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Janine Grant Issue Brief No. 1/2021 February 2021 By: Reza Maulana

1. Introduction

The COVID-19 pandemic has done catastrophic damage to the economic condition of Indonesians, with work from home, Large-Scale Social Restrictions (PSBB), and New Normal policies causing paralysis in the economic sector. The impacts of COVID-19 have interrupted supply chains, reducing income and loss of capital for medium, small and micro-enterprise (MSME) traders, with many people losing their jobs and income, which will lead to increased poverty, hunger, and other negative socio-economic impacts such as in education and child health.

This study aims to identify alternative sustainable economic models that can support community economies during times of crisis and support the transition to long-term recovery. Importantly, a sustainable economic model must be inclusive and in line with environmental ethical values, as inclusive and environmentally sustainable economic recovery models are essential to ensure that no one gets left behind as the world responds to this unprecedented health and economic crisis.

2. Background and Objective of the Study

This feasibility study on local economic recovery models aims to identify alternative economic models that can restart the local economy at the community level to ensure that local communities are not left behind in national response plans and increase community resilience in the face of future economic and climate crises. This study discusses an economic model that will support the resilience of local economies while simultaneously linking local economies to the national and international economy.

This study builds on a concept applied by a community in Kota Tangerang, Banten, a suburb of Jakarta, Indonesia, to ensure that economic activities could continue during the most critical phases of the PSBB policy application enabling community members to continue to earn income by utilizing local resources.

Before the pandemic, most economic activities were undertaken outside of the community, with community members either working as employees or merchants elsewhere. However, with the onset of restrictions on mobility during the pandemic, nearly all economic activities were limited to the home. This significant change in economic activity meant that many people had no income at all. Community leaders worked to identify who was providing what goods and services in the community and integrate that information into a format easily accessible to the public. The information was compiled and displayed through digital and non-digital media so that community members could still access basic goods and services, and merchants could continue to earn income, even if on a much more local scale. Merchants were able utilize local resources for raw material and the incentive to use local supply and value chains meant that households continued to earn enough income to meet their basic needs.

The success of this economic model has encouraged the community to develop it into an inclusive and sustainable community-owned enterprise. This enterprise accommodates all community products for sale through digital and non-digital platforms through a one-stop shop concept. This concept opens the community to outside consumers, which in turn increases local production, revenue and more secure household income.

This study was undertaken to identify the potential for this model to be replicated to other communities, including understanding minimum implementation standards, risks, and obstacles to implementing such a model. The central aspect of this model is using local resources to ensure that all community members have an opportunity to benefit from the model and improve their livelihoods. The benefits of the model are many but improving social cohesion during a time of crisis and recovery is important if we are to view local economic recovery through a more inclusive, sustainable, and socially responsive lens. Further, a collective awareness of the importance of local resources will gradually form and potentially lead to a balance between local economic development and environmental sustainability. The model ultimately builds on the ‘locavore’ concept, to reduce carbon emissions caused by a long distribution process (supply chain), increasing income of local farmers, consuming healthier and fresher food, in line with the availability of foodstuffs and local based food security.

This study used a qualitative approach, with data collected through semi-structured interviews, and analyzed using interactive analysis techniques by Miles and Huberman. This study was conducted in several geographic areas that were identified based on the unique characteristics of the region and society in Indonesia.

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