The COVID-19 pandemic is testing Indonesia’s healthcare industry. With 169,195 confirmed cases and 7,261 deaths as of August 29, Indonesia has had to face the challenge of managing an extremely transmissible virus for a country of 265 million. That the country’s 2,925 hospitals have yet to buckle under the duress may already be a feat unto itself. Nevertheless, Indonesia could do a lot to improve upon its healthcare sector. The Indonesian government is aware of this and seems more committed than ever to carrying a full reform of its healthcare industry. Pharmaceuticals “The events [unfolded] by this pandemic means that we must accelerate the fundamental reforms in our healthcare sector,” President Jokowi said at the annual plenary meeting of Indonesia’s Consultative Assembly in Jakarta this August, as quoted by Kompas Daily. “We must massively increase the resilience and the capacity of our health services.” To the Indonesian government’s credit, the country was already on a path of a massive healthcare reform. It introduced, in 2014, a universal healthcare program, which has since grown into the world’s largest, covering over 200 million people. To further improve the country’s healthcare infrastructure, in 2017, the country had also made amendments to its Negative Investment List, giving foreign investors a larger stake in certain sub-sectors of its healthcare industry, such as in hospitals, specialized clinics, and medical equipment. This has led to a healthy, if somewhat below-potential, growth of the country’s healthcare industry. Indonesia’s pharmaceutical industry, in particular, experienced annual growth between 10 and 13% due to the national health insurance program in the last five years. Indeed, amidst the significant economic contraction caused by the COVID-19 pandemic, the chemical, pharmaceutical, and traditional medicine sectors still managed to grow 8.65% in the second quarter 2020, and 5.59% throughout the first half of the year. These sectors carry significant potential for foreign investors, as some 90% of the raw materials used in the production of drugs are imported. Additionally, the government has already amended the Negative Investment list to allow foreign investors 100% ownership of factories that produces these essential raw materials. Medical devices Indonesia’s medical device industry is worth an estimated US$2.4 billion in 2019, with the majority (US$2.8 billion) coming from imported products, according to a report by consulting firm Dezan-Shira. Due to the COVID-19 pandemic, the number of imports is set to grow even higher, with the country setting aside Rp 695.2 trillion towards funding its national economic recovery program. As much as Rp 169.7 trillion, or 6.2% of the total state budget, have been allocated to the Ministry of Health. As part of the government’s COVID-19 response, the Ministry of Health has been tasked with procuring the COVID-19 vaccine, laboratory equipment and facilities, as well as research and development in addition to conducting the vaccination process itself. Currently, the government has eased various import restriction on medical devices in its effort to combat the COVID-19 pandemic. If the Indonesian government continues its regulatory reforms to improve its Ease of Doing Business ranking, which President Joko Widodo has pledged to do, the ability of foreign manufacturers to import medical devices should become less cumbersome. Opportunities for foreign Investors Amidst a downturn in all other economic activity, German medical technology export to Indonesia increased. As reported by GTAI, Germany exported medical devices worth US$52.2 million, 22.2% more than a year earlier. This is reflective of the potential the Indonesian healthcare industry bears for German investors. In the long-term, the healthcare industry will experience significant growth as the Indonesian middle-class grows and demand increases for products to treat common and even niche conditions. In this regard, foreign investors may also take notice of the growth of Indonesia’s digital healthcare as the use of healthcare apps is also transforming the local market. Local healthcare app, Alodokter, recorded more than 30 million active users since March 2020. The Indonesian government is also invested in these so-called telehealth firms. The Ministry of Health partnered with Halodoc, as well as local ride-hailing giant Gojek, to provide COVID-19 diagnostics in remote areas.
The Federal Government has decided on numerous state aid measures to overcome the Corona crisis. According to the German Finance Ministry's stability program, this will burden the public budgets with approximately 450 billion EUR, and the federal and state governments will provide additional guarantees of almost 820 billion EUR. The Federal Government has also launched a comprehensive 130 billion EUR economic stimulus package and a 50 billion EUR package for the future. However, the final impact of the crisis cannot yet be fully quantified. In addition, the EU Launched a Coronavirus Response Investment Initiative (CRII) with a total of 37 billion EUR to combat the pandemic in the following sectors of the economy: health care, SMEs and employee support. Since April 1, the application of rules for faster and more flexible use of EU cohesion funds is in place. This applies retroactively to expenditures that Member States have made and continue to make since February to combat the crisis. Last but not least, the EU leaders in July agreed on an unprecedented stimulus package worth 750 billion euros, with 390 billion euros of grants and 360 billion euros of low-interest loans. The information below provides a brief overview of the federal measures to support the German economy as well as a selection of links to inform employees and interested groups. FOR SMALL COMPANIES, SELF-EMPLOYED AND START-UPS 50 billion EUR in direct subsidies from the Federal Government, do not have to be paid back (for companies with up to five employees 9,000 EUR, up to ten employees 15,000 EUR), there of 25 billion EUR for bridging assistance (cross-sectoral program) Supplemented by financial programs in the federal states to varying degrees 7.5 billion EUR for facilitated access to basic security of self-employed workers Low-interest loans via the KfW reconstruction bank (the Federal Government takes over up to 100 percent of the default risk) 2 billion EUR for public venture capital investors for financing rounds for start-ups Postponement of the due date for import VAT to the 26th of the following month FOR MEDIUM-SIZED AND LARGER COMPANIES Low-interest loans through the KfW Fast loans are also possible, where the Federal Government bears the default risk (maximum 500,000 EUR for 11 to 49 employees, for 50 employees maximum 800,000 EUR) Economic Stabilization Fund with 600 billion EUR, thereof 100 billion EUR for capital measures and equity investments and 400 billion EUR in liquidity guarantees Modernization of corporation tax law, including a model for partnerships to opt for corporation tax Extension of the tax loss carryback: to a maximum of five million euros for 2020 and 2021. FOR EMPLOYEES Extended short-time allowance: This instrument proved to be a key support for employment during the financial crisis of 2008/2009, and it continues to play a key role now. Companies can partially compensate for loss of work and loss of pay. The Federal Employment Agency pays 60% of the lost wages or 67% for households with at least one child (if short-time work has to be continued for more than three months, the allowance is higher). Simplified access to basic security without a financial audit and in addition to the child supplement − Guarantee that social security contributions will not exceed 40% until the end of 2021. Partial compensation for loss of earnings due to childcare Relief contribution for single parents will be increased for a limited period of 2 years from the current EUR 1,908 to EUR 4,000 for the years 2020 and 2021 Bonus payments due to the Corona crisis are tax-exempt up to 1,500 Euro − Parental allowance months in systemically important occupations can be postponed One-time child bonus of EUR 300 for each child The VAT rates will be reduced from 19 to 16% and from 7 to 5%. The reduced rates are to apply as early as July 1 and are limited until December 31, 2020. FOR THE HEALTH SYSTEM Central procurement and domestic production of protective equipment for hospitals and medical practices − Around 2 billion EUR for more intensive care beds in hospitals and the procurement of ventilation equipment "Hospitals of the Future Program" to promote the necessary investments, both in terms of modern emergency capacities, as well as a better digital infrastructure of the houses for better care, process organization, communication, telemedicine, robotics, high-tech medicine and documentation (Financial requirements: 3 billion Euro) 2.8 billion EUR as compensation for postponed treatments Another 55 billion EUR for not yet defined measures planned A program to promote flexible and, in the event of an epidemic, scalable domestic production of key pharmaceuticals and medical devices. (Financial requirements: 1 billion Euro) How do internationally active companies quickly inform their customers and employees about current regulations on the Corona crisis in English? Various Internet sites provide remedy – below you’ll find a selection. Integration Commissioner The Federal Government provides information on current regulations on the corona virus in various languages (including German, English, French, Turkish, Russian, etc.). Among other things, it also contains speeches by Chancellor Angela Merkel. https://www.integrationsbeauftragte.de/ib-de/amt-und-person/informationen-zumcoronavirus Federal Centre for Health Education Besides hygiene routines you will also find leaflets and information graphics for free download. https://www.infektionsschutz.de/coronavirus/informationen-in-anderen-sprachen.html WDRforyou WDRforyou regularly creates videos e.g. in English, Arabic and Persian on its YouTube channel on the subject of corona virus. https://www.youtube.com/channel/UCCLTfM5rbatSdc8n4KQE-Sg/videos Handbook Germany Daily updated information can be viewed in different languages with a click on the globe and are divided into different categories such as "Corona virus and work". https://handbookgermany.de/de/live/coronavirus.html You can also obtain a PDF version here