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OJK offers stimulus policy to combat impact of FMD outbreak

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James Bladen
James Bladen
James Bladen joined Alpha Southeast Asia in 2015. He has written on a wide range of issues covering capital markets, Islamic finance and M&A. He worked as a consultant in Indonesia (2013-2017) and moved to New York in 2020 where he continues to cover Southeast Asia. Disclosure: I have no direct investment holding in any stocks or bonds in Indonesia , and no plans to initiate any positions within the next 96 hours. The opinion expressed in this article is my own. I have no commercial relationship with any company cited on this website nor am I receiving any compensation from anyone except from Alpha Southeast Asia, controlling shareholder of www.www.whatinvestorswant.com

Otoritas Jasa Keuangan (OJK), the Financial Services Authority of Indonesia, has introduced the Oral and Nail Disease Stimulus Policy to support farmers and sectors affected by the outbreak of the mouth and nail disease and the foot and mouth disease (FMD). The country is currently facing an outbreak of FMD, with 24 out of 37 provinces infected and over 500,000 confirmed cases of FMD recorded in the last 30 days as of the 7th September 2022, according to the Indonesian National Agency for Disaster Countermeasure.

FMD is a highly contagious viral disease of livestock that affects cattle, swine, sheep, goats and other cloven-hoofed ruminants. While the virus is not generally fatal, with most livestock surviving the virus without medical aid, it has significant economic implications due to the highly infectious nature.

An outbreak has an impact on the production of livestock and the distribution of animals and animal products. The current outbreak has impacted the breeding and beef cattle cultivation sector, the dairy farming and breeding sector, the mixed farming and plantation sector as well as the agricultural services sector.

OJK’s stimulus policy will see both Islamic and conventional banks implement restructuring policies and schemes that support debtors affected by the outbreak. Banks will implement restructuring policies and schemes to support debtors. While the stimulus policy will provide support to farmers affected by the loss of income as a consequence of the outbreak, the economic cost can only be mitigated through preventative measures.

In addition to the government’s vaccination campaign, several international efforts have been implemented including a collaboration between the Indonesian government and the Food and Agriculture Organization of the United Nations as well as a US$10 million biosecurity package from Australia to Indonesia in the form of FMD vaccines.

“We have been able to match the doses to the FMD strain present in Indonesia. These doses will be highly effective in providing protection to Indonesian livestock,” said Australia’s Minister for Agriculture, Fisheries and Forestry and Minister for Emergency Management Murray Watt.

Australia has a particular interest in the mitigation of the spread of the current outbreak due to its geographical proximity to Indonesia and the potential biosecurity risk the spread of the outbreak to Australia would cause.

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