Giant's fall (May 21-28)
Supermarket chain bids adieu
Hello Coconauts!
This week, we heard the upsetting news that the Giant supermarket chain, known as much for its ubiquity as its low, low prices, is closing for good. We’ll take a look at Giant’s impact on Indonesia, and what the future holds for its parent company (Hint: it involves an expansion of a certain Swedish furniture brand).
Plus, read on for more essential updates from throughout the archipelago, including the latest developments surrounding a controversial vaccine, a work from a Bali initiative, and hardline cleric Rizieq Shihab’s conviction.
Stay informed, and we’ll see you next week!
Business and the economy
Giants once roamed Indonesia
Hugely popular supermarket chain Giant — which had 395 stores during its heyday — is closing for good by the end of July, parent company PT Hero Supermarket announced this week.
PT Hero Supermarket said Giant was no longer profitable and was especially affected by the pandemic, during which consumers switched preferences to more convenient minimart chains for their daily needs.
The parent company, which operates the IKEA brand in Indonesia, will transform five Giant stores into new outlets for the Swedish furniture brand at as-of-yet undisclosed locations, as well as 100 new Guardian drug stores and dozens of new Hero supermarkets.
Giant has been on the ropes for several years. In December 2017, the chain employed 14,642 people. After several cuts, it’s had 7,975 employees as of March 2021, many of whom may be out of a job if they don’t transfer to PT Hero Supermarket’s other business units before Giant’s closure.
PT Hero Supermarket, meanwhile, booked a loss of IDR1.21 trillion (US$84.5 million) in 2020, up 3,570 percent from the IDR33.18 billion (US$2.3 million) loss in the previous year. A retail association says Giant’s demise epitomizes the increasing pressure on the retail industry amid the pandemic.
Unemployment down
Latest official data shows that 8.75 million Indonesians are unemployed as of February 2021, down from 9.7 million in August 2020, indicating a gradual recovery in demands for jobs that took a major hit during the pandemic.
Given Indonesia’s eligible workforce of 205.36 million, the country’s current unemployment rate stands at 6.26 percent.
Transportation up
Speaking of rebounds from the pandemic, state-owned bank Mandiri has forecasted that transportation services and automotive manufacturing will head toward green territory thanks to massive spikes in domestic travel volume and vehicle purchases.
Conversely, the tourism industry is expected to remain in the red this year due to continued restrictions on international travel.
Garuda bleeds
Yet not all in the transportation sector is enjoying their time in the sun, with flag carrier Garuda Indonesia admitting this week that its financials are in dire straits due to the pandemic. Garuda says it’s exploring several options to keep the company afloat, including debt restructuring, a government bailout, and liquidation.
Garuda has reportedly offered early termination packages to its employees. An employees union said they will not accept the offer, which they say was unilaterally decided by management.
Garuda recorded US$1.14 billion in income in the first three quarters of 2020, down from US$3.54 billion from the same period in 2019. Between those periods, the airline saw a 71 percent reduction of income from passengers and a 26 percent reduction from cargo.
Gov’t workers for WFB
The government seems to be seriously considering launching its Work From Bali initiative, which would initially see a quarter of all civil servants employed by seven ministries working from the paradise island to help prop up its ailing tourism-dependent economy.
The government has signed an MOU with hotels in the upscale Nusa Dua resort area, which will host the civil servants for stays and meetings. Officials are hoping to launch the initiative by the third quarter of 2021.
Experts have criticized the plan, which they say would represent wasteful spending of the state budget and for potentially raising the risk of new COVID-19 outbreaks in Bali.
Morgan Stanley out
American investment bank and financial services company Morgan Stanley has shut down its stock brokerage service in Indonesia, but will continue provide its clients access to the equity market through local brokerage partners.
Morgan Stanley’s securities arm in Indonesia has yet to release its Q1 2021 financial report, but numbers from last year did not cast optimism for the future. In 2020, the firm booked an IDR51.2 billion (US$3.6 million) profit, down 17 percent year-on-year.
Facebook, TikTok safe for now
The Information and Communications Ministry has extended its deadline for Facebook, TikTok, and all other digital services to register as Electronic System Providers (PSE) with the ministry by another six months, as the original deadline of May 24 had passed.
The ministry last year passed a regulation that contains the requirement for the purposes of cyber security and protection. However, none of the major digital service providers had expressed their intention to comply with the rule.
Recommended reads
Growing demand for electric vehicles a boost for Indonesia’s economy (The Jakarta Post)
Already commonplace in many parts of the world, EVs are expected to represent more than 50 percent of new vehicle sales globally by 2035—though demand varies dramatically from country to country. In Indonesia, this game-changing, environmentally friendlier technology is just starting to emerge as a significant force.
Gojek and Tokopedia’s holding group GoTo plans fundraising ahead of blockbuster IPO this year (South China Morning Post)
Now the newly merged entity, GoTo Group, is planning another round of fundraising this summer ahead of launching an initial public offering (IPO) later this year that could make it one of, if not the, most valuable technology companies in Southeast Asia.
But all that development comes at a cost. Insider spoke with economists as well as tourism and Southeast Asian development experts to understand what kind of downsides a new surge in tourism could create. Some of those experts expressed doubt that the appeal of Bali can be replicated in the first place — while others are concerned about the impact widespread tourism will have on the country's people and environment.
Across the archipelago
Rizieq guilty
Hardline Islamic cleric Rizieq Shihab, who founded the outlawed Islamic Defenders Front (FPI), was sentenced to eight months in prison for breaching COVID-19 protocols. In late 2020, he held his daughter’s wedding and his followers held mass gatherings in his honor following his return from three years of self-imposed exile in Saudi Arabia to escape charges related to pornography.
The sentence was much lighter than the two years sought by prosecutors, and his prison term will be reduced by three months to account for the time he has already spent in police detention.
Rizieq’s return was met with a renewed crackdown on ultraconservatism by the government, resulting in the banning of the FPI after the group was accused of being against the country’s founding principles. At the height of the tension, police killed six FPI members in a shootout.
AstraZeneca green-lit
The Food and Drugs Manufacturing Agency (BPOM) has given its all-clear for a suspended batch of nearly half-a-million doses of the AstraZeneca vaccine to be used in the country’s mass vaccination drive.
The batch, code-named CTMAV547, was recalled for toxicity analysis nearly two weeks ago amid concerns that they may cause severe side effects and even death. BPOM has declared the batch to be safe, but will continue to monitor the safety of all vaccines available in Indonesia.
KPK still down
Despite President Joko Widodo publicly defending the 75 Corruption Eradication Commission (KPK) employees who failed a dubious civics test (see last week’s newsletter), 51 are reportedly set for termination after they were deemed to have scored too low on the test. The remaining 24 are set for civics training, but they say they may choose to resign with their dignities intact instead.
The 75 have filed a complaint with the National Commission for Human Rights (Komnas HAM), accusing the government and the current leadership of systematically weakening the anti-graft body by getting rid of its best people through dubious means.
The test only became a requirement after a controversial revision to the laws governing the independent anti-graft body was passed in 2019, and it was widely seen as an attempt to trip up the agency in a larger scheme to weaken its powers.
Rapist’s proposal
A son of a member of the Bekasi City Council (DPRD) turned himself in to the police after he was reported a month ago for the rape and human trafficking of his 15-year-old girlfriend.
The high-profile rape case triggered even more outrage when the suspect’s lawyer proposed that the victim be married to his client so the latter can atone for his sins. While the suspect’s father was on board with the idea, the victim’s father was understandably not, and is seeking the most severe punishment possible for his daughter’s rapist.
Recommended read
Unpaid and overworked: Inside the exploitative world of student internships (Coconuts Jakarta)
It wasn’t exactly the start to the professional life Agus dreamed of. For the past three years, the 23-year-old struggled to obtain college credits via his internship program, having toiled without pay at three different companies.
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