has, like its predecessors, demonstrated considerable generosity.  But we can do more.

In the midst of border closures and the loss of opportunity for people-to-people contacts, this is a critical time for governments to be working together and building linkages. While doing that is not easy — our embassy and consulates in Indonesia have recorded 50 COVID cases since the start of the pandemic, mostly among locally-engaged contract staff — it is important that we resume high-level, in-person contacts this year and encourage the resumption of business and educational travel as soon as possible.

Our first priority is to help Indonesia meet the health security threat. As we have seen elsewhere, the best way to launch the economic recovery is to minimise the rate of infection. Indonesia’s ability to control the spread of the virus by mobility restrictions and other public health protocols is limited. The pandemic will run its course there as a result of herd immunity, which will come from either a vaccine rollout or the spread of the virus to the majority of the population. This latter outcome implies a much bigger death toll and strain on the health system.

The Indonesian government started its vaccination program in January using the Sinovac jab purchased from China. Widodo has set the target of vaccinating 181.5 million people or two thirds of the population by March 2022. This is almost certain to be too ambitious.

Australia has made four vaccine pledges. It has given $80 million to the international vaccine finance facility GAVI Covax. Indonesia can access this program. Canberra also has pledged $500 million to vaccine purchases for the Pacific and Southeast Asia – $101.9 million earmarked for Indonesia. The government promised last October to donate surplus vaccines from Australia’s immunisation program to regional partners. And then at the 12 March meeting of Quad leaders, it agreed to contribute another $100 million to purchase vaccines and support “last mile” delivery to arms, with a focus on Southeast Asia. This is part of a bigger Quad goal to increase manufacture and distribution of vaccines to the Indo-Pacific over the next year.

Australian aid, including medical PPE arrives at Halim Air Force Base, Jakarta, Indonesia - August 29, 2020. Image credit: Australian Embassy, Jakarta, Flickr.

The Quad was established in its first incarnation as a mechanism to respond to the 2004 tsunami. By a curious twist of fate, another natural catastrophe has given the four democracies the potential for to make strategic gains in the face of rising competition from China.

In recent days, the government’s attention has been drawn to the worsening coronavirus situation in PNG. Others in the region, like East Timor and the Philippines, have seen a spike in cases. It underscores the danger facing the immediate region and the need for Australia to support its neighbours.

But Australia should ensure the Quad’s aid diplomacy has a clear focus on Indonesia because in sheer numbers it faces the region’s most severe COVID threat and the long-term repercussions and strategic stakes there are so great.

The Quad’s allocation to Australia of a special role in distribution and delivery of vaccines acknowledges an area of relative strength. We already have made a largely unheralded difference on the ground in the provision of expert policy and technical advice. The framework for this was established in a decade-old program to support Indonesia in combating disease outbreaks, recognising its status as an infectious disease ‘hotspot’.

In a case of fortuitous timing, this program was in the process of being upgraded and relaunched as the Australia-Indonesia Health Security Partnership when the pandemic struck. Morrison and Widodo announced the partnership at their meeting in Canberra last year.

The technical collaboration can make a vital contribution to beating COVID. For example, Indonesia had submitted sequences for only 570 virus genomes between March 2020 and January 2021 to an international body tracking virus mutations. Increased surveillance would help identify any new strains of the virus emerging on our doorstep; speeding up vaccination by making sure Indonesia’s enormous logistical challenges are overcome will help prevent them emerging.

The economic legacy of the pandemic presents problems of an even greater magnitude.

Years of work to reduce poverty and set the country on the road to developed economy status have been unwound. Ironically, Indonesia this year graduated from the World Bank’s list of lower-middle income countries to upper-middle income, having just crossed the threshold of $US 4046 national income per capita.

Australia’s economic aid to Indonesia in this crisis is arguably of greater symbolic than practical benefit. Canberra lent $1.5 billion to support the national budget, giving Indonesia a significant discount on the interest it would pay if it raised the money itself. Indonesia already has started to draw down on the loan and the word in Canberra is that should Jakarta want another such loan Australia would look favourably on the idea.

Australian and Indonesian officials greet 2 million AUD worth of PPE and other medical supplies at Halim Air Force Base, Jakarta, Indonesia - August 29, 2020. Image credit: Australian Embassy, Jakarta, Flickr.

As with the health security challenge, Australian policy and technical advice can make a valuable contribution to better economic outcomes, like helping to identify the new poor and what assistance they need. For example, the partnership for economic development, PROSPERA, connects Australian Government agencies and private sector advisers to 30 Indonesian counterpart agencies. With initiatives like these Australia has established deep relationships in the Indonesian system – the extent and value of which are seldom recognised outside government. It would be hard to find another country where Australia is more institutionally entwined.

The missing ingredient in the relationship is the lack of two-way trade and investment. In 2018-19, trade in goods and services was $17.8 billion (with China it was $231 billion). The stock of bilateral investment was just $9.1 billion in 2019.

This year, Australian and Indonesian economic ministers are due to hold the first in a new series of annual talks. Already, Indonesia’s COVID crisis is reviving an old predisposition for economic nationalism. Widodo recently declared that Indonesians ought to “hate” foreign products – a disheartening message for advocates of an open economy. The biggest thing the economic ministers’ meeting could do is press ahead with the implementation of the Indonesia-Australia Comprehensive Economic Partnership Agreement, which for all its faults offers opportunities to give the relationship some missing economic weight.

There are no short-term wins for Australia from supporting its nearest Asian neighbour. Aid can have payoffs, as Downer found in establishing the EAS in 2006, although it would be unwise to expect some concrete return or expression of gratitude.

Still, we haven’t always been as good as some in promoting what we do. There is a view in Canberra that it’s unwise to advertise aid efforts too widely because opinion polls indicate voters are at best disinterested and at worst antagonistic to aid, especially when given to growing economies in Asia.

It might not be surprising then that a recent survey of Southeast Asian opinion makers found Australia even trailed New Zealand in perceptions of the countries that had offered the most help during COVID. China resoundingly won that contest – 44.2 percent compared to 4.3 percent for Australia. That’s another area where we could do more.

Donald Greenlees is Senior Adviser to Asialink, University of Melbourne, and Visiting Fellow at the Strategic and Defence Studies Centre, ANU.

Banner image:  Australian Prime Minister Scott Morrison hosts Indonesian President Joko Widodo at Parliament House, Canberra, Australia - February 10, 2020. Credit: @pmc_gov_au, Twitter.

This article also appeared in the Weekend Australian on April 3, 2021.