Expectations So That Floods Will Not Affect Inflation Levels

Floods in Jabodetabek. (Irfan Meidianto / VOI)

JAKARTA - The ground floor (basement) of Jatinegara Market, East Jakarta, which is one of the centers for souvenirs, vegetables, and meat, has stopped its activities due to flooding earlier this year. Not only at Pasar Jatinegara, activities in a number of modern shopping centers to traditional markets outside of DKI Jakarta have also been paralyzed.

As is known, the floods in early 2020 did not only hit Jakarta but also Banten and West Java. Call it the flood that hit Banten, West Java.

At that location, the flood caused the price of vegetables at the Kranggot Traditional Market, Cilegon City, to soar. On Friday January 3, the increase in vegetable prices reached 40 to 50 percent from the previous price.

The increase was caused by hampered food distribution or logistics. In this condition, it triggers the demand (demand) to be greater than the supply (supply) which ultimately causes the inflation rate to increase.

Head of the Central Statistics Agency (BPS) Kecuk Suhariyanto conveyed that protracted flooding must be watched out for because it can disrupt the stability of prices for basic necessities and affect the national inflation rate in January.

It is hoped that the flood will not continue and recede quickly so that connectivity is not hampered and the supply of goods and services in the Jadetabek area returns to normal.

Therefore, the government needs to be aware of the high inflation from the food sector because the distribution is disrupted due to flooding in a number of points in Jakarta and its surroundings. The government also needs to immediately repair damaged infrastructure so as not to disrupt the smooth flow of distribution.

Economic observer from the Institute for Development of Economics and Finance (INDEF) Bhima Yudhistira said the government needs to make efforts to repair damaged houses and ensure public transportation returns to normal.

"Several roads were flooded, automatically basic necessities such as rice, chilies entering Jakarta were hampered, while the price could be higher later," said Bhima.

This is because most of the food supplies in the flood-affected areas in Jakarta, Depok, Tangerang and Bekasi are still imported from outside these areas.

Inflation Is Expected To Be Maintained

Bhima said, the flood factor is expected to affect the inflation rate this January. However, the young researcher has not been able to provide a projection for the amount of inflation that could potentially occur in the January period.

At least, he hopes that inflation will be maintained at a low level, because the government will certainly not allow a shortage of logistics supplies due to disruption in distribution which triggers uncontrolled increases in goods prices.

It is also hoped that floods will not continue and recede quickly so that connectivity is not hampered and the supply of goods and services in a number of regions returns to normal so that it does not have an impact on high inflation rates.

Currently, there is no projection of the amount of inflation that has the potential to occur in the January 2020 period. However, if you look at the records of the Central Statistics Agency (BPS), there was inflation in January 2019 of 0.32 percent which was contributed by the increase in the price of fresh fish, rice and vegetables. vegetables.

January 2019 inflation was also relatively low compared to the same period in the last two years, namely January 2018 at 0.62 percent and January 2017 at 0.97 percent.

Meanwhile in DKI Jakarta, during January 2019 inflation in DKI Jakarta was 0.24 percent on a monthly basis (month to month / mtm), or 3.08 percent on an annual basis (year on year / yoy). This figure is lower than the January inflation average in the last three years, namely 0.55 percent (mtm).

Risk Mitigation

The Indonesian Chamber of Commerce and Industry (Kadin) said that business actors who run their business in flood-prone areas need to be educated about disaster mitigation, one of which is flooding, in order to minimize the impact that occurs on their business.

One thing that can be done is by insuring its assets to avoid losses.

"When a disaster (flood) like this occurs, the loss of assets can be replaced with insurance claims," said Deputy Chairman of the Indonesian Chamber of Commerce and Industry for International Relations, Shinta Widjaja Kamdani.

Learning from the large floods that hit DKI Jakarta, Bogor, Depok, Tangerang and Bekasi (Jabodetabek), Shinta suggested that industrial centers that are prone to disasters should start moving their businesses to safer areas.

"Maybe it is necessary to build an alternative route that is flood free from industrial or trade centers to ports, airports or other logistics centers," he said.

In addition, it is also necessary to improve the drainage system along the transportation route around the economic and industrial centers.

According to Shinta, the government needs to immediately recover the impact of the floods that have occurred since the beginning of this year so that the damage does not drag on. Currently, Kadin has not yet recorded the amount of losses suffered by business actors.

"We have not yet recorded how much losses are borne by national business actors from this incident," concluded Shinta.

Insurance claim

The Indonesian General Insurance Association (AAUI) will encourage insurance companies to be more proactive in handling claims processing from customers affected by the floods that hit a number of areas in DKI Jakarta, Banten and West Java.

In addition, AAUI also encourages general insurance companies to record all the insured affected by the flood so that they are easily contacted.

"Insurance companies should respond quickly and proactively regarding this flood risk," said AAUI Executive Director Dody Dalimunthe.

Regarding the readiness of general insurance companies to handle natural disaster claims, he said that many companies have anticipated this by making announcements regarding the steps in submitting claims.

AAUI said that insurance related to property or property and motorized vehicles is the largest share of the general insurance industry market.

Until now, the value of the loss is still waiting for claims reports from all general insurance companies with figures that are not final and are still growing because the identification and verification process is in process.