AFTER recording quarterly contractions twice in a row, Singapore officially experienced a technical recession, with a GDP decline of 41.2% compared to the first quarter of 2020. While on an annual basis, second quarter GDP contracted 12.6%.

According to Tauhid Ahmad, Executive Director of the Institute for Development of Economics and Finance (Indef), explained there are at least three entrances to Singapore’s decreased exposure to Indonesia. First, the value of trade fell sharply.

Based on data from the Ministry of Trade, the value of trade between Indonesia and Singapore from January to May 2020 was US$10.41 billion, shrinking by 14.37% compared to the same period in 2019 of US$12.16 billion. However, Indonesia’s trade balance deficit decreased from US$1.62 billion last year to US$612.09 million in the January-May 2020 period.

“Indeed, what is happening in Singapore has an effect on the Indonesian economy. Singapore also has a big role in our non-oil and gas exports, ranked fifth,” he said, Tuesday (7/14).

Second, the decline of the tourism sector. Overall, foreign tourist arrivals in May 2020 decreased sharply by 86.90% to 163,646 from the same period last year 1,249,536. Meanwhile, tourists from Singapore in May amounted to 1,335, down 99.03% compared to 136,961 last year.

Third, foreign investment. Although according to data from the Investment Coordinating Board (BKPM) in the first quarter investment realization from Singapore is still growing, even being the highest, but in the second quarter is expected to be hit. In the first quarter, Singapore’s total foreign investment in Indonesia reached US $ 2.7 billion or 40% of total foreign investment in the country.

“When Singapore experiences a shock, they will certainly reduce new investment plans and/or reduce the expansion of existing investments,” he said.

Tauhid explained further calculation was needed regarding the downward exposure in the three sectors to Indonesia’s economic growth. However, the obvious impact is on export-import performance, tourism, and foreign investment. [ special]