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Abstract

Extensive research has been carried out on government capacity to cope with the pandemic. However, little study on this issue exists examining it in the context of the creative economy sector. It has been argued that the successful organizations to address changes in the environment are determined by their organizational capacity. In this paper, we analyze the Indonesian government’s capacity to recover the creative economy sector during the first year of the COVID-19 pandemic. The qualitative content analysis method and key informant interviews were undertaken to understand government capacity. The paper extended the RISE (resilience, intention, sustain, and endurance) model to understand the process of government actions in recovering the creative economy sector from the adverse effects of the COVID-19 pandemic. The RISE model portrays the government’s capacity to respond to the hostile and uncertain environment through tax and loan relaxation, social and health assistance, and capacity building. This paper provides valuable insight into public administration by highlighting government responses to the global pandemic. By analyzing four stages of government actions in restoring the creative economy sector, this study shows that the expected outcomes are far from satisfactory. The government intervention during the first year of the COVID-19 pandemic becomes ineffective because the government is weak in preparing the creative economy recovery policies according to the needs of creative economy actors and accurate data. These findings suggest that the central and local government should improve their collaborative capacity to upgrade the creative economy recovery programs according to the local aspiration.

Keywords

government capacity creative economy COVID-19 global pandemic Indonesia

Introduction

The COVID-19 pandemic has caused a tremendous disaster, not only on humanity but also in the economic sector (Cakraborty & Maety, 2020; Nicola et al., 2020). It is estimated by the United Nations Conference on Trade and Development (UNCTAD, 2020b) that the disastrous effects of COVID 19 have a worse impact on developing countries than developed countries. In these countries, foreign debt will increase, encouraging high shadow banking activity and more volatility in the currency exchange rate.

Maliszewska et al. (2020) calculated that the Gross Domestic Product in the global scale, industrialized, and developing countries will respectively fall by 2%, 1.8%, and 2.2%. The pandemic is predicted to have worse future impacts on peoples, especially in the developing countries in the future. The more serious consequence is that in 2020, it is estimated that more than 1 million people died, millions of livelihoods were lost, and would leave around 130 million people living in conditions of extreme poverty if the crisis continued (United Nations, 2020).

In developing countries, people’s economies are more vulnerable to pandemics. The COVID-19 pandemic has impacted the decline of all economic sectors, including the performance of creative economists. Barrot et al. (2020) estimate that this pandemic’s social and physical distancing effects will reduce the economic value of activities in the arts and recreation sector by 7.7% and the restaurant and hotel sector by −6.8%. However, the sectors most affected are the upstream economic sector farthest from the end consumers, such as mining (−8.8%), and technical activities (−7.6%), consulting (6.2%), or utilities (−6.0%).

Prior to the COVID-19 outbreak, Indonesia’s creative economy sector had a bright future in terms of contributing to the national income. In the recent 4 years, the creative economy sector has grown by IDR 852 billion (2015), IDR 894 billion (2016), IDR 990.4 billion (2017; Okezone, 2017), and IDR 1,105 billion (2018). The concept of a creative economy, according to the United Nations Conference on Trade and Development (UNCTAD; 2008), relies innovative assets and goods that encourage better economic growth and development. In Indonesia, the creative economy sector, particularly the film, music, and performing arts sub-sectors, has stalled since the COVID-19 pandemic and the implementation of the social distancing. Due to the reduction in market demand during the period of social restriction, other sub-sectors such as fashion and handicrafts also encountered production and marketing limits (Rosyadi, 2020).

COVID-19 has also caused every country to close its borders to prevent further transmission. This closure is also carried out even between local regions in one country. This closure has a direct impact on the tourism system, both in global and domestic transportation systems. Various transportation activities have experienced pressure which has caused a decrease in demand for accommodation, restaurants, meetings, conventions, art tours, and multiple sports activities. This activity has proven to have hit tourism economic activities where tourism was previously recognized as an important driver of the national economy in many countries (Gossling et al., 2020).

The shock in demand has driven a decline in various economic sectors, including the decline in the value of the tourism economy, which is closely related to the creative economy (Loayza & Pennings, 2020). Likewise in developed countries, in Europe, the pandemic effect on the aviation and transportation industry, in general, has resulted in reducing tourist visits by as much as 87% (European Commission, 2020). The fall in demand for tourism has directly hit the creative industries in many countries. The effects of this pandemic have resulted in the loss of millions of jobs in the tourism industry. UNCTAD (2020a) estimates that around 50 million workers in the coastal tourism sector are affected. The creative economy sector in the entertainment industry has also had a negative effect due to COVID-19. The International Alliance of Theatrical Stage Employees (IATSE) reports that around 120,000 entertainment industry activity has been lost due to the coronavirus pandemic; this includes theatre stage employees. The pandemic also lost 120,000 work activities of 150,000 entertainment industry workers (Ozili & Arun, 2020). UNCTAD (2021) also reports that foreign tourist arrivals fell by 74% between January and December 2020 for about 1 million trips.

For the case in Indonesia, Suryahadi et al. (2020) calculated that the COVID-19 pandemic affected increasing poverty in Indonesia. With a simulation of economic growth that decreases in 2020 to 2.1%, it will impact increasing poverty to 11.4%, and if economic growth is 1%, it will push poverty to 12.4%.

In response to the COVID-19 impacts, particularly on the creative economy sector, government capacity to handle all impacts becomes a crucial test (Serikbayeva et al., 2020). Although extensive research has been carried out on government capacity to cope with the pandemic (Bartik et al., 2020; de Jesus, 2020; Faisal & Nirmala, 2020; Hidayaturrahman & Purwanto, 2020; Kuckertz et al., 2020), little study on this issue exists examining it in the context of the creative economy sector. The Indonesian Government formulated various policies and programs to mitigate adverse impacts, such as job loss, non-performing loans, and bankruptcy. Under this crisis, the Indonesian Government is reacting to recover the creative economy sector from the threat of a recession. Moreover, the creative economy sector in the last 5 years has contributed significantly to gross product domestic. Therefore, the aim of this study is to analyze the role of government capacity in responding to the COVID-19 impacts on the creative economy sector.

Theoretical Background

This section describes the theoretical foundation of government actions in responding the impact of the COVID-19 pandemic on the creative economy sector from an open system theory. According to Taylor (1911) and M. Weber (1964), the application of systems theory to organizations allows us to reconsider traditional organizational structure and operation models like bureaucratic organizations, which put them in a system that is self-contained from their environments. Open system theory argues that contextual factors determine an organization to react and adapt with changes in the environment through series of organizational actions (Pfeffer & Salancik, 1978). In line with the COVID-19 pandemic bringing adverse impacts on all sectors, the governments across the world respond such the impacts with various policies and programs for socio-economics recovery.

All governments worldwide are confronting a massive challenge in responding to the Coronavirus crisis (Serikbayeva et al., 2021). The COVID-19 epidemic, originating in Wuhan, China, is one of the world’s biggest challenges. In contrast to the financial or economic crisis with a more precise handling method, the crisis caused by COVID-19 has a broader and more complex dimension. Not only has a life threat, but the COVID-19 pandemic also threatened all sectors of life. Deaths, business bankruptcies, unemployment, and even social unrest, are the effects of the COVID-19 pandemic. One of the sectors that COVID-19 has hardest hit is the creative economy sector.

The implementation of health protocols resulted in the postponement of various contracts and decreased production activities, which paralyzed economic activity, including the creative economy sector (Kahale, 2020; Nobre, 2020; Thunström et al., 2020). In this context, an essential question regarding how the Government’s capacity to respond to the impacts of COVID-19 in the creative economy sector is an essential focus in this study.

The concept of government capacity is relevant with the lens of open system theory. Through this theory, the government capacity for social economic recovery explains about how the governments transfer inputs into outputs (Kettl, 2011). The focus of open system theory is on the goal of organization (government) and organizational behavior to seek the most efficient tools to achieve it. In this regard, the organizations conduct the process of converting inputs into outputs. The successful organizations to address changes in the environment are determined by the following two capacities: (1) “ability to manipulate or adapt to its external environment” and (2) “ability to suppress or regulate internal risks” (Kettl, 2011, pp. 102–104).

Organizational capacity is also a key factor for managing change in an environment full of turbulence and uncertainty (Heckmann et al., 2016; Hillmann & Guenther, 2020). Several reasons for the importance of organizational capacity in times of crisis are; first, the complexity of the impact caused by the crisis requires coordination between institutions, especially since the COVID-19 pandemic crisis is trans boundary; second, threats and uncertainty demand the Government’s capacity to take swift action with the authorities it has; and third, an effective response to the crisis is determined by the Government’s ability to build legitimacy and public trust (Boin, 2018).

Conceptually, government capacity refers to the Government’s ability to carry out functions, solve problems, and set and realize the expected goals (Hajnal et al., 2018). Government functions range from formulation to implementation of policies, provision of public services, and protecting the security of citizens from various threats. The implementation of these functions is aimed at solving problems and meeting public needs. With the authority and resources that the Government has, it is hoped that various public demands can be responded to effectively.

Various studies on government capacity are well documented (Chen, 2014; Hajnal et al., 2018; Kim & Yoon, 2017; Noring et al., 2020; Novianty, 2015; Wang, 2019). These studies test the Government’s capacity to realize the predetermined objectives. Under normal circumstances, the Government does not come under tremendous pressure to solve problems and realize public expectations. However, in an abnormal situation, such as the COVID-19 pandemic, studies related to the Government’s capacity for economic recovery show mixed findings. A study from Ozili (2020) finds that even though the Government has provided assistance and subsidies to restore the economy during a pandemic, these interventions have not been effective. Different results are found from the study of Yeh (2020), which found Taiwan’s success in restoring the economy, especially the tourism industry, through a loan scheme to ease the burden on economic players. With solid experience in handling SARs cases, Taiwan was successful in anticipating the adverse effects of COVID-19. This success made it easier for them to recover the economy gradually.

In the context of the creative economy, government actions need to consider the characteristics of the creative economy different from other economic sectors. A creative economy relies on ideas, creativity, intellect, culture, traditions, and talents to produce goods and services that have economic value. In Indonesia, the creative economy sector covers 17 subsectors consisting of Architecture, Interior Design, Visual Communication Design (VCD), Product Design, Fashion, Animated Video Film, Photography, Advertising, Crafts (Crafts), Culinary, Music, Applications and Game Development, Publishing, Advertising, TV and Radio, Performing Arts, and Fine Arts. The application of social and physical distancing has paralyzed several sub-sectors of the creative economy, such as performing arts, photography, and filmmaking. Therefore, the creative economy sector recovery needs to consider each character and context of the creative economy sub-sector (Fahmi et al., 2017).

To understand the Government’s capacity to deal with the impact of COVID-19 in the creative economy sector, we extended the RISE (resilience, intention, sustain, and endurance) model from Maher et al. (2020). Previously, this RISE model was used to understand the actions of public and private organizations in adapting to environmental changes due to the global pandemic.

In our research, the RISE model is adapted to the context of government action in restoring the external environment, such as the creative economy sector affected by COVID-19. With the threat of recession and economic stagnation, the Government needs to formulate a series of responsive actions to provide an energy injection to the economy (Nicola et al., 2020; Sharma et al., 2020).

Using the RISE model, the capacity of the Government as seen from its actions to address its external environmental problems and deliver the desired results is divided into four stages. First, resilience is the initial stage of the Government in mobilizing power and financial resources to maintain the sustainability of the creative economy sector. Second, the intention is the second stage taken by the Government to take direct actions to minimize the impact of COVID-19 on the creative economy sector. Third, sustain is a stage in which the Government takes action in the short term with the resources it has to create stabilization. Fourth, endurance or the adjustment phase made by the Government is meant to bring the creative economy sector into a new situation or a new normal. With these four stages, government capacity will be easy to identify in overcoming external environmental problems.

This RISE model refers to the concept of open systems. Organizational behavior in an open system constantly strives to make improvements and to create a dynamic balance. According to Jung and Vakharia (2019), organizations are open structures and networks that are part of and influenced by the environment. In the context of this open organization, government capacity is determined by how effectively the Government manages dynamic and uncertain environmental changes to achieve the expected goals. A strong government capacity will have a big impact on adapting to new situations. However, the Government’s weak capacity in managing an environment full of uncertainty will create a situation full of conflict and even chaos.

Methods

This research aims at analyzing the role of government capacity in responding to the COVID-19 impacts on the creative economy sector based on the RISE model. To obtain rigorous methodology, this research combined two qualitative approaches: a qualitative content analysis method and key informant interview method. Qualitative research is influenced by the naturalistic-interpretative paradigm (Creswell, 2007), in which researchers try to construct reality and understand its meaning so that this research pays close attention to processes, events, and authenticity (Ahmad, 2018). The content analysis method needs to observe the communication phenomenon by formulating what is researched appropriately, and all actions must be based on these objectives. To contextualize qualitative data from content analysis, this study conducted key informant interviews to obtain the opinions or shared experiences of creative workers about the Indonesian economy.

In this research, the object is a message in online media, so it is necessary to identify the messages and media that deliver them (Ahmad, 2018). Content analysis is a research method using a set of procedures to make valid inferences from texts (R. P. Weber, 1990), while according to Krippendorff (1991), content analysis is a research technique for making inferences that can be replicated (imitated) and for validating the data by paying attention to the context. The content analysis aims to provide knowledge and understanding of the phenomenon under study (Downe-Wamboldt, 1992).

This research is not intended to comprehensively identify the Indonesian Government actions in overcoming the impacts of COVID-19 on the creative economy sector. This research can be classified as a preliminary study that provides an evaluation within a certain period of government actions in the creative economy sector during the pandemic. Using the RISE model of Maher et al. (2020), government capacity is analyzed in a four-stage process. First, resilience or the Government mobilizing resources, especially power and financial resources, to manage the crisis caused by the COVID-19 pandemic. Second, the intention or stage of government action in general to minimize the impact of COVID-19 on the creative economy sector. Third, sustain or the stage of government action to allocate budgets into various short-term programs to stabilize the creative economy. Fourth, endurance or the adjustment stage of the creative economy sector to a new normal. In this fourth stage, various administrative and political obstacles were found in the Government’s efforts to create a new order in the new era.

The unit of analysis used is a text document that comes from online media sources. The documents used as material for analysis in this research are news articles uploaded on kompas.com from March to December 2020. The selection of news from kompas.com is based on two criteria: first, kompas.com is the largest national media in Indonesia. It influences the opinions of readers. Second, the media of kompas.com is very intensive in raising economic issues, including the creative economy during the pandemic. According to a survey conducted by Maverick (Indonesia communications consulting firm) in 2020, kompas.com was the most credible, the most interesting content, and the most update online news media (Kumparan, 2020). With these criteria, the selection of kompas.com media can represent other online media in gathering representative data regarding the issue of government capacity in restoring the creative economy sector during the pandemic.

The news that was chosen to be analyzed from kompas.com was news related to the capacity and recovery of the creative economy sector from the Government related to the response to COVID-19 in Indonesia. From kompas.com’s search, the number of uploaded news related to the government’s efforts in socio-economic recovery during the pandemic was collected as many as 198 news. Furthermore, of the 198 news items, we obtained 32 news items that fit the criteria of the RISE model. Qualitative content analysis in this research is summative content analysis type; the study begins by finding keywords from 32 selected news items focusing on the government efforts to recover the creative economy sector during the 2020 COVID-19 pandemic uploaded on kompas.com, then continues by identifying keywords that have been determined from before analysis to during the analysis. The keywords defined in this summative type of qualitative content analysis are derived from several literature reviews and the researcher’s interests (Hsieh & Shannon, 2005). Meanwhile, the procedure used in this analysis is inductive category development. The inductive category begins with formulating the category or coding of the news text analyzed, followed by adding categories when the text analysis process occurs. In the end, the system of categories defined represents the whole material, so the recording unit must consist of all text material to be analyzed (Mayring, 2014).

Key informant interviews (KII) were undertaken to contextualize their opinion and experience relating to the Indonesian government responses to the COVID-19 impacts on the creative economy sectors (see Appendix). Key informant interviews are a valuable qualitative research tool focusing on policy issues (Lokot, 2021). They are qualitative in-depth interviews involving one or more key informants (CFR, 2021). Because of their status and competence, key informants have more valuable information. In addition, because of their “expert” status, key informants may be assumed to understand and represent their communities (Lokot, 2021).

The strategy for key informants selection is purposive sampling. This kind of sampling is used better to assimilate the sample to the research’s goals and objectives, promulgate the study’s rigor and credibility of the data and results (Campbell et al., 2020). Key informans were chosen based on predetermined criteria in accordance with the research objectives in order to establish a representative group of interviewees. Our key informants involved 18 competent people in the creative economy sector: 2 officials from the tourism and creative economy ministry, 2 officials from the local government agency, 2 creative economy activists, and 12 creative economy workers. The interviews conducted with creative economy workers represent four main subsectors of the creative economy experiencing the adverse COVID-19 impacts, namely culinary, fashion, craft, and film. All interviews with key informants were conducted via online interviews to execute a social distancing policy restricting face-to-face communication. Table 1 below provides the information about the number of informants in this study.

Table 1.

Number of Informants.

No	Informant	Total
1	Culinary actors	4
2	Fashion actors	4
3	Craft actors	2
4	Film actors	2
5	Ministry officials	2
6	Local government officials	2
7	Creative economy activist	2
	Total	18

This study applied the one-to-one interview. When conducting one-to-one interviews, the interviewers allow equally the interviewee to speak. The interview is conversational in style, but the interviewer does not comment or pass judgment on the answers to the questions, except to dig for clarification or elaboration (Ryan et al., 2009). Therefore, as the interview process is taking place, we let the interviewee to speak at their own pace while responding with relevant comments and questions. The duration of interview with each key informant takes 1 to 1.5 hours.

The results of content analysis from Kompas online media coverage were then validated using triangulation with the data from key informant interviews. This is a technique of checking the validity of data by utilizing several methods or data sources to develop a comprehensive understanding of phenomena (Patton, 1999). The triangulation used here is data sources and methods triangulation. In this case, the researcher analyzes various news from Kompas online regarding the actions of the Indonesian government regarding the recovery of the creative economy sector, examines the consistency of different data sources from selected competent informants in the creative economy sector and then confirms the findings produced through these two methods.

Results

In this section, authors attempt to analyze government initiatives in the creative economy sector during the COVID-19 pandemic in 2020 by using the RISE Model (Maher et al., 2020) consisting four government responses to changes in the environment. First, resilience, or the government’s mobilization of resources, particularly power and financial resources, to deal with the COVID-19 pandemic’s issue. Second, the government’s aim or stage of action in general to mitigate COVID-19’s impact on the creative economy sector. Third, keep the creative economy stable by allocating budgets to various short-term activities. Fourth, the creative economy sector’s endurance or adjustment stage to a new normal.

Resilience

The COVID-19 pandemic has dealt a massive blow to threats to health and the economy, especially the creative economy sector. A total of 44,295 artistic and creative workers were affected by the COVID-19 pandemic (Ministry of Tourism and Creative Economy, 2020). These artistic and creative workers experienced work contract cancellations due to social distancing and physical distancing to curb the transmission rate of COVID-19. Unemployment in the creative economy sector contributes to total unemployment due to layoffs, which reached 2.8 million workers, directly impacting COVID-19 (Juaningsih, 2020).

Several sub-sectors of the creative economy that have been lesion badly as of weakening of consumer purchasing power are craft, fashion, and culinary. The production stopped utterly due to demand sloping in the handicraft sector at the beginning of the pandemic (Kompas, 2020a). It seems that consumers are holding back their money for purchasing craft products because they are more focused on buying personal protective equipment such as masks, hand sanitizer, vitamins, and supplements to maintain their immunity. While in the fashion sector, consumers no longer think about new clothes. During the COVID-19 pandemic, sales of Moslem clothing fell by more than 50% because there is something more important than fashion, namely the fulfilment of food needs to survive this pandemic (Kompas, 2020b).

As for the culinary sector, apart from being constrained by the ban on dine-in services, based on research results from BAYK Strategic Sustainability and Populix, a large number of consumers (more than 90%) admitted that they cook more often than before the social restrictions were imposed (Kompas, 2020c). The research also stated that 87% of respondents admitted to prioritizing spending for daily needs during this pandemic (Kompas, 2020c). In general, consumers do not consider purchasing creative economy products during the pandemic because they are more concerned with survival by prioritizing the fulfilment of their essential needs. Of course, this has a very negative impact on the creative economy sector in general.

A further consequence of the COVID-19 pandemic, according to Minister of Finance Sri Mulyani, is a decline in economic growth to minus 5.3% in April and May 2020 periods, which can lead to an economic recession (CNBC, 2020). Two of our informants from the ministry of tourism and creative economy shared his authority to ensure the sustainability of the creative economy as follows:

The music, film and animation directorate that I lead made many steps to take advantage of the public authorities. Among them are efforts to manufacture product incubation and strengthen product added value and efforts to develop marketing, human resources, and infrastructure. So the intervention is on strengthening the system. Government incentives exist and have been carried out. These incentives are expected to encourage the strengthening of the value chain, from production to innovation. (Directorate of music, film and animation, Ministry of Tourism and Creative Economy during KII).

In the field of creative economy, we have a national movement called Proud Made in Indonesia or Proudly Indonesian Products. It aims to help the affected SMEs and also encourage them to switch to online platforms. That is our effort and passion to love and buy Indonesian products to accelerate the national economy. (Directorate of Strategic Studies, Ministry of Tourism and Creative Economy during KII).

The Indonesian Government’s policy through Perpu (Government Regulation) No. 1 of 2020 allocates a budget of IDR 405.1 trillion to overcome the impact of COVID-19 and as an economic stimulus for small businesses (Kompas, 2020d). This large budget is managed by several ministries such as the Ministry of Tourism and Creative Economy, the Ministry of Social Affairs, the Ministry of Manpower, and the Ministry of Education and Culture. In addition, state-owned oil company or Pertamina is also involved in increasing the resilience of small business actors in the creative economy sector through CSR funds (Kompas, 2020e). Table 1 summarizes the government actions to recovery the creative economy sector.

Policies to save the creative economy during the pandemic are unfortunately not further supported at the local government level. As shown in Table 1, efforts to save the creative economy sector are highly dependent on the central Government’s actions. The ability of local governments has not touched the empowerment of creative economy actors in overcoming the impact of COVID-19. To explain constraints related to the role of central and local Government in handling the COVID-19 impacts on the creative economy sector, our two informants from the regional creative economy committee and local official said as follows:

The Indonesian Government cannot restore the creative economy sector in every province or district/city. The Government is still busy dealing with the impact of COVID-19 on the health sector, so that the creative economy empowerment in these 17 sub-sectors is not yet optimal. Funds are currently being sucked into the health sector. The ability of each region is also different in restoring the creative economy sector. For example, Salatiga, this culinary creative city, is making progress that can minimize the effects of the COVID-19 pandemic. Local tourism, which is truly local, is developing. As for other areas, some can develop, and some are not. Among those that can develop are Rembang with its Lasem Batik Festival and Solo with its Mask Festival. Meanwhile, the Borobudur Marathon in Magelang can still occur due to the Central Government budget’s disbursement. If it only relies on the Magelang district government funds, it will not work because the local government budget is being refocused to handle public health. (Creative economy activist, head of regional creative economy committee during KII).

Apart from training and revolving funds, during this pandemic my agency does not have a special program to regenerate the creative economy because the local government funds are currently being refocused on handling COVID-19. What we still can do, for example, is to involve SMEs for product exhibitions to Jakarta, which are currently still being held. The agency also does not have data on the impacts of COVID-19 on the creative economy sector because there has been no survey on it. (Local official, SMEs Agency during KII).

The lack of local government budgets has led to the dependence of local governments on the central government in the recovery of the creative economy sector. The COVID-19 pandemic has forced the central and local governments to refocus their budgets. Most of the local government budget allocations are aimed at handling the impact of COVID-19 on public health. Consequently, programs to save the creative economy cannot be financed by local governments. Meanwhile, the central government itself has an inadequate budget to protect the creative economy sector. As a result, the budget for saving the creative economy originating from the central government cannot reach all creative economy actors, especially local ones.

Intention

The Ministry of Tourism and Creative Economy plays a direct role in saving the creative economy sector. Even though the managed budget is not as big as the Ministry of Social Affairs and the Ministry of Manpower, the IDR 500 billion effort to save the creative economy sector aims to mitigate the impact of the COVID-19 pandemic on the tourism industry and creative economy. The fund is a budget refocusing policies to save tourism and creative actors (Kompas, 2020i).

Other ministries, such as the Ministry of Social Affairs, have more roles in allocating social assistance to workers, including creative workers affected by COVID-19. This social assistance is given to provide peace to creative workers because of the cancellation of various work contracts (Kompas, 2020o).

The Ministry of Education and Culture also provides social assistance specifically for arts and culture workers. Implementation of the PSBB (wide-scaled social distancing) policy prohibits activities that can gather large numbers of people and causes arts and cultural workers to postpone various arts and cultural performances. Therefore, this social assistance is intended to appreciate arts and cultural workers willing to postpone their activities (Kompas, 2020l).

Interestingly, social assistance plus training are provided by the Ministry of Manpower in a pre-employment card program. The reason is that the management of production activities and the cancellation of various creative economic activities have increased the number of unemployed. Therefore, unemployed workers are provided with a direct cash assistance stimulus and specific skills training. The number of beneficiaries in 2020 is targeted to be 5.6 million people (Kompas, 2020g).

Pertamina as a state-owned enterprise (BUMN) also made efforts to help the creative economy sector during the pandemic. As one of the largest state-owned companies in Indonesia, Pertamina plays a role in helping to save the creative economy, especially at the small and medium enterprise (SMS) level. In this case, Pertamina provided empowerment funds to 596 SMEs affected by COVID-19 (Kompas, 2020p).

In general, the budget for mitigating the effects of COVID-19 on the creative economy sector is aimed at providing social protection for creative economy workers, reallocating budgets for labor-intensive programs for information actors in the tourism sector, and providing economic stimulus for workers in the tourism and creative economy sectors. (Kompas, 2020h). However, in its implementation, it cannot fully minimize the negative effects of the pandemic felt by creative economy workers. Our two informants from ministry and creative economy workers express their experiences relating to this issue as follows:

So far, the effectiveness of the government’s actions to minimize the effects of the pandemic on the creative economy sector is going quite well. Although there may still be unequal distribution of aid recipients at some points, in this case we continue to strive for the best by conducting several online and offline trainings for business actors or beneficiaries engaged in the creative economy sector. We focus on several activities that can revive the spirit of workers and actors in the creative economy sector. (Directorate of Strategic Studies, Ministry of Tourism and Creative Economy during KII).

During this COVID-19, there has been no direct assistance to Small and Medium Enterprises (SMEs). Before the pandemic, we produced robes and hijabs. At the beginning of the pandemic, we switched to the production of masks so that our employees were not laid off. However, the ban on scuba-style masks is detrimental to us. The masks ended up piling up in warehouses and could not be sold. The Government does not notice this. We once enjoyed the Government’s subsidy program, even though it was only for about one month. Usually, the cost of sending goods via train per sack is 100 thousand, but with the subsidy, the cost is only 10 thousand. Currently, there is no other stimulus that we get from the Government. (Creative economy worker, fashion subsector during KII).

The fashion sub-sector is one of the sub-sectors that has suffered the most from the pandemic compared to other sub-sectors. The data shows that the fashion sub-sector experienced a contraction of −3.2% year on year (YoY). Meanwhile, according to Pardede, an economist from Permata Bank, the culinary sub-sector growth slowed by 2.4% (Elena, 2020). Therefore, efforts to minimize the impact of the pandemic in the creative economy sector require the Government’s capacity to integrate links in the creative economy business.

Sustain

Various short-term programs are formulated by ministerial agencies and BUMN involved in saving the creative economy sector. The main aim of the short-term program is to support the economic needs and increase the skills of artistic and creative workers to enter the new normal.

The recovery program for the creative economy sector to deal with the impact of the COVID-19 pandemic was carried out by the Government because many creative business actors felt that their income had greatly decreased. As a result, no customers have purchased their products since implementing the Large-Scale Social Restrictions (PSBB). In the culinary sector, for example, consumer visits to restaurants have decreased drastically due to the ban on eating on the spot. Consumers tend not to want to take the risk of being exposed to the COVID19, thereby reducing the frequency of eating in restaurants or cafes. Whereas 90% of restaurant services in Indonesia are dine-in (Kompas, 2020cc). In addition, the implementation of physical distancing policies also makes it difficult for creative economy workers to get capital loans (Kompas, 2020q). Therefore, the Government has compiled various short-term programs to restore the creative economy sector (see Table 2). The aim is to provide direct benefits from the program to creative economy actors (see Table 3).

Table 2.

Government Organization Involved in the Recovery of the Creative Economy.

Institution	Role in creative economy resilience
Ministry of Tourism and Creative Economy	Managing a budget of IDR 500 billion to help save the tourism sector and the creative economy during the COVID-19 emergency. (Kompas, 2020f, 2020g, 2020h, 2020i)
Ministry of Social Affairs	Managing the budget of IDR 85.56 trillion for workers, including creative workers affected by COVID-19. (Kompas, 2020j)
Ministry of Manpower	Providing a budget of IDR 20 trillion to workers affected by layoffs. (Kompas, 2020k)
Ministry of Education and Culture	Managing the budget of IDR 38 billion for arts and cultural workers affected by COVID-19. (Kompas, 2020l).
National Oil Company	Providing a budget for SMEs affected by COVID-19. (Kompas, 2020m)
Financial Service Authority	Providing credit relaxation under Rp 10 billion for Small and Medium Enterprises (SMEs). (Kompas, 2020n)

Source. Kompas.com.

Table 3.

Short-Term Programs for the Recovery of the Creative Economy.

Institution	Short-term programs
Ministry of Tourism and Creative Economy	(1) Social safety net schemes, business protection, exemption from health and labor insurance costs, tax relief, bank loan relaxation, reduction of electricity costs and rental costs, as well as the Labor Intensive Program.(2) #GerakanMaskerKain targets the procurement of 1 million cloth masks nationwide.(3) #GerakanLaukSiapSaji involves food entrepreneurs to prepare food for those affected.(4) #SatuDalamKopi Movement as a joint effort to advance. National coffee while at the same time moving the economic wheels of the national coffee industry players to remain productive during a pandemic.(5) Free online training for up skilling and reskilling creative economy actors.(6) Preparing a new normality protocol in running a creative economy business.(7) Providing capital incentive assistance of IDR 24 billion for six creative economy sub-sectors. (Kompas.com, 2020)(8) Gerakan Bangga Buatan Indonesia (GBBI) or Indonesia-made love movement to moblize local economy. (Kompas.com, 2020; Kompas, 2020p, 2020r, 2020s, 2020t, 2020u, 2020v, 2020w).
Ministry of Social Affairs	Distributing social assistance consisting of basic food packages, cash social assistance, direct village cash assistance, to pre-work cards. (Kompas, 2020g).
Ministry of Labour	Organizing a Pre-Employment Card program for young job seekers and workers who get laid off. Each pre-employment cardholder will receive IDR 3,550,000, which is sent gradually over four months. This consists of a training fee of IDR 1 million, an incentive after completing the training of IDR 2.4 million, which will be given IDR 600,000 every month for four months, and a survey incentive of IDR 150,000. (Kompas, 2020x).
Ministry of Education and Culture	(1) Reducing entertainment tax and value added tax to maintain purchasing power and provide stimulation due to the cancellation of art events.(2) Giving appreciation funds to art workers who have lost their jobs.(3) Providing an online stage for art workers who cannot perform during the coronavirus pandemic.(Kompas, 2020l, 2020y, 2020z).
National Oil Company	(1) Providing a revolving fund loan with a maximum value of IDR 200 million.(2) Providing further guidance to small and medium enterprises (SMEs) to improve their businesses. (Kompas, 2020m)
Financial Service Authority	Tax and loan relaxation for SMEs in the form of lower interest rates and postponement of instalments for a year, both from banks and the non-bank financial industry. (Kompas, 2020n).

Source. Kompas.com.

From informants’ perspectives, they express different opinions of the various short-term program in saving their business. Some informants gained benefits from the program, but others did not. The following are excerpts from interviews with creative economy workers.

I have not received any government assistance at all. I was once offered productive social assistance of 2.5 million. When I applied for the funding, I did not get it at all. My sustenance comes directly from God. (Creative economy worker, culinary subsector during KII).

Thankfully, my application for pre-employment card training passed, but this program’s confirmation process took quite a while. I took a marketing course because it suited my needs. I can use the course to sell my batik products. (Creative economy worker, fashion subsector during KII).

I had applied for a pre-employment card. However, until now, I do not know the results. I hope there is clarity regarding the pre-employment card program so that as a creative worker, I can still survive (Creative economy worker, film subsector during KII).

I got a bank instalment deferral for six months during the pandemic. I was only asked to pay interest on the loan. However, there is no other assistance from the Government other than suspension of bank instalments. (Creative economy workers, handicraft sub-sector during KII).

The Government has offered several assistance to creative economy actors during the pandemic. However, this assistance was very limited. Many creative economy actors have registered as recipients of government programs, but not all of them have received those programs. Some do not even know if they managed to get the help. In addition, actors who have received assistance feel that the management process is quite long. Furthermore, the assistance was felt to be very short, and there was no other assistance they could ever access. The following are excerpts from an interview with a government official recognizing the shortcomings of assistance programs for the creative economy workers.

We recognize the shortcomings of some of our efforts and have not been able to reach all the beneficiaries in need, but our efforts will never stop. We work based on priorities and focus on what has more leverage on the national economic recovery through the creative economy sector. (Directorate of Strategic Studies, Ministry of Tourism and Creative Economy during KII).

Endurance

The Government’s response to overcoming shocks in the creative economy sector, in general, can answer the needs and problems of creative economy workers to enter the new normal. Our informant from ministry and creative economy workers told their actions relating to the new normal issue as follows:

We implement the INNOVATION strategy, including the big data approach, to map the potential and strengthen existing tourism sectors. Fundamental changes to super-priority destinations in one year, starting from fashion, performing arts, culinary, and infrastructure. ADAPTATION. The application of the CHSE (Cleanliness, Health, Safety, Environment Sustainability) standard for each tourist destination as a form of adaptation during a pandemic. COLLABORATION. We are cooperating with all parties to restore the tourism and creative industry sectors, creating the widest possible employment opportunities. The COVID-19 pandemic has had an impact on young entrepreneurs of SMEs. Almost all young entrepreneurs are not aware of the support from external parties, be it NGOs, the private sector, or the government. Most of them take advantage of networks among young entrepreneurs to build partnerships between suppliers and distributors. For that, we are ready to work together with various parties to revive the national economy. Our Ministry has been ready to work together to create accelerated skills upgrading. (Directorate of Strategic Studies, Ministry of Tourism and Creative Economy during KII).

The Government’s readiness can be seen from several of its actions to restore the creative economy sector and prepare for the new normal era. However, the Government’s capacity to manage data on social assistance recipients has encountered problems such as overlapping and incomplete recipient data (Kompas, 2020aa). As a result, the implementation of social assistance for creative workers was not fully effective. Two informants expressed this concern as follows:

I was once offered to apply for productive social assistance by a friend of mine. I tried to apply for help but ended up not getting it at all. Surprisingly, my friend who does not have a definite business received productive social assistance from the Government. (Creative economy worker, culinary subsector during KII).

From government-run social media, I believe the Government has heard the complaints of art workers. However, it seems that the Government is not able to capture the aspirations of the art workers. Even if we provide a solution, it is unlikely that our aspirations will reach the Government. Finally, we were given training materials on jobs that have nothing to do with art. We automatically start from zero, right?. . ..while at the same time we have to keep earning. Where does the income come from, sir? (Creative economy worker, film subsector during KII).

The implementation of pre-employment cards also encountered obstacles. Even the pre-employment card program triggered a polemic because of the involvement of the President’s exceptional staff as providers of training programs. In addition, the online training program package provided was not suitable for the needs of creative workers affected by COVID-19. According to a national politician, the provision of the pre-employment card program is not appropriate to address the socio-economic impact of those who have lost their jobs due to the COVID-19 outbreak (Kompas, 2020bb). The purpose of the pre-employment card program is actually to provide additional skills or improve the skills of people looking for work. As a result, the training package provided by the pre-employment card program was discontinued. However, incentive assistance for pre-employment card participants is still provided.

Discussion

This article attempts to broaden the understanding of the Government’s capacity to respond to the impact of the COVID-19 pandemic on the creative economy sector. Government capacity here is understood as the Government’s ability to take various actions in the form of policies and programs to overcome the impact of the crisis. In this case, the crisis was brought about by the COVID-19 outbreak. This study extended the RISE model developed by Maher et al. (2020) to analyze the Government’s capacity to respond to the impact of COVID-19 on the creative economy sector. The following discussion provides findings based on the RISE Model criteria.

Resilience

The findings of resilience criteria from this study are as follows. First, the Government has shown great concern to save the country’s economy from the earliest period of the pandemic entering Indonesia. Indeed, one of the economic sectors affected by the pandemic was the creative economy sector. The Government was trying to restore the creative economy sector because of its large contribution to GDP. These findings supported preliminary research conducted by Nicola et al. (2020) and O’Sullivan et al. (2020), which highlighted economic recovery efforts in various countries such as Germany, the United States, the United Kingdom, and Australia to save the economy and to ease the economic burden of business actors due to the COVID-19 pandemic.

The Government has done what the President’s priorities in his second term to increase economic growth. Hence, in many ways, this economic priority seemed to exceed the efforts of preventing the spread of the coronavirus. This can be observed from the beginning of this year. When many parties began to worry about the COVID-19 outbreak coming to Indonesia, the Government was more concerned about the short-term impact of this outbreak on the damage to the Indonesian economy (Sparrow et al., 2020).

Therefore, at a time when many countries issued travel warnings or even began to limit the influx of visitors from abroad and were considering lockdown their territories, the Indonesian Government was still trying to take advantage of the situation by launching initiatives to encourage the creative economy sector, especially by promoting tourism. The Government tried to attract foreign tourists who at that time had difficulty vacationing in other countries that had closed their tourist destination to divert their visits to Indonesia (Sugihamretha, 2020).

This means that the Government’s concern for the economy was considerable. Concerning the creative economy sector, the Government has specifically mitigated creative economy actors affected by COVID-19 by reallocating budgets, conducting incentive programs, and involving creative economy actors to help them survive and get sustainable income.

Intention

The main finding of intention criteria from this study is the policy strategy to mitigate the impact of COVID-19 focusing on programs directly impacted economic recovery. Several programs such as social assistance, tax relief, loan interest relief, health insurance payment exemptions, and access to capital and training were policy strategies with a direct and responsive impact. These findings supported the study of Amir and Amir (2020).

The short-term policy strategy taken by the Government concerning creative economy actors was aimed at their survival amid the pandemic. In reality, the creative economy sector mostly develops in the form of the informal sector. During the COVID-19 outbreak, their position was very vulnerable because most of them were not included in government data as beneficiary residents. If there were no special attention to them, then they would not be touched by any emergency incentive programs or safety net assistance schemes for their survival. At least these programs could reduce the burden of life during the impact of the Coronavirus outbreak so they were still able to meet their basic needs before they could carry out creative efforts as in normal times.

Even though it is arguably a bit late, the Government has opened registration for creative workers who have been affected by the economy due to social restrictions caused by COVID-19. The Government has also tried to include them in the Family Hope Program and the Pre-Employment Card. This includes traditional artists who are not familiar with the technology.

However, the long-term policy strategy has not yet been apparent. The Government’s efforts to create an enabling environment for an everyday creative economic life under the umbrella of the health protocol were expected, for example, by art workers who needed space for performing arts and workers from the tourism sector who wanted to reactivate tourist destinations. The Government seemed like it was trying to accommodate it, but without adequate health protection.

Sustain

The main finding of sustain criteria from this study is the government capacity playing an essential role in handling the pandemic crisis due to COVID-19. Policy makers have demonstrated their ability to produce effective decisions to prepare economic actors to survive crises. This finding supported the study of Chuaire et al. (2014), Djalante et al. (2020), Maher et al. (2020), and Serikbayeva et al. (2020), which emphasized the importance of government capacity to cope with turmoil, to manage, and to recover from crises and uncertainties. Likewise, the findings of this study also corroborated with the studies of Borcan et al. (2018), Dincecco and Katz (2016), and Wang (2019), which found a significant effect of government capacity on achieving better economic outcomes.

Despite its lack of competence in dealing with the spread of the pandemic, the Government can be said to have a strong focus on minimizing the potential economic damage by COVID-19. The decision to deal with the economic crisis caused by COVID-19 was taken quickly. This was undoubtedly supported by the existence of the rule in the form of government regulations instead of laws (Perpu), which were issued to provide immunity for government officials in using state money. This law, in many cases, also reduces control from the People’s Representative Council (DPR) because it cuts off part of the DPR’s budget function. In addition, during this crisis, the Government was relatively free from public control. Many policies could be taken without getting criticism, protests, and even demonstrations from the citizens.

Unfortunately, this large government capacity has been misused by some to serve the interests of cronies in power. A number of conflicts of interest were suspected to be inserted in government programs to tackle the COVID-19 outbreak. The appointment of a digital platform in the pre-employment card program was criticized by citizens as misappropriated. It could be seen from the partnership with many digital platforms, which was not conducted through a goods and service procurement mechanism. This highlights Ozili’s (2020) study of the failure of the Nigerian Government to prevent the economic crisis because of ineffective policy responses to the COVID-19 pandemic situation. The experience of Nigeria, which has spent a large budget during the COVID-19 pandemic, has failed to restore the national economy because of the Government’s slow response in understanding the pandemic and its socio-economic impacts.

Endurance

The main finding of sustain criteria from this study is collaborative capacity among institutions. Collaboration was needed to prepare and respond to crises comprehensively during a pandemic. These findings supported not only the study of Schwartz and Yen (2017) but also the study of Christensen and Ma (2020), Kapucu and Ustun (2018), and Parker et al. (2020), which emphasized that crisis management requires collaborative capabilities among government agencies.

In terms of collaborative capacity, however, the Indonesian Government did not look good enough. Policies between ministries often overlapped and changed at the time of implementation. In terms of handling the creative economy, there were overlapping databases at the ministries. Technically, a fast and precise one-door data collection mechanism was needed in order for the assistance to be adequately channeled.

Meanwhile, with local governments, the coordination flow between the central Government and regional governments was not going well. Central government policies often created confusion at the local government level. The central Government has taken many rules and policies without synchronizing with local governments. In a pandemic period, the collaboration between the central Government and local governments should run well. However, they could not work together in dealing with emergencies to recover the creative economy sector. The limited budget managed by the Regional Government and the pandemic that cannot be controlled make efforts to recover the creative economy sector very difficult.

An interesting finding delivered by this study is that the Indonesian Government has taken many actions and spent much money responding to the impact of the COVID-19 pandemic on the creative economy sector. However, the expected results in creating an enabling environment for an everyday creative economic life are still inadequate. Not only 17 sub-sectors of the creative economy have not been fully touched by government programs, but also most of the big programs are only enjoyed by a few creative economy actors. In general, the beneficiaries of government programs in the creative economy sector are limited, and programs run at the national level are not connected to those at the regional level. This study shows that the local government agencies that deal with the creative economy have not yet taken any steps to respond to the impact of COVID-19 on the creative economy life. Therefore, most creative economic actors that still exist today can survive because of their own efforts and innovations.

In addition, the negative impact of the COVID-19 pandemic on the creative economy sector is getting substantial due to changing consumer behavior (Di Crosta et al., 2021). In line with declining purchasing power, consumers are more likely to spend their budget on personal protective equipment rather than culinary, fashion, and craft. Consumer concerns about the transmission of COVID-19 have also reduced consumer behavior to buy creative economy products, especially culinary and fashion. As a result, both the culinary and fashion sectors in the first year of the pandemic experienced negative growth.

With regard to the applicability of the RISE model in our study, the analysis showed that this model provides an overview of the essential role of government in responding to the crisis caused by the corona virus pandemic. Maher et al. (2020) formulated the RISE model to describe the public and business sectors in the United States in overcoming the financial crisis due to the COVID-19 pandemic. They found that both the public and private sectors carried out spending savings strategies and management innovations to survive the economic turmoil due to the pandemic. In contrast to Maher et al. (2020), our analysis with the model shows the Indonesian Government’s strategy to increase public spending to save the creative economy sector from bankruptcy. Over the last 5 years, the creative economy’s enormous contribution to Indonesia’s GDP has prompted the government to carry out a rescue strategy in the short term through various economic stimuli and social assistances. Although the results achieved are far from satisfactory, the government’s spending strategy to maintain the resilience of the creative economy sector during the COVID-19 pandemic shows the importance of the government’s role in times of multidimensional crises.

Conclusion and Recommendations

This study draws several conclusions. First, the COVID-19 pandemic has had a major negative impact on the creative economy sector. Changes in consumer behavior have had a negative impact on the fashion and culinary sectors. Second, at the resilience stage the Indonesian Government has demonstrated its capacity to save the creative economy sector during the first year of the COVID-19 pandemic. Collaboration between government agencies, state-owned companies (BUMN), and Financial Service Authority to restore the creative economy sector shows the Government’s strong capacity to overcome the impact of COVID-19 from an economic perspective. However, the central policies to recharge the creative economy during the pandemic are unfortunately not supported at the local government level because of an inadequate budget. Third, at the intention stage, the Government’s actions show efforts to minimize the impact of COVID-19 on the creative economy sector through short-term programs. These actions are undertaken to keep creative workers survive during the COVID-19 pandemic. Fourth, at the sustain stage, the Indonesian Government implements short-term programs in saving the creative economy with the main objective of reducing the economic burden experienced by arts and creative workers due to the direct impact of the COVID-19 pandemic. In general, short-term programs are manifested in social assistance packages, tax relief, insurance premium free, and skills improvement training. Fifth, at the endurance stage, the adaptation of the creative economy sector to the new normal is hampered by poor data management and political economy interests.

Irrespective of the Indonesian Government’s efforts to recover the creative economy sector from the COVID-19 pandemic, the expected outcomes are still far from satisfaction. Many creative economy actors in the regions have not received direct cash assistance/productive social assistance or access to pre-employment training in the first year of the pandemic. In addition to mistargeting, creative economy actors also do not receive a sustainable recovery program to have difficulty adapting to the pandemic situation. These findings reveal that the ggovernment’s intervention during the first year of the COVID-19 pandemic becomes ineffective because the government is weak in preparing the creative economy recovery policies according to the needs of creative economy actors and accurate data.

Some of the recommendations suggested from the results of this study are: first, government action to bring the creative economy sector to the new normal era should also focus on programs that prepare the behavior of creative economy workers in innovative ways; second, the government should prevent free-riding from taking place and extend mitigation programs for the impact of COVID-19 so as not to hinder the process of accelerating the recovery of the creative economy sector; and third, the central and local government should improve their collaborative capacity to upgrade the creative economy recovery programs according to the local aspiration.

Future research could explore more samples of online news and representative informants to capture a comprehensive understanding of the government dynamics in responding to the COVID-19 impacts on the creative economy sectors. In addition, future studies should take more robust a conceptual framework into account to gain a more critical analysis of the government capacity in handling the creative economy crisis due to the COVID-19 pandemic.

Footnotes

Appendix

Interview Guide.

Declaration of Conflicting Interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author(s) disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: We would like to gracefully thank the Universitas Jenderal Soedirman for funding this first year research grant from BLU Research Fund of Universitas Jenderal Soedirman [Kept.117/UN23.18/PT.01.05/2020].

ORCID iD

Slamet Rosyadi

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The Indonesian Government Capacity in Responding to the COVID-19 Impacts on the Creative Economy Sector

Abstract

Keywords

Introduction

Theoretical Background

Methods

Results

Resilience

Intention

Sustain

Endurance

Discussion

Resilience

Intention

Sustain

Endurance

Conclusion and Recommendations

Footnotes

Appendix

Declaration of Conflicting Interests

Funding

ORCID iD

References