This section analyses the relationship between the usage of a particular fintech app and individual user socioeconomic and psychological factors. We use logistic regression to empirically verify the factors affecting personal decisions to use fintech. Table A1 shows a list of dichotomous dependent variables used in the model. Y1–Y5 are dependent variables concerning usage of different fintech platforms, i.e., M-banking, E-wallet, lending, investment, and donation. Y6–Y7 are dependent variables concerning fintech usage for social activities and expanding one’s network. Finally, Y8–Y9 are dependent variables concerning one’s perception of data security and fraud related to fintech usage.Table A2 shows a list of independent variables used in the estimation. It covers individual-specific characteristics such as age, gender, income, job type, and residential area. It also covers some psychological factors, such as feeling in control, being afraid of data leaks or fraud, and being worried about being extravagant or trapped in unsustainable debt, among others.Overall, the estimation results show that having many choices for the needed financial services (KAT_CHOICE) and feeling in control (KAT_ TAKE_CONTROL) make people like to use various types of fintech applications. These variables are statistically significant and positive in all model estimations (Table A3).Table A3 shows that men tend to like investment apps, while women tend to like E-wallet and lending apps (KAT_GENDER). Younger people (Generations Y and Z) tend to like E-wallet and investment apps (KAT_ AGE). Those with higher education (post senior high school) tend to use fintech more, especially M-banking, investment apps and donation apps (KAT_EDUC), compared to those with lower education. And people who have full-time jobs tend to like fintech, i.e., M-banking and investment apps (KAT_JOB). Finally, lower-income groups tend to like E-wallet apps (KAT_SES), while the higher income groups tend to like M-banking apps.Location variable (KAT_AREA) stands out as significant in all estimations (Table A3). It shows that those living in the Jabodetabek area have a higher probability of using fintech platforms than those outside Jabodetabek. Later we re-estimate the model using the Jabodetabek sample to check the robustness of the estimation results.Table A4 indicates that fintech use is not associated with expanding social networks (KAT_BROADEN NETWORK). However, people who use fintech for social activities (KAT_SOCIAL_ACT) tend to install E-wallet, donation and investment apps.

Introduction

This chapter sets out to answer the following questions. Is the present pandemic an out-of-the-ordinary event or something that could have been expected, given past history, but for which we were not prepared? What are the basic causes of pandemics? How are these causes related to the way humans interact with nature and environment? These are addressed in Section 1. Section 2 of the chapter asks: what are the different ways societies have responded to the pandemic crisis? What factors explain why some are doing better than others? What lessons can be learned to prepare for the next pandemic?

With hindsight, a global pandemic was inevitable. History is peppered with pandemics including in recent times, and today’s globally connected world could hardly be better optimized to breed new outbreaks and allow them to spread. High population densities, intensive farming and deforestation all make the emergence of novel viruses and pathogens more likely; trade and modern travel make their transmission inevitable. What was not inevitable though was our collective response to the threat.

We begin with a brief tour of the history of pandemics from ancient to modern times, focusing on the latter and in particular on the present pandemic—the COVID-19 pandemic. We will look at influenza and coronavirus pandemics in turn, but we will also include a few pandemics that do not neatly fall under these headings and attempt to balance this loose categorization with a historical chronology.

Section 1: A Brief History Of Pandemics Historical Background: Plague Pandemics

There have been three major bacterial pandemics since the sixth century AD: the Justinian plague, the bubonic plague (or Black Death), and the third plague pandemic (we will also briefly look at the Manchurian plague). All are noteworthy for the devastation that ensued both in terms of loss of life and in the far-reaching socio-economic impacts they made.

Throughout the course of the first two pandemics, spanning both the Dark Ages and the Renaissance, a poor understanding of the cause of plague led to a persistent curtailment of control. In these periods the pathogenic agents or bacteria had yet to be discovered. People were unaware that rats were transmitting agents. The belief at that time was that miasmic bad air was to be blamed, sometimes associated with malevolent astrological signs (Watts 1997, pp. 8–15).

This chapter begins by examining the mechanics of how the shock of sudden lockdown impacted our complex, integrated and circular economy, teasing out the various transmission processes and key economic agents. Section 2 deals with government responses and measures to rescue their economies from the fallout of the grinding halt. Different countries had different capacities to do it, and some could afford extensive programmes worth up to 40 per cent of GDP, while others eked out in single digits—reflecting their level of development, depth of pockets and the range of policy levers available. Section 3 briefly compares these measures to what was put in place during the Global Financial Crisis (GFC)—what we learnt from last time, and the difference it makes that this current crisis is health-driven and impacts simultaneously on economic demand and supply, whereas the GFC had its origins squarely in the world of finance. Section 4 concludes with a brief discussion on the impact of COVID-19 coping measures—some of which played out more or less as anticipated, whereas others did not—and potential consequences for the long term.

Section 1: Sudden Stop—An Economy Is Not A Supertanker

Until now, the term “sudden stop” was typically applied to the capital markets and used to describe the way that financial flows—often “hot money” heading from low interest rate countries to higher interest rate ones—could abruptly dry up or change direction, causing turmoil in exchange rates, interest rates and other financial markets. The health crisis of COVID-19 and coping policies of social distancing and lockdown saw a sudden stop applied as a deliberate policy, to humans and indeed the entire economy. Before this happened, people would not have dreamed such a sudden stop to normal life even possible. Often, when we talk about effecting change in the economy or in society we use the analogy of a supertanker, which is famous for taking a long time to change direction because of its massive size and weight and the effect of momentum. Sudden stop for these vessels is impossible and it takes kilometres of sea even to slow down or do a U-turn. Nonetheless, the ship does eventually come to a standstill, and when all engines are turned off it stays more or less headed in the same direction, and passengers and cargo remain on board unaffected.

The economic, political, strategic and cultural dynamism in Southeast Asia has gained added relevance in recent years with the spectacular rise of giant economies in East and South Asia. This has drawn greater attention to the region and to the enhanced role it now plays in international relations and global economics.

The sustained effort made by Southeast Asian nations since 1967 towards a peaceful and gradual integration of their economies has had indubitable success, and perhaps as a consequence of this, most of these countries are undergoing deep political and social changes domestically and are constructing innovative solutions to meet new international challenges. Big Power tensions continue to be played out in the neighbourhood despite the tradition of neutrality exercised by the Association of Southeast Asian Nations (ASEAN).

The Trends in Southeast Asia series acts as a platform for serious analyses by selected authors who are experts in their fields. It is aimed at encouraging policymakers and scholars to contemplate the diversity and dynamism of this exciting region.

THE EDITORS

Series Chairman:

Choi Shing Kwok

Series Editor:

Ooi Kee Beng

Editorial Committee:

Daljit Singh

Francis E. Hutchinson

Norshahril Saat

INTRODUCTION

The COVID-19 pandemic has arguably accelerated changes in consumer behaviour, leading to more people performing economic activities online. One important change is the adoption of fintech as a preferred transaction and payment method. This trend is driven by a significant proportion of the unbanked population and the lower-income segment in urban areas. New fintech start-ups such as ShopeePay (E-wallet), Shopee Paylater (Buy Now Pay Later or BNPL) and Kredivo (Online Lending Service) and Bibit (Mutual Fund Invesment) have all introduced innovative ways to offer online financial services in Indonesia’s rapidly growing digital economy.

Fintech enterprises offering E-wallet, BNPL, Online Lending, Insurance and Multifinance require approval from the Financial Services Authority of Indonesia (Otoritas Jasa Keuangan or OJK), whereas fintech enterprises dealing with investments, stock/mutual funds and cryptocurrencies require approval from the Commodity Futures Trading Supervisory Agency (Badan Pengawas Perdagangan Berjangka Komoditi). In 2012 OJK replaced the previous Capital Market Supervisory Board (Bapepam LK or Badan Pengawas Pasar Modal & Lembaga Keuangan) and holds wider authority in supervising and regulating the capital market and financial institutions. Fintech enterprises undergo a two-step process to obtain permits from OJK: the first involves reporting and analysing the suitability of pursuits and business processes with current government regulations; and secondly, upon further recommendations, fintech start-ups are mandated to register the business with OJK by compiling a self-assessed risk mitigation portfolio and devising a collaboration scheme with government inspectors to avoid money laundering and to establish a consumer service centre for consumer protection. The innovations brought about by fintech startups show similarities to the technology and business processes within the various fintech categories in Indonesia; standardization is, however, still a work in progress. This is occurring in the area of their services, their transaction and payment methods, the timeframe involved, the quality of the fintech platforms, and the rights and responsibilities of both the industry and consumers.

Along with improved services and increased transparency, fintech is gaining momentum and changing the economic landscape in urban and peri-urban areas. This is due to its decentralized, personalized and efficient nature. We observed lower psychological barriers to enable digital literacy and spread fintech adoption among Indonesia’s middle-and lower-income urban households.

Introduction

The year 2020 has been an eventful year, for many reasons, but principal among them being the ongoing COVID-19 crisis, that has knocked over a series of dominoes, leading to very serious implications in so many different aspects of life on our planet, including health, economics, trade, environment and society. The global pandemic has revealed and highlighted many of the structural and ideological weaknesses present and prevalent in a globalized free market economy run along neoliberal lines. How did we get here? Where is “here” exactly? Where do we go from here? These are some of the lines of enquiry we will follow in this book.

Before we dive in, let us take a moment to consider why we use the term Great Transformation. It is not about technology, the Internet, the invention of electricity, nor even the wheel, although these have indeed been transformative to the way people live. Rather, we are talking about economic systems, which overarch all of these things. The First Great Transformation, according to the brilliant economic historian Karl Polanyi, was the shift in human and societal relations—the transformation of humans as social beings to homo economicus, acting purely according to economic considerations. Society was turned on its head when the market as a social institution traditionally embedded in social relations became disembedded, with price and profit calculus dictating economic behaviour. This facilitated the rise of wage labour crucial to the rise of industrial capitalism beginning in eighteenth-century England. As Polanyi so graphically puts it, man became labour, land real estate and trees timber—all exploited for profit.

This book examines what happened next, and how we entered into a Second Great Transformation—the change from industrial-managerial capitalism to financialized capitalism—from the 1980s onwards, whereby the finance that was supposed to be the servant became the master of the real economy. By the end of the book we hope to have made a convincing argument for a Third Great Transformation that is yet to come, and much needed, to a more balanced economic system that puts finance back where it belongs and encourages a different, more balanced relationship between Man, Nature and Society.

Writing a book about a current event presents numerous challenges, not the least of which are having to analyse data that are either incomplete or constantly changing, and making conclusions that can quickly become outdated. The objective of this volume is not to provide a blow-by-blow account of the development of the COVID-19 pandemic. Neither is it a primer to explain the pandemic from a health or medical perspective.

Rather the purpose is to situate the pandemic in a larger historical, social, economic and political context. To show that the pandemic is not just a health crisis, that it should be understood in a holistic and historical perspective. The book is intended for a general audience rather than an academic one. Hence, we tried to the best of our ability to convey the message in as accessible language as possible without sacrificing academic rigour. A glossary of medical terms used in Chapter 2 is provided for the convenience of readers.

What broke out as a health crisis in 2020, definitely the most serious since the 1918 Spanish flu, has deep historical and structural roots with extensive impacts that reverberate to all sectors of society and economy. That is why our book is titled: COVID-19 and the Structural Crises of Our Time. We examined the crises of environment, health, economy, finance and politics and their interrelationships. The pandemic is simply a jumping point or springboard for us to examine the structural flaws in our society.

Practically all commentators on the pandemic, including those with different political persuasions, are more or less agreed that the event has laid bare many fractures and flaws in society—environmental degradation and climate crisis, inability of health systems to cope with health calamities; huge economic disparities in society that worsened as the pandemic hit the poor and lower working class harder than the rich and upper class; political polarization between those who turn to science to manage the pandemic and those who disdain science in favour of populist jingoism and solutions.

In terms of situating the pandemic in broader historical context, the authors turn to the work of economic and social historian Karl Polanyi.

The economic, political, strategic and cultural dynamism in Southeast Asia has gained added relevance in recent years with the spectacular rise of giant economies in East and South Asia. This has drawn greater attention to the region and to the enhanced role it now plays in international relations and global economics.

The sustained effort made by Southeast Asian nations since 1967 towards a peaceful and gradual integration of their economies has had indubitable success, and perhaps as a consequence of this, most of these countries are undergoing deep political and social changes domestically and are constructing innovative solutions to meet new international challenges. Big Power tensions continue to be played out in the neighbourhood despite the tradition of neutrality exercised by the Association of Southeast Asian Nations (ASEAN).

The Trends in Southeast Asia series acts as a platform for serious analyses by selected authors who are experts in their fields. It is aimed at encouraging policymakers and scholars to contemplate the diversity and dynamism of this exciting region.

THE EDITORS

Series Chairman:

Choi Shing Kwok

Series Editor:

Ooi Kee Beng

Editorial Committee:

Daljit Singh

Francis E. Hutchinson

Norshahril Saat

EXECUTIVE SUMMARY

• • This article reports the findings of an online survey conducted in November–December 2021 on Indonesians’ experience and perception of fintech tools, focusing on fintech adoption in the Greater Jakarta region, which besides Jakarta, includes Bogor, Depok, Tangerang and Bekasi.

• • One key finding is that, in the Greater Jakarta region, socioeconomic status as measured by income is not a key determinant of fintech adoption. This is likely due to the more developed and mature ICT infrastructure in the Greater Jakarta region, which makes fintech tools readily accessible.

• • However, the kinds of fintech tools that are more likely to be used— M-banking, E-wallet, Online Lending, Investment, Donations, and so on—are influenced by factors such as income, education, gender, age and occupation, suggesting that different fintech tools appeal to different groups in society according to their needs and resources.

• • Psychological factors that are important in the adoption of fintech include having many choices in the needed financial services and feeling in control. While fintech users are concerned about data leaks and fraud, this does not deter them from using fintech.

• • It may be anticipated that with the deepening of ICT infrastructure and public education on the safe use of fintech, fintech usage in Indonesia will continue to spread throughout the country.

EXECUTIVE SUMMARY

• • Micro-, small- and medium-sized enterprises (SMEs) account for approximately 97 per cent of all active business entities within the ASEAN region. They are an important contributor to both emissions generation and future reduction.

• • A recent large-scale, multi-country quantitative assessment was undertaken into how SMEs are dealing with climate change in Indonesia, Malaysia, the Philippines, Singapore and Vietnam. Most respondents reported a high level of concern about climate change.

• • Over 90 per cent of firms are currently undertaking measures to reduce emissions, albeit that they are typically simple steps such as reducing air conditioning and electricity, recycling or installing low-energy lighting.

• • Common intentions to deal with future extreme weather events include reducing emissions, developing a disaster plan, or reviewing business insurance policies.

• • Major obstacles to dealing with climate issues are firstly, a lack of knowledge and secondly, insufficient funds. Governments are the preferred source of information, followed by business associations/ chambers, friends and family. Social media, YouTube and websites are overwhelmingly the dissemination modes of choice. There were significant variations in these patterns from one reporting country to another.

• • Policymakers can help SMEs adjust to climate change by: encouraging them to adopt simple emission reduction measures; providing training and financial support; ensuring appropriate online delivery of advisory and assistance measures; and localising responses to meet the needs of SMEs which are specific to different ASEAN member states.

Introduction

Chapter 5 examines the roots of populism, the dangers it presents to democracy and how the COVID-19 pandemic has introduced new dynamics to the situation with both promises and dark warnings. Four decades of neoliberalism has not only spawned economic and financial crisis but also political crisis. It is manifested in the ascendance of populism verging on ethnonationalist regimes, which can descend into fascism in the worst scenario. Populists in power have exploited the pandemic crisis to grab more power. At the same time, populist governments have not performed well in coping with the crisis. This chapter also looks at how the pandemic can affect the fortune of populism and democracy, as well as the sense of solidarity among nations.

The rise of populism and ethno-nationalism today is in many ways a redux of what happened in Europe during the interwar years in the early twentieth century. Polanyi saw the rise of fascism, the economic depression, and the two world wars as the crisis and breakdown of the self-regulating market and capitalism. Under capitalism, societies are constantly confronted with the basic tension between forces of marketization and the counterforces of social protection. As the market relentlessly expands its reach and search for profit, it generates contradictions in society and imposes enormous hardships on people. This naturally engenders counter-movements, seeking protection from the ravages of market, demanding political and social rights. This produces a clash between market values and political values of democracy. When these two forces are equally balanced, political stability prevails. But when market forces become excessive, they result in extreme inequities and crisis. The inability to find a solution to the crisis, and a stalemate between these two forces, presents opportunities for alternative narratives and “solutions”. This unstable situation is often exploited by political demagogues and charlatans to rise to power. Italy and Germany, during the period between the two world wars, represented such a moment. Defeated after the First World War, humiliated psychologically and impoverished with the heavy burden of war reparations, the lives of ordinary people were made worse by hyperinflation.

Introduction

The COVID-19 pandemic has laid bare some of the fundamental flaws and fractures in our globalized society. These range from environmental degradation and climate crisis, broken healthcare systems, increasing political polarization, and historic levels of economic and social inequality. In addition, we can see a highly concentrated economy that enriches big corporations to the disadvantage of smaller businesses. This discourages innovation and bolsters a financial system dissociated from the real economy, one that values the extractive over the productive, with all the attendant ecological degradation that implies. In short, we are faced with multiple crises, the cumulative effect of which is that human existence, and the civilizations they depend on, are under threat.

These crises present an opportunity for public debate, with a reassessment of the role of the market and a re-examination of how the economy became a market economy and how society became a market society. We need to question the personal, social and environmental consequences that are intrinsic in a market economy and a market society, and while we are at it, reformulate the goals of what they ideally should achieve.

In this chapter, we distinguish between the concepts of the market, a market economy, and a market society. The market has been around in different forms for centuries, and for the foreseeable future we still need to live with it. But we argue that certain goods and spheres of life should not be subject to market forces. The way the market is embedded in society needs an overhaul. Similarly, finance needs to be restructured to better serve the real economy. This calls for a two-pronged approach, reining in large profit-oriented financial institutions, while simultaneously encouraging the growth of alternative financial institutions. To achieve this, the role of civil society needs to be strengthened and the market needs to be disentangled from politics. We will consider the prospects for change, looking at the dynamics and interaction between the forces of marketization, social protection, and emancipation, and the possible political-economic outcomes.

Concepts Of The Market, The Market Economy, And The Market Society

The concept of the market has different meanings to different people, partly because the term is employed loosely and contains several nuanced definitions.