UNAIR NEWS – Political economy expert and senior lecturer at University of Indonesia Faisal Basri was invited as a resource person at Batch I International Development Student Conference 2020 Faculty of Economics and Business UNAIR 2020 (IDSC 2020 FEB UNAIR). IDSC 2020 is an activity from a series of annual activities called Economic Week 2020. In the webinar held on Saturday afternoon (19/9/2020), the material presented by Faisal Basri was " Propitious Economic Decisions in the Midst of Unstable Conditions ".

Faisal opened his material by explaining that the economic crisis caused by the COVID-19 pandemic is different from previous global or regional economic crises. This is because the trigger for the crisis was not the financial sector itself, but the health sector. So, he emphasized that efforts to find an antidote to cure this economic crisis require mindset because the effects of this crisis have a huge impact on almost all aspects of human life.

"The COVID-19 pandemic is a manifestation of the concept of true ambiguity in future prediction theory in the world of economics because no one predicts that there will be a global economic crisis in 2020. Everyone thinks the economy will improve this year, but in fact it doesn't," explained Vanderbilt University alumnus.

Faisal said that the short-term impact of the pandemic on the global economy was the simultaneous a supply shock and a demand shock This is because the production and consumption sectors have been stopped by the social restriction policies implemented by the government. He also presented economic growth data such as England and France as examples of how affected they were due to the pandemic. However, strangely, the Indonesian economy was not that affected and according to Faisal, this is not something to be proud of.

“Our economic stability is greatly influenced by the fact that Indonesia does not implement strict social restrictions. "They eat the sap first but maybe next year things will return to normal, while we are still struggling with handling the virus and our economy is still stagnant like this," criticized the former National Mandate Party (PAN) politician.

The bespectacled economist then explained that economic growth should be inversely proportional to the growth of the virus, but according to him the Indonesian government seemed to ignore this and the economy was relaxed when cases continued to rise. Faisal added that if this was continued, it could change people's economic behavior.

“People will automatically change their economic behavior because uncertainty persists. They will be more careful in spending their money and tend to save because they are not sure when this pandemic will end. Business people are also reluctant to invest in this country because conditions are not yet stable. Government spending allocations will also change. "So this premature economic easing must be stopped immediately," said Faisal.

Faisal proposed the hypothesis that if Indonesia decides to implement strict social restrictions, he is optimistic that Indonesia can resolve the economic downturn in a short time. He quoted the prediction of Dani Rodrik, an economist from Turkey, that the future economy will be dominated by a trend of rebalancing between hyper-globalization and the national economy, with the national economy taking precedence. Faisal concluded that Indonesia has a very capable national economy and this fact can cure the economic crisis caused by social restrictions.

"The data I use to support this opinion is that the percentage of exports and imports in Indonesia's annual income is only around 39.8%, so it is not that big. FDI ( Foreign Direct Investment ) in Indonesia is also only 5% compared to the percentage of exports and imports. Meanwhile, Indonesia still has 270 million people, most of whom are consumers. It's not that I am against foreign investment, but Indonesia is actually great and can overcome the economic crisis. "Our country's economy can still be independent," said the member of the Business Competition Supervision Commission (KPPU).

Finally, Faisal quoted that the COVID-19 pandemic economic crisis is a crisis filled with uncertainty and complexity. Therefore, he emphasized that the best certainty that can be present at this time for society and the world of the economy is the government's ability to overcome the COVID-19 pandemic.

Author: Pradnya Wicaksana

Editor: Nuri Hermawan

Source: http://news.unair.ac.id/2020/09/22/idsc-2020-faisal-basri-ulas-politik-economic-di-tengah-pandemi/