This chapter begins by examining the mechanics of how the shock of sudden lockdown impacted our complex, integrated and circular economy, teasing out the various transmission processes and key economic agents. Section 2 deals with government responses and measures to rescue their economies from the fallout of the grinding halt. Different countries had different capacities to do it, and some could afford extensive programmes worth up to 40 per cent of GDP, while others eked out in single digits—reflecting their level of development, depth of pockets and the range of policy levers available. Section 3 briefly compares these measures to what was put in place during the Global Financial Crisis (GFC)—what we learnt from last time, and the difference it makes that this current crisis is health-driven and impacts simultaneously on economic demand and supply, whereas the GFC had its origins squarely in the world of finance. Section 4 concludes with a brief discussion on the impact of COVID-19 coping measures—some of which played out more or less as anticipated, whereas others did not—and potential consequences for the long term.

Section 1: Sudden Stop—An Economy Is Not A Supertanker

Until now, the term “sudden stop” was typically applied to the capital markets and used to describe the way that financial flows—often “hot money” heading from low interest rate countries to higher interest rate ones—could abruptly dry up or change direction, causing turmoil in exchange rates, interest rates and other financial markets. The health crisis of COVID-19 and coping policies of social distancing and lockdown saw a sudden stop applied as a deliberate policy, to humans and indeed the entire economy. Before this happened, people would not have dreamed such a sudden stop to normal life even possible. Often, when we talk about effecting change in the economy or in society we use the analogy of a supertanker, which is famous for taking a long time to change direction because of its massive size and weight and the effect of momentum. Sudden stop for these vessels is impossible and it takes kilometres of sea even to slow down or do a U-turn. Nonetheless, the ship does eventually come to a standstill, and when all engines are turned off it stays more or less headed in the same direction, and passengers and cargo remain on board unaffected.

A PRESSING AND DEFINING ISSUE

Inequality and exclusion are defining problems of our times globally, regionally, nationally. In introducing this book’s impetus and formation, it is helpful to passage through these geographic and academic layers. Inequalities of opportunity, well-being, income and wealth have existed in all societies, but the past decade has seen heightened perceptions that globalized capitalist systems enrich the few at the expense of the many. Tellingly, the Millennium Development Goals 2015 specified gender equality while generally focusing on poverty and basic needs, while the Sustainable Development Goals 2030 inscribed reduction of inequality within and among countries as one of the various new goals pursuing equitable distribution of socio-economic benefits.

Alongside burgeoning prosperity, uncertainty and precarity are also growing, fuelling public sentiments and popular discourses surrounding these phenomena. Social discontent arises from local, lived experiences. Social movements, voters and the general public around the world are signalling for more policies that foster equitable outcomes and bolster incomes at the bottom and middle of the distribution, and that protect the vulnerable and disadvantaged. The COVID-19 pandemic and its economic aftermath have further revealed the ways that existing inequalities can be compounded in crisis times.

The focus has decidedly fallen on disparities within countries. Inequality between countries remains salient; national income persists at low levels in many countries. Nonetheless, inequality is acknowledged as a problem all countries need to address; even if poverty alleviation takes relative precedence, rich-poor disparities and structural exclusion can undermine sustainable growth. Empirical evidence, based on increasingly widespread household income surveys, also find that within-country inequality accounts for the bulk of global household income inequality (Milanovic 2016; Bourguignon 2017). Widening inequality has been recognized as a precursor to the global financial crisis, especially in advanced economies that from the 1990s reversed the inequality reduction achieved from the 1950s through to the 1980s (Piketty 2014; Milanovic 2016; Christiansen and Jensen 2019). The general public also views the problem with increasing gravity. The World Values Survey, which has repeated the inquiry in a consistent sample of countries representing 40 per cent of the world’s population, reports a rising share in the past decade that regard inequality as a significant problem warranting policy attention (UNDP 2019).

There are a number of book-length studies on Indonesia’s foreign policy, of which very few have been published. Most of the books published can be divided into two broad categories: macro and micro studies. The macro studies (such as works by Franklin Weinstein, Anak Agung Gde Agung and Michael Leifer) deal largely with Indonesia’s foreign policy in general, while micro studies (by Jon M. Reinhardt, J.A.C. Mackie, David Mozingo, Dewi Fortuna Anwar and others) focus on specific topics and themes. Of these two types of studies, many cover the Sukarno period or early Suharto era. Particularly lacking are macro studies on Indonesia’s foreign policy under Suharto. The existing books which partially or wholly deal with Suharto were either published in the 1970s or early eighties. To my knowledge, there is no up-to-date book that examines comprehensively Indonesia’s foreign policy under Suharto. Undoubtedly there is an urgent case for such a book.

It is also worth noting that most of these books do not adopt a specific “theory” or model for examining Indonesia’s foreign policy and I have followed the same approach, although I am fully aware of the existence of these “theories” and models. An Indonesian case study such as mine is usually insufficient for generating a useful model. Nevertheless, the information provided in my study may contribute to future model-building on foreign policy behaviour.

Although no model has been used in the study, I have adopted a framework of foreign policy analysis. The framework provides a useful checklist of items required for a study of foreign policy, including the determinants of a country’s foreign policy behaviour.

In analysing Indonesia’s foreign policy during the Suharto era, however, it appears that the Indonesian military and culture (or political culture) are of crucial importance. The military, together with President Suharto, who was an army general, are initial decision-makers. Their policy tends to be influenced by prevalent political culture in terms of abangan (or nominal Muslim-cultural) orientations, and preference for authoritarianism. Nonetheless, it is clear that, in the later period, Suharto became more assertive in foreign policy. He has not always agreed with the military establishment on domestic politics as well as on foreign policy issues as illustrated by his handling of the East Timor issue, especially the recent Dili incident.

Two Views of the Monarchy in 1996

The year 1996 was a landmark year for Thailand, the modern Siam, during which King Bhumibol Adulyadej, Rama IX of the Chakri Dynasty, became the world’s longest-reigning monarch. At age sixty-nine, the king had reigned for fifty years. In hindsight, this was probably the apogee of his reign.

Throughout the year, celebrations were held across the kingdom, accompanied by torrents of praise and acclaim. One such was the opening ceremony of the 14th Conference of the International Association of Historians of Asia (IAHA) at Bangkok’s Chulalongkorn University on 20 May, barely a year before the 2 July 1997 Thai baht devaluation.

At the ceremony, Anand Panyarachun, who had been appointed as prime minister in 1991 and again in 1992, made a keynote speech of glorification entitled “His Majesty’s Role in the Making of Thai History”. Anand told the international gathering of around one hundred participants:

Anand mentioned that Bhumibol became king “by accident” at age nineteen.

In the 1990s, Singapore government leaders raised questions as to whether Islamic education in the country adequately equips the Malay/Muslim community with necessary skills and knowledge to survive in the modern world. Students of religious sciences in full-time madrasahs were equated with school dropouts and deemed unprepared for the knowledge-based economy (KBE). Consequently, Malay/Muslim community leaders sought to readjust madrasah education to meet contemporary needs, and a number of the full-time religious schools underwent major revamp while the rest continue to be run the same way. Attention towards madrasah underperformance somewhat dissipated after the turn of the millennium: madrasahs promised to perform as well as national schools, agreed to work closely with the state’s curriculum guidelines, and the government faced community pressure not to close them down, even though they had never threatened to do so.

Now, Malay/Muslim leaders are focusing on the downstream of Islamic education. Majority of the asatizah complete at least twelve years of education in one of the local madrasahs. The concern of the state is no longer about the students’ achievements or the lack of them, but their attitudes, thought, and ideology. Already Islamic studies has been under global scrutiny, particularly after its graduates are found promoting radical, puritan, or conservative ideas to the masses. The state is also worried that the graduates are unable to contextualize religion based on Singapore values. However, in post-9/11, the state sees the asatizah’s worth in countering radicalism and terrorism through promoting “moderate” religious discourses, but all these would require efforts and resources to guide them. Without these guides, the asatizah will not be able to adjust and may end up displacing the local Malay identity with foreign ones depending on where they complete their religious education. We hear discussions about Malays turning to become “Arabized” as they inch closer to become more religious.

The subject of radicalism and terrorism has shaped much of the discourse on Islamic education that the bigger issues concerning Islamic studies graduates are overlooked. For instance, why do parents continue sending their children to madrasah, with the hope that they will become an asatizah and graduate with an Islamic studies degree? Every year, there will be excess demand for 400 primary one places for madrasah enrolment.

In conclusion, as the ninth king regnant of the Chakri dynasty, HM King Bhumibol was extremely successful in constructing a neo-monarchy with extensive barami. However, according to Theravada Buddhist concepts, personal barami is untransferable. His successors must work to achieve it for themselves.

Just as HM King Chulalongkorn (Rama V), another successful absolute monarch whose barami vanished with him, HM King Vajiravudh, Rama VI (1910–25) and HM King Prajadhipok, Rama VII (1925–35) had to develop it on their own. Absolute monarchy ended in Siam in 1932, only twenty-two years after the death of King Rama V. King Rama IX’s successor will face the same problem of how to maintain, or adapt, the new monarchy to suit new contexts.

As mentioned before, in 1927, Prince Damrong, a chief minister and historian, gave a resoundingly influential lecture about the Thai people and their nation. At one point, the prince said, “The Thai people have three important virtues that sustain Siam to the present day: one, love of national independence; two, tolerance; and three, the power of assimilation.”

At the height of Anglo-French colonialism, Chulalongkorn’s Siam managed to survive external threats and remain semi-independent. During the Second World War, the new 1932 government of Thailand, the People’s Party or Khana Ratsadon, collaborated with the Japanese as well as the Allies with even-handed results.

The economic, political, strategic and cultural dynamism in Southeast Asia has gained added relevance in recent years with the spectacular rise of giant economies in East and South Asia. This has drawn greater attention to the region and to the enhanced role it now plays in international relations and global economics.

The sustained effort made by Southeast Asian nations since 1967 towards a peaceful and gradual integration of their economies has had indubitable success, and perhaps as a consequence of this, most of these countries are undergoing deep political and social changes domestically and are constructing innovative solutions to meet new international challenges. Big Power tensions continue to be played out in the neighbourhood despite the tradition of neutrality exercised by the Association of Southeast Asian Nations (ASEAN).

The Trends in Southeast Asia series acts as a platform for serious analyses by selected authors who are experts in their fields. It is aimed at encouraging policymakers and scholars to contemplate the diversity and dynamism of this exciting region.

THE EDITORS

Series Chairman:

Choi Shing Kwok

Series Editor:

Ooi Kee Beng

Editorial Committee:

Daljit Singh

Francis E. Hutchinson

Norshahril Saat

The economic, political, strategic and cultural dynamism in Southeast Asia has gained added relevance in recent years with the spectacular rise of giant economies in East and South Asia. This has drawn greater attention to the region and to the enhanced role it now plays in international relations and global economics.

The sustained effort made by Southeast Asian nations since 1967 towards a peaceful and gradual integration of their economies has had indubitable success, and perhaps as a consequence of this, most of these countries are undergoing deep political and social changes domestically and are constructing innovative solutions to meet new international challenges. Big Power tensions continue to be played out in the neighbourhood despite the tradition of neutrality exercised by the Association of Southeast Asian Nations (ASEAN).

The Trends in Southeast Asia series acts as a platform for serious analyses by selected authors who are experts in their fields. It is aimed at encouraging policymakers and scholars to contemplate the diversity and dynamism of this exciting region.

THE EDITORS

Series Chairman:

Choi Shing Kwok

Series Editor:

Ooi Kee Beng

Editorial Committee:

Daljit Singh

Francis E. Hutchinson

Norshahril Saat

INTRODUCTION

The COVID-19 pandemic has arguably accelerated changes in consumer behaviour, leading to more people performing economic activities online. One important change is the adoption of fintech as a preferred transaction and payment method. This trend is driven by a significant proportion of the unbanked population and the lower-income segment in urban areas. New fintech start-ups such as ShopeePay (E-wallet), Shopee Paylater (Buy Now Pay Later or BNPL) and Kredivo (Online Lending Service) and Bibit (Mutual Fund Invesment) have all introduced innovative ways to offer online financial services in Indonesia’s rapidly growing digital economy.

Fintech enterprises offering E-wallet, BNPL, Online Lending, Insurance and Multifinance require approval from the Financial Services Authority of Indonesia (Otoritas Jasa Keuangan or OJK), whereas fintech enterprises dealing with investments, stock/mutual funds and cryptocurrencies require approval from the Commodity Futures Trading Supervisory Agency (Badan Pengawas Perdagangan Berjangka Komoditi). In 2012 OJK replaced the previous Capital Market Supervisory Board (Bapepam LK or Badan Pengawas Pasar Modal & Lembaga Keuangan) and holds wider authority in supervising and regulating the capital market and financial institutions. Fintech enterprises undergo a two-step process to obtain permits from OJK: the first involves reporting and analysing the suitability of pursuits and business processes with current government regulations; and secondly, upon further recommendations, fintech start-ups are mandated to register the business with OJK by compiling a self-assessed risk mitigation portfolio and devising a collaboration scheme with government inspectors to avoid money laundering and to establish a consumer service centre for consumer protection. The innovations brought about by fintech startups show similarities to the technology and business processes within the various fintech categories in Indonesia; standardization is, however, still a work in progress. This is occurring in the area of their services, their transaction and payment methods, the timeframe involved, the quality of the fintech platforms, and the rights and responsibilities of both the industry and consumers.

Along with improved services and increased transparency, fintech is gaining momentum and changing the economic landscape in urban and peri-urban areas. This is due to its decentralized, personalized and efficient nature. We observed lower psychological barriers to enable digital literacy and spread fintech adoption among Indonesia’s middle-and lower-income urban households.

Introduction

The year 2020 has been an eventful year, for many reasons, but principal among them being the ongoing COVID-19 crisis, that has knocked over a series of dominoes, leading to very serious implications in so many different aspects of life on our planet, including health, economics, trade, environment and society. The global pandemic has revealed and highlighted many of the structural and ideological weaknesses present and prevalent in a globalized free market economy run along neoliberal lines. How did we get here? Where is “here” exactly? Where do we go from here? These are some of the lines of enquiry we will follow in this book.

Before we dive in, let us take a moment to consider why we use the term Great Transformation. It is not about technology, the Internet, the invention of electricity, nor even the wheel, although these have indeed been transformative to the way people live. Rather, we are talking about economic systems, which overarch all of these things. The First Great Transformation, according to the brilliant economic historian Karl Polanyi, was the shift in human and societal relations—the transformation of humans as social beings to homo economicus, acting purely according to economic considerations. Society was turned on its head when the market as a social institution traditionally embedded in social relations became disembedded, with price and profit calculus dictating economic behaviour. This facilitated the rise of wage labour crucial to the rise of industrial capitalism beginning in eighteenth-century England. As Polanyi so graphically puts it, man became labour, land real estate and trees timber—all exploited for profit.

This book examines what happened next, and how we entered into a Second Great Transformation—the change from industrial-managerial capitalism to financialized capitalism—from the 1980s onwards, whereby the finance that was supposed to be the servant became the master of the real economy. By the end of the book we hope to have made a convincing argument for a Third Great Transformation that is yet to come, and much needed, to a more balanced economic system that puts finance back where it belongs and encourages a different, more balanced relationship between Man, Nature and Society.

Writing a book about a current event presents numerous challenges, not the least of which are having to analyse data that are either incomplete or constantly changing, and making conclusions that can quickly become outdated. The objective of this volume is not to provide a blow-by-blow account of the development of the COVID-19 pandemic. Neither is it a primer to explain the pandemic from a health or medical perspective.

Rather the purpose is to situate the pandemic in a larger historical, social, economic and political context. To show that the pandemic is not just a health crisis, that it should be understood in a holistic and historical perspective. The book is intended for a general audience rather than an academic one. Hence, we tried to the best of our ability to convey the message in as accessible language as possible without sacrificing academic rigour. A glossary of medical terms used in Chapter 2 is provided for the convenience of readers.

What broke out as a health crisis in 2020, definitely the most serious since the 1918 Spanish flu, has deep historical and structural roots with extensive impacts that reverberate to all sectors of society and economy. That is why our book is titled: COVID-19 and the Structural Crises of Our Time. We examined the crises of environment, health, economy, finance and politics and their interrelationships. The pandemic is simply a jumping point or springboard for us to examine the structural flaws in our society.

Practically all commentators on the pandemic, including those with different political persuasions, are more or less agreed that the event has laid bare many fractures and flaws in society—environmental degradation and climate crisis, inability of health systems to cope with health calamities; huge economic disparities in society that worsened as the pandemic hit the poor and lower working class harder than the rich and upper class; political polarization between those who turn to science to manage the pandemic and those who disdain science in favour of populist jingoism and solutions.

In terms of situating the pandemic in broader historical context, the authors turn to the work of economic and social historian Karl Polanyi.

Singapore’s religious studies graduates form a significant component of asatizah, a term which in the context of Singapore’s contemporary Muslim community generally refers not only to those who teach religion (also known as ustaz for males or ustazah for females), but also those who have undergone a degree of formal training in religious schools. So broad is the usage of the term today that it also includes those with religious studies background but whose sources of livelihood are not necessarily in teaching religion but involve other professions which may or may not have anything to do with religious services or education. In the past, it was not uncommon for asatizah not to have acquired formal religious training to teach religion. Their socialization into religious education was informal based on devotion to the teachings of a spiritual master. The prominent ones amongst them are cherished and revered by the community. Others received religious education in one of the full-time madrasahs (Islamic schools) or part-time classes run by mosques or privately run religious schools, such as Bustanul Arifin (formed in 1946 but closed in the mid-1990s) and Sekolah Ugama Radin Mas (tahfiz or Quranic memorization schools founded in 1956).

Given that the values of Islam touch the lives of Muslims on many fronts, asatizah generally exert strong influence in the religious life of the community and form the major social group that shapes religious thought, beliefs and orientations. As the ethical teachings of Islam underline all aspects of life, their influence is wide-ranging, covering areas beyond matters of worship and faith. Though the advancement of technology has facilitated the possibility of accessing religious instruction and teachings globally via new media platforms, this development has not displaced the significance of the local asatizah who continue to play an influential role in shaping religious thought and understanding through teaching and other religious services they conduct.

Some amongst them are considered as ulama based on their contributions to scholarship in matters pertaining to religion.

The economic, political, strategic and cultural dynamism in Southeast Asia has gained added relevance in recent years with the spectacular rise of giant economies in East and South Asia. This has drawn greater attention to the region and to the enhanced role it now plays in international relations and global economics.

The sustained effort made by Southeast Asian nations since 1967 towards a peaceful and gradual integration of their economies has had indubitable success, and perhaps as a consequence of this, most of these countries are undergoing deep political and social changes domestically and are constructing innovative solutions to meet new international challenges. Big Power tensions continue to be played out in the neighbourhood despite the tradition of neutrality exercised by the Association of Southeast Asian Nations (ASEAN).

The Trends in Southeast Asia series acts as a platform for serious analyses by selected authors who are experts in their fields. It is aimed at encouraging policymakers and scholars to contemplate the diversity and dynamism of this exciting region.

THE EDITORS

Series Chairman:

Choi Shing Kwok

Series Editor:

Ooi Kee Beng

Editorial Committee:

Daljit Singh

Francis E. Hutchinson

Norshahril Saat

The economic, political, strategic and cultural dynamism in Southeast Asia has gained added relevance in recent years with the spectacular rise of giant economies in East and South Asia. This has drawn greater attention to the region and to the enhanced role it now plays in international relations and global economics.

The sustained effort made by Southeast Asian nations since 1967 towards a peaceful and gradual integration of their economies has had indubitable success, and perhaps as a consequence of this, most of these countries are undergoing deep political and social changes domestically and are constructing innovative solutions to meet new international challenges. Big Power tensions continue to be played out in the neighbourhood despite the tradition of neutrality exercised by the Association of Southeast Asian Nations (ASEAN).

The Trends in Southeast Asia series acts as a platform for serious analyses by selected authors who are experts in their fields. It is aimed at encouraging policymakers and scholars to contemplate the diversity and dynamism of this exciting region.

THE EDITORS

Series Chairman:

Choi Shing Kwok

Series Editor:

Ooi Kee Beng

Editorial Committee:

Daljit Singh

Francis E. Hutchinson

Norshahril Saat