How Indonesia’s med-tech and ed-tech firms are responding to COVID-19
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Wed, 1 Apr. 2020
Oxford Business Group
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With cumulative global deaths from COVID-19 exceeding 22,000 from over 480,000 cases as of March 26, Indonesia – the world’s fourth-most populous country and the largest economy in South-east Asia – reported a cumulative total of 893 cases and 78 deaths.
Despite its close proximity and trade ties to China, where the outbreak began in December 2019, Indonesia did not report its first two confirmed cases until March 3. As such, travel and leisure activities continued largely as normal through much of the first quarter, although several restrictive measures were gradually imposed, including the one-month suspension of the visa-exemption policy for all countries starting March 20. Citizens of seven European countries, Iran, China and South Korea have also been banned from entry or transit.
As of March 26, the authorities continued to refrain from imposing a full lockdown, instead of following a policy of public “physical distancing”, which the police and military are authorised to help enforce, particularly if large crowds congregate.
Domestic and international airports and flights remain operational, although international routes are growing increasingly limited as airlines around the world scale back or suspend operations as a result of the pandemic.
The COVID-19 outbreak has hit at a time when the reform agenda of President Joko Widodo, better known as President Jokowi, was gaining momentum.
He won a second term in office in April 2019 on promises to enact meaningful structural reforms that would boost labour productivity, address skills gaps among Indonesia’s vast, youthful population, and promote the further growth of the digital economy.
In February 2020 the draft of the long-awaited Omnibus Law on job creation was submitted to Parliament for further discussion. The law promised to consolidate fragmented legislation in Indonesia’s complex legal code, with the aim of cutting red tape, centralising investment approvals and addressing long-standing complaints from employers around termination benefits, among other things. Although some of the provisions have been met with resistance from trade unions, the measures are broadly welcomed by the business community and investors eager to expand operations in the G20 economy.
“The short-term disruption which may be caused by the COVID-19 pandemic will make it even more important for the government to put the right measures in place to encourage investment in order for the economy to quickly bounce back once life returns to normal,” Julian Smith, government and public services leader at PwC Indonesia, told OBG.
As of March 26, there was no indication that the parliamentary agenda would be suspended due to the COVID-19 pandemic, but the immediate priorities of the president and Cabinet were focused on the economic, social and public health implications of the virus.
Having consistently grown at or above 5% for 12 consecutive quarters, GDP growth forecasts in 2020 have been revised downwards by numerous sources, with the minister of finance indicating that quarter one growth might slip to 4.5-4.9%, with the potential to fall even further in the second quarter. While such figures would be a clear decline from previous quarters, they remain high by global standards.
On March 24 President Jokowi told reporters the government was considering raising the budget deficit cap in order to strengthen health care systems and social protections while stimulating the economy.
Med-tech and ed-tech firms step up
As the debate continues over whether Indonesia’s public health care system is resilient enough to cope with a high volume of cases, fast-growing firms in Indonesia’s nascent medical technology (med-tech) sector are prepared to play a key role in the immediate response and are well-positioned to address gaps in health care services across Indonesia’s vast and fragmented territory over the long term.
Indonesia is home to the highest number of so-called unicorns – start-ups valued in excess of $1bn – among all 10 members of the Association of South-East Asian Nations (ASEAN). This is unsurprising considering that a 2019 report by Google, Temasek and Bain projected that Indonesia’s digital economy – already the largest and fastest-growing in the region – would expand from a value of $40bn in 2019 to $130bn by 2025.
Speaking in February 2018, the then- minister of communications and information, Rudiantara, predicted that the next wave of Indonesian unicorns would come from med-tech and education technology (ed-tech).
Many of the aspiring firms he named at the time are making innovative contributions to the fight against COVID-19 today.
Halodoc, which operates a mobile platform for patients to access doctors at any time of day and pharmacy delivery across 50 cities, has partnered with the Ministry of Health and Go-Jek, Indonesia’s first and largest unicorn, which operates integrated mobile ride-hailing, delivery and financial services. Together, they launched a telemedicine service called Check COVID-19, which allows Go-Jek users who feel ill to check their symptoms with over 20,000 licensed doctors in the Halodoc system. Suspected mild cases will be given advice on how to self-isolate and treat themselves at home, while more serious cases will be referred to hospital.
“Through this collaboration, we can potentially help the government to treat patients at home, via our telemedicine and medicine delivery service,” Jonathan Sudarta, CEO of Halodoc, told OBG. “With studies showing that approximately 81% of COVID-19 patients experience mild symptoms that are treatable at home in self-quarantine, we can potentially also limit the spread of the virus and its serious social and economic consequences by ensuring the public has access to the correct information from experts.”
Although daily life has yet to be severely upended for most people in Indonesia, it was announced on March 24 that national examinations would be cancelled for more than 8m high school students in an effort to limit the spread of COVID-19.
In anticipation of more disruption to the academic calendar, ed-tech firm Ruangguru, which offers online tutoring and education services, has launched the Ruangguru Online School Programme, which allows users of all grades to subscribe for free. Virtual classes delivered by the platform’s master teachers can be accessed every weekday from 8.00am until 12.00pm.
The firm has struck a partnership with the country’s biggest cellular operator, Telkomsel, to offer a free 30-GB internet package to allow students to study online without incurring any costs.
At this difficult time for the national and global economy, such initiatives can help to maintain the positive momentum towards developing human capital and preparing the next generation of Indonesians for the opportunities and challenges in the future economy.
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