Indonesian Retailers Brace for Gradual Recovery as Stores Reopen

(Bloomberg) --

Retail stores, restaurants and offices reopened in Indonesia’s capital after more than two-months as authorities eased social restriction rules to jump-start an economy hit hard by the coronavirus pandemic.

The number of visitors to dine-in restaurants and retail stores is limited to 50% of their capacities under a new health protocol unveiled by Jakarta’s administration last week, which also saw public transport services being restored to the pre-pandemic period albeit with reduced capacity. The city’s online motorcycle taxi services by Gojek and Grab Grab Holdings Inc. were also allowed to resume from Monday.

Jakarta, the epicenter of the nation’s virus outbreak, switched to a month-long transition phase from a partial lockdown last week by allowing places of worship to reopen. The city of almost 11 million people has seen the rate of infections fall below the threshold seen as safe to resume limited activities, according to Jakarta Governor Anies Baswedan.

The decision to ease restrictions in Jakarta, also the financial hub and an engine of growth for the Indonesian economy, followed a similar move in parts of more than 100 cities labeled as green zones. The government has separately announced it may reopen the country to foreign tourism as early as September and to domestic holidaymakers by the end of July.

Economic Activities

“The recovery in business, in terms of the number of visitors and consumption, will be gradual as economic activities are resuming in stages too,” Roy Mandey, chairman of the Indonesian Retailers Association, said in a phone interview. “We are still hoping for a gradual pick up in retail sales in the second half and see 3%-4% growth in full-year sales.”

The food and beverage industry too expects the reopening to gradually revive demand for products from processed food and bottled soft drinks, which was hit hard by the lockdowns in March and April, according to Rachmat Hidayat, vice chairman of the Indonesian Food and Beverage Association.

“With people starting to go to offices, eating at restaurants and canteens and traveling resuming, we will see sales starting to increase,” Hidayat said. “At least we will see some improvement in the next month, but for demand to return to normal it will need more time.”

Read: Recovery Hope Erases Pandemic Losses in Indonesian Assets

Social distancing measures put in place to counter the spread of Covid-19 in Jakarta and elsewhere in Indonesia have weighed heavily on commerce, contributing to massive job losses. The economy is expected to miss a revised estimate for growth for this year of 2.3% with the possibility of a contraction of 0.4% under a worst-case scenario, according to official estimates.

New Cases

Indonesia had 31,186 cases of Covid-19 as of Sunday, while the death toll had risen to 1,851, with Jakarta accounting for more than a quarter of the fatalities and infections, according to official data.

The Jakarta administration will continue transitioning to a further lifting of restrictions with malls to be allowed to open from June 15 and tourism sites from June 20. The shopping centers are preparing to enforce temperature checks on visitors and employees, besides switching to cashless transactions to minimize virus transmission risks, according to Ellen Hidayat, chairwoman of the Jakarta chapter of Indonesian Shopping Center Association.

“The closure of the shopping centers and the absence of income from rental fees hit our members really hard,” Hidayat said. “Hopefully, with the reopening of shopping centers in Jakarta, it will contribute positively to the revival of the national economy.”

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