RESEARCH PAPER SERIES, 2019–20              11 June 2020

COVID-19 in the region: a quick guide

Dr Angela Clare

Foreign Affairs, Defence and Security Section

Overview

Several countries in Australia’s immediate region are vulnerable to severe impacts from COVID-19 due to their high incidence of poverty and limited basic health care. With their larger populations, Papua New Guinea (PNG) and Indonesia are of particular concern.

Indonesia is one of the worst-affected countries in Southeast Asia, with public health measures to contain the disease seriously disrupting economic activity. Observers fear that due to a large informal sector, poverty could increase considerably unless effective support measures can be implemented.

PNG and the Pacific have low COVID-19 numbers to date, with financial support to keep governments going, rather than medical aid, seen as the most urgent need at present. Pacific countries have been particularly affected by a drop in tourism, migration and commodity prices.

Indonesia, PNG and several Pacific Island countries have been offered financing from the development banks to support their response to the pandemic. In general, Pacific countries have limited capacity to take on more debt due in part to their narrowly-based economies. The G20 announced in April that several countries are eligible for bilateral debt relief over the rest of 2020.

Australia’s support for the pandemic response in the region includes assistance with testing and laboratory diagnosis; the provision of personal protective equipment (PPE) for health care workers; risk communication strategies; national response planning and budgeting; and the provision of medical supplies and equipment. Australia, along with New Zealand, is funding the World Health Organization’s (WHO) Pacific regional coronavirus response plan (which provides access to medical and technical advice on infection prevention and control, and clinical management). Australia is also supporting a range of health and medical research on infectious disease prevention, detection and control in the region.

In recognition that Australia is an important transport hub for the region, the Australian Government is also working to maintain an essential services and humanitarian corridor to the Pacific and Timor-Leste, to allow for the movement of a limited number of international experts, essential supplies and food.

On 29 May the Australian Government announced a new policy, Partnerships for Recovery, to guide its support for the region’s COVID-19 response. The policy pivots Australia’s development partnerships towards three key areas: health security, economic recovery and stability of the region. It includes the redirection of $280 million to support critical medical and humanitarian priorities in the Pacific, Timor-Leste and other Southeast Asian countries. It also includes a focus on Pacific women and girls’ health, economic security and personal safety.

Australia’s support to the region is being financed through the existing aid budget, with no additional funding announced to date.

The Australian Council for International Development (ACFID) has called on the Government to increase its support for the region’s COVID-19 response. Citing the Howard Government’s $1 billion humanitarian package for Indonesia after the 2005 tsunami, ACFID has argued that the Government should allocate an additional $2 billion over four years to support the region’s recovery.

For updates on international responses to the pandemic, see the World Bank’s COVID-19 Finance Sector Related Policy Responses; the International Monetary Fund’s (IMF) policy responses; the Australian Pacific Security College’s COVID-19 Pacific Island response matrix, and Donor Tracker.

Further information on individual countries—Indonesia; Timor Leste; Papua New Guinea; Pacific Island countries—is provided below.

The impact of the COVID-19 pandemic across Australia’s immediate region is still unfolding and this quick guide represents a snapshot of the situation as at early June 2020. It is one of a number of publications on COVID-19 by the Parliamentary Library.

Indonesia

While Singapore leads the COVID-19 case tally, Indonesia is one of the worst-affected countries in Southeast Asia and has the highest death toll in Asia, outside of China.

As at 9 June there were 33,076 confirmed cases and 1,923 deaths. Health experts suggest that the national tally could be far higher if suspected—but not yet tested—cases of the virus are included. Cases have been recorded in all 34 provinces, with 1,291 reported in the two Papuan provinces as at 9 June. Observers believe official numbers in the latter provinces also likely mask the actual level of infection, noting a substantial outbreak in the mining hub of Mimika.

Official daily tallies of the pandemic in Indonesia are issued by the Ministry of Health.

Until recently, a lack of testing had been one of the key obstacles to Indonesia’s response to the pandemic. The number of tests completed in Indonesia per million residents has been amongst the lowest rates in the world, and only reached the national target of 10,000 tests per day in late May. Shortages of materials and trained laboratory staff are said to be the major constraints.

The G20 has expressed fears that Indonesia has neither the economy nor health systems to cope with the pandemic. Indonesia is seen to be especially susceptible to a high COVID-19 related death toll due to its weak hospital system, widespread poverty, and poor overall health indicators, including one of the world’s highest rates of tuberculosis, and smoking among men.

Given the relatively large size of the informal economy and lack of any social safety net, the economic and social costs of lockdown measures are also expected to be severe, particularly for urban workers. An estimated 55 per cent of Indonesians work in the informal sector and rely on daily income.

Government responses

•        The Government increased funding for its National Economic Recovery program on 18 May, which is now estimated to cost US$44 billion. The program expands on the stimulus packages issued in February and March 2020 and includes tax breaks, capital injections for state-owned enterprises, interest subsidies for micro, small and medium-sized business enterprises, support for the banking industry, and financial assistance for the health sector.

•        The Government has announced a raft of social protection measures, including Rp 22.4 trillion from a total of Rp 71.19 trillion in village funds to disburse cash transfers for 12.3 million families affected by the crisis. Other measures include assistance packages for laid-off and informal workers and micro and small-business owners, financial support for electricity and housing costs, and the provision of food packages. With the additional spending, the budget deficit is expected to reach 6.27 per cent of GDP.

•        On 31 March the Government declared a public health emergency, but rejected a nation-wide lockdown, allowing regional administrations to impose their own restrictions. Quarantine and lockdown measures have varied considerably across the country and a series of policy reversals has caused widespread confusion. In late May 340,000 army and police personnel were deployed across four provinces and 25 cities, including Jakarta, to help enforce lockdown measures. The Government began to lift restrictions in the capital from early June in a bid to ease economic and social impacts, although many are worried about the continuing rise in new cases. The annual Hajj pilgrimage has been cancelled.

•        Civil society groups are considered to have mobilised effectively to drive local responses.

External support

The Indonesian Government has received support from 58 international partners to boost its COVID-19 response, including:[1]

•        around US$7 billion in loans from the Asian Development Bank (ADB), the World Bank, and the Asian Infrastructure Investment Bank (AIIB)

•        US$11 million from the US to support laboratory systems, surveillance and assistance to vulnerable populations, while the EU is providing €6 million

•        several grants and pledges of in-kind support from China, including 36 tonnes of medical aid. Video sharing platform TikTok has provided a US$6.3 million grant to health workers, while the Jack Ma Foundation donated two million masks, protective clothing, and test kits to Indonesia, Malaysia, the Philippines and Thailand

•        technical advice on the crisis from Australia, comprising guidance on economic assessment; fiscal stimulus packages; and non-cash vouchers for the unemployed (including through Australia’s aid program for economic development) and

•        assistance from multilateral agencies, including the World Health Organization, UNDP, UNICEF, the International Organization for Migration, the Global Fund, and the International Committee of the Red Cross (ICRC).

Outlook and commentary

•        Observers have been critical of the Indonesian Government’s ‘slow and piecemeal response’ to the pandemic and lack of effective national coordination. The Government initially played down the risk of COVID-19, with senior officials reportedly suggesting that prayer, herbal remedies and hot weather would help ward off the virus. Indonesia’s security agencies have since assumed control of a national COVID-19 taskforce under presidential command, raising concerns that the pandemic will be used as cover to suppress political dissent.

•        Poor coordination between national and sub-national levels of government risk undermining the success of large-scale social restrictions according to some analysts, posing a threat to national unity as national and provincial authorities struggle to meet the basic necessities of the population.

•        Critics have also argued that the current stimulus packages are not enough to cover the country’s COVID-19 response, while health experts say government measures are not sufficient.

•        Analysts have called for Australia to do more to help Indonesia, arguing that for security as well as economic reasons, Australia needs Indonesia to succeed. A large loan facility and a currency swap line are among the options proposed.

•        It has also been suggested that the pandemic presents opportunities for Australia and Indonesia to forge stronger ties in the areas of security, public health and climate change.

Timor Leste

Overview

As at 9 June Timor Leste has recorded a total of 24 confirmed COVID-19 cases and no deaths. There have been no recorded community transmissions, and no new cases since 24 April.

Timor Leste has an oil-based economy and is experiencing severe economic impacts due to the pandemic and collapse of oil prices, including the reported loss of $1.8 billion from the Petroleum Fund (which makes up around 90 per cent of the government budget). Further falls are likely given the mid-April collapse in oil prices.

With a weak health system and a high poverty rate (around 41 per cent of the population live below the country’s poverty line), the potential impact of the virus could be devastating.

Unemployment is expected to increase across a number of key sectors, in both the formal and informal economy.

Given the low infection rate to date, debates have commenced on loosening COVID-19 related restrictions.

Government responses

•        A state of emergency was declared on 28 March, putting into force restrictions on movements; surveillance; compulsory 14-day quarantine for those possibly exposed to the virus; and social distancing at home and work.

•        A COVID-19 Fund has been created to finance the health response to the pandemic. On 2 April the parliament approved a US$250 million withdrawal from the Petroleum Fund, with a further withdrawal of US$286 million requested by the Timorese Government on 3 June.

•        A socio-economic plan was approved on 20 April, including cash support for electricity and
low-income households (each household will receive $15 in electricity credits and $100 per month); wage subsidies; the purchase of an emergency rice stock; support for national air transport connections; and ensuring emergency connections to Darwin.

•        The Prime Minister, Taur Matan Ruak, has withdrawn the resignation he submitted in February in order to help the country through the COVID-19 crisis. On 4 May the Government’s new coalition collapsed after a vote to extend the emergency decree was defeated in parliament.

External support

•        Australia has provided medical support and equipment, including personal protective equipment and support for testing (the national laboratory is now able to conduct testing autonomously). Australia also helped repatriate nine doctors from the region to boost Timor Leste’s response and provided an additional $10 million in aid.

•        The Menzies School of Health Research has partnered with local clinicians to boost Timor Leste’s in-country diagnostic capacity, with Dili’s National Health Laboratory processing 40 to 50 tests per day as at 9 May.

•        The US, the EU, China and Cuba (a long-term health partner) are among the bilateral partners also providing support to the country’s COVID-19 response.

•        The WHO and other UN agencies are providing financial and technical support, including supporting the Government implement its cash transfer program and helping the Ministry of Health draft guidelines for maintaining routine immunisation activities during the COVID-19 pandemic.

•        The International Committee of the Red Cross (ICRC) is supporting the Timor Leste Red Cross with awareness, training, and other materials, including in detention settings. A number of other NGOs are also actively supporting Timor Leste’s response.

Outlook and commentary

•        Further reductions in the Petroleum Fund will affect future revenue, analysts claim, highlighting the country’s economic vulnerability and heavy reliance on this commodity.

•        Observers concede that the Government has taken ‘reasonable measures’ to address the pandemic, but that these should be a first step towards longer term strategies to invest in key sectors such as health, agriculture, tourism, and education to reduce dependence on the oil sector and diversify the economy. Timor Leste does not produce enough food to be self-sufficient, for instance, undermining the value of cash subsidies.

Papua New Guinea

Overview

The first case of COVID-19 was detected on 20 March, and as at 9 June the number of cases remains at eight, with no deaths. No new cases have been reported since 23 April. Observers caution that the gap in PNG’s testing capacity risks undermining efforts to control the spread of infection: as at 25 May less than 3,000 people had been tested in a population of nearly nine million.

With COVID-19 cases rising in the bordering Indonesian Papuan states (from 141 on 29 April to 1,291 on 9 June), PNG officials are most concerned about the risk of community transmission across the border. The indirect health impacts COVID-19 may pose to already weak health systems could also be significant, including for maternal and child health. The Government has acknowledged that the country does not have the capacity to deal with a COVID-19 outbreak.

It is feared that COVID-19 may push the country closer to being a failed state, adding to already high debt levels and unstable government.

UNICEF has expressed concern that the suspension of routine immunisation with the onset of the pandemic will put children at risk of other infectious diseases such as measles and polio, both of which have seen recent outbreaks in PNG.

Low commodity prices exacerbated by the pandemic mean PNG is suffering a severe budget shortfall. Even before the pandemic, PNG was negotiating a US$2 billion bailout package with international lenders to address a looming financial and budget crisis.

With low numbers of confirmed cases to date, there have been calls to ease restrictions. Students returned to school on 4 May after schools had been closed for five weeks, while Air Niugini is expanding domestic services in response to a pick-up in demand.

A PNG Government minister has called for the country to be included, with other Pacific Island nations, in the opening of Australian and New Zealand borders under the so-called ‘Trans-Tasman bubble.’

Government responses

•        A state of emergency was declared on 22 March, with the Government restricting movement and gatherings, closing international borders and imposing quarantine policies, suspending non-essential business and services, and setting up a 24-hour call centre to respond to concerns.

•        On 2 April the Government announced a stimulus package of A$2.5 billion (5 per cent of GDP), which includes private sector contributions, domestic bonds and loans from international banks. The package is intended to support households, businesses, and the health system to respond to COVID-19.

•        Procuring personal protective equipment has been challenging for the Government, with donors stepping in to help meet demand.

•        The Indonesian and PNG military are coordinating patrols of the border between the two countries.

External support

•        Australia is providing a A$20.5 million COVID-19 support package through its existing aid program, including for personal protective equipment, medical equipment and supplies, and measures to increase testing capacity. It has delivered ten container health facilities to boost infrastructure capacity. Rapid response teams have also been deployed to PNG provinces, including the regions that border West Papua.

•        The World Bank has approved an emergency US$20 million project to provide rapid support for PNG’s pandemic response, and US$100 million for new agriculture, health and youth projects.

•        UN agencies are providing a wide range of medical equipment and technical support, while bilateral donors, including the US (pledging US$3.2 million), the EU and China, have provided cash grants and medical supplies.

•        Several NGOs are supporting PNG’s response to the pandemic—including Care, World Vision and the ICRC—by providing personal protective equipment and training to health facilities in targeted areas such as the Highlands, Bougainville and Western Province.

Outlook and commentary

•        Analysts have noted that the pandemic could not have arrived at a worse time for PNG, with the economy more vulnerable than it has ever been to external shocks.

•        Despite the sizeable borrowings, new fiscal spending will only amount to A$240 million, which is not deemed sufficient to respond adequately to the pandemic or the population’s needs.

•        Economists have argued that given the country’s borrowing constraints, ‘cuts in non-priority areas will be critical for freeing up funds to respond to the very real economic suffering that COVID-19 is already causing’.

•        Transparency International has called for greater accountability in regard to the use of
COVID-19 related funds, after allegations of improper use surfaced.

•        The PNG Government has recently criticised Australia’s approach to delivering aid to the country, claiming that PNG leaders have been left out of decision-making processes, and that PNG priorities were ignored and PNG Government systems bypassed.

Pacific Island countries

Overview

Most Pacific Island countries took early steps to close borders and impose quarantine measures, and to date there have been few direct health impacts from the pandemic. With the total number of cases across the region reported to be 297 (excluding PNG) as at 9 June, the health threat is looking less severe than feared. Guam has the highest number of cases at 171, followed by French Polynesia with 60. There are 28 in the Commonwealth of the Northern Mariana States, 20 cases in New Caledonia, and 18 in Fiji (with no new cases since 18 April). Other Pacific nations remain free of COVID-19. The region’s geographic isolation is thought to have provided some initial protection against the onset of COVID-19.

Given the low case numbers, some countries have commenced easing restrictions on social movement and gatherings, while commentators argue that financial support to keep governments going, rather than medical aid, is the most pressing need at present. But with severely under-resourced health systems across the region, there are clear risks to lifting restrictions too soon.

Pacific economies are typically narrowly-based and highly vulnerable to external shocks. They are often heavily dependent on tourism, commodities, trade and migration, all of which have been severely affected by containment measures. As with PNG, the Solomon Islands has been hit hard by falling commodity prices, while Fiji, Vanuatu, Samoa, Palau and the Cook Islands have been severely affected by the loss of tourism.

Several Pacific Island countries have been extended grants or concessional financing from development banks (the ADB or the World Bank) to help finance their response to the pandemic. Most have limited capacity to absorb debt and are unable to raise money on the international capital markets, hampering their capacity to implement stimulus measures. It has been feared economic hits may cause social unrest in some countries.

Australia has announced that Pacific seasonal workers could continue to work in the agriculture sector for up to 12 months. Calls have been made to increase the intake of seasonal workers from the region to meet the high demand for fruit and vegetable harvesting, under appropriate health and safety regimes.

Remittances from seasonal work form a large proportion of some Pacific Island countries’ income, making up around 18 per cent of GDP in Samoa and 40 per cent in Tonga. Work in Australia accounts for 26 per cent of remittances to the Pacific, with workers each sending home around $2,200 over a six-month period. The World Bank predicts global remittances to decline by about 20 per cent in 2020 due to the pandemic, the sharpest decline in recent history.

The region’s economic vulnerability has prompted calls to bring Pacific nations inside the ‘Trans-Tasman bubble’.

Regular updates on the impact of COVID-19 in the Pacific are currently issued by The Guardian, the ANU’s DevpolicyBlog, and the Australian Pacific Security College’s COVID-19 Pacific Island response matrix.

External support

International engagement in the region has continued to increase over recent weeks. Coming on the back of assistance for Tropical Cyclone Harold, managing this engagement is becoming increasingly complex for some countries.

•        Several Pacific Island countries have been approved concessional loans or grants from the Asian Development Bank (ADB) or the World Bank to support their response to the pandemic. This support is in addition to temporary debt relief announced by the G20 in April.

•        This follows a series of grants to Fiji, Vanuatu, Tonga and the Solomon Islands to assist recovery after Cyclone Harold. NGOs have reported that COVID-19 restrictions are slowing aid and equipment deployment in Vanuatu following the cyclone.

•        Australia provides the bulk of its support to the region through grants and other initiatives under its Pacific aid program (totalling $1.4 billion in 2019–20). Australia’s support for the region’s COVID-19 response includes boosting testing and diagnostic capacity; the provision of medical supplies and equipment; national response planning; implementation and budgeting; and helping to keep open an essential services and humanitarian corridor. Australia, along with New Zealand, is funding the WHO Pacific regional coronavirus response plan (providing access to technical advice on infection prevention and control, and clinical management).

•        New Zealand has provided medical equipment and other COVID-19 related supplies and increased access to testing.

•        The US has committed US$27.5 million for the COVID-19 response in its three Freely Associating States (Palau, Marshall Islands and the Federated States of Micronesia), and an additional US$3 million for the regional response.

•        The EU has pledged €119 million towards the pandemic response in the Pacific.

•        China has set up a US$1.9 million ‘Anti-COVID-19 Cooperation Fund’ with Pacific Island countries. The Jack Ma Foundation has been providing COVID-19 related equipment, while Chinese companies have also distributed medical equipment and other aid.

•        Non-government organisations, including Plan International, Care, Oxfam, Save the Children and the Australian and International Red Cross, are also supporting the region’s pandemic response.

Outlook and commentary

•        Calls have been made for Australia and New Zealand to bail out Pacific Island economies, for closer integration of the region’s smaller and larger economies, and for increased investment in the region’s health infrastructure, to manage future risks. For instance, it has been suggested that thought be given to better ensuring the supply of critical medical supplies across the region in the face of increasing global demand, including through mechanisms such as pooled procurement.

•        The suspension of routine immunisation services as a result of the pandemic is putting children at risk, UNICEF has claimed. It argues that basic health systems need to be strengthened if outbreaks of other preventable infectious diseases—such as the 2019–20 Samoa measles outbreak—are to be avoided.

•        Commentators have also called for the Australian Government to upgrade its Pacific step-up, which may involve:

a significant shift in our development assistance programs so that they focus on restoring the small business and agricultural sectors; industries that have been ravaged by the shutting of international borders, including tourism and hospitality; and areas affected by the closure of schools, colleges and universities.

•        The WHO is concerned with the situation in Tonga, Fiji, Vanuatu and the Solomon Islands after Cyclone Harold hit the region in early April, making social distancing and maintaining personal hygiene more difficult for many communities.

•        As fears grow over vulnerability to COVID-19 across the Pacific, some governments have been accused of sheltering behind tough lockdown rules to silence criticism.

Specific country measures

•        Fiji: the Government has announced a stimulus package of A$400 million, with more than half to be directed towards businesses and employees. The country has kept in place restriction measures despite no new cases for several weeks, with recreational sport banned and a daily curfew from 10 pm to 5 am.

•        Vanuatu: the Government has announced a stimulus package of US$32 million to boost infrastructure, provide jobs, and support food security. It is also set to benefit from QBE’s A$2.6 million COVID-19 response. The World Bank has provided US$10 million in emergency funding to Vanuatu to support the country’s response to the combined impacts of the global COVID-19 pandemic and Cyclone Harold.

•        The Solomon Islands: the Government has announced an economic stimulus package valued at US$37.5 million to provide equity injections and fund tax breaks for key sectors, including tourism; copra and cocoa; grants and concessional loans for private companies; and the ramping-up of donor-funded infrastructure projects employing local workers. Health workers have threatened to strike over the lack of PPE. The ADB has announced a US$3 million grant and a US$3 million concessional loan to help finance the Government’s response to the pandemic.

•        Samoa: the Government has announced a US$24 million supplementary budget with a focus on relief for households. The IMF has approved emergency financing of US$22.03 million, while the ADB has approved a US$2.9 million grant, and the World Bank is providing a US$5.1 million grant to support the country’s response. In December 2019 the World Bank committed US$9.3 million to strengthen Samoa’s health systems over the next six years.

•        Tonga: the Government has announced a stimulus package of US$25.5 million, while the ADB has approved a US$6 million grant to help finance the response to the pandemic.

•        Kiribati: the Government has imposed travel restrictions and other protection measures, and announced that it lacks the resources to deal with COVID-19 if it enters the country.

•        Nauru: Australia has provided the country with $3 million for its COVID-19 response.

•        Tuvalu: the Government announced an economic and financial relief package on 6 May. The package includes measures to respond to health risks, provide grants to businesses, and increase welfare.

•        Palau has been granted a US$15 million loan from the ADB’s Disaster Resilience Program to help finance its response to the pandemic.

•        Marshall Islands: the ADB has announced a US$6 million grant to help finance the pandemic response. The World Bank has also approved a US$2.5 million emergency project to support the country’s fight against COVID-19.

•        Federated States of Micronesia: the ADB has announced a US$6 million grant from its Pacific Disaster Resilience Program (Phase 2) to help finance the response.

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[1].               Office of National Intelligence Open Source Centre, Indonesian daily compilation report, 23 April 2020.