Indonesia, as an economic giant in Southeast Asia, finds itself at a crucial crossroads in the development of its business landscape. As e-commerce grows exponentially, Indonesian authorities are taking steps to protect their local businesses, sparking a poignant debate about the future of online commerce in the country. This tactic, driven by the desire to preserve the cultural and economic identity of traditional markets, could paradoxically slow the rise of a digital revolution that could otherwise propel the economy to new heights. Therefore, it is essential to question the implications of this approach, both for consumers and entrepreneurs, as well as Indonesia’s potential to balance modernization and preservation.
An existential threat for local merchants
Table of Contents
Devita Ariyanti, an entrepreneur from Yogyakarta, has been selling hijabs for four years in her small store. Its main challenge used to be delivery delays, but now it faces stiff competition: cheap hijabs imported via shipping platforms. e-commerce such as Shopee, Lazada And TikTok Shop.
The Indonesian government’s response
To protect local businesses like Devita’s, the Indonesian government plans to impose import duties of up to 200% on a wide range of products, including textiles, clothing, footwear, cosmetics and electronics. These measures mainly target Chinese imports, which have become omnipresent with the rise of trading platforms. online commerce.
The economic impact of e-commerce in Indonesia
Indonesia is the market for e-commerce the largest in Southeast Asia, accounting for nearly half of the gross market value of the top eight platforms, according to consultancy firm Momentum Works. The value of online sales in Indonesia reached $77 billion last year, according to authorities.
Rigorous protective measures
Faced with the influx of cheap products, the government has sought to protect local businesses. President Joko Widodo has repeatedly expressed concerns about low-cost Chinese goods, and urged consumers to avoid imported products. The region’s strictest regulations were put in place, lowering the de minimis limit for customs duties, and even banning social media shopping, forcing TikTok Shop to temporarily close.
The repercussions for local businesses
In Jakarta’s Tanah Abang textile market, the largest in Southeast Asia, several businesses have had to close in the face of cheap imports. Others have had to turn to the sale of imported products to survive, with a majority of customers becoming resellers of items purchased during livestreams on TikTok Shop and Shopee Live.
The fragile balance of economic interests
While trying to restrict the firms of e-commerce Chinese companies, Indonesia enthusiastically welcomes Chinese electric vehicle manufacturers with incentives to establish factories. However, restrictions on some imports had to be eased after complaints of a slowdown in local manufacturing.
Comparison table
| Objective | Save local businesses | Promote e-commerce |
| Import duties | Increase up to 200% | Reduction or absence of rights |
| Favored platforms | Local business | E-commerce platforms |
| Targeted products | Textiles, clothing, shoes | All types of products |
| De minimis policy | Strictly reduced | Generally high |
| Government support | Promote local businesses | Encourage imports |
| Economic impact | Protection of 60% of GDP | Rapid growth in online sales |
| Challenges | Competition with cheap imported products | Regulations and Restrictions |
Concise comparison list
- Objective :
- Save local businesses
- Promote e-commerce
- Save local businesses
- Promote e-commerce
- Import duties:
- Increase up to 200%
- Reduction or absence of rights
- Increase up to 200%
- Reduction or absence of rights
- Favored platforms:
- Local business
- E-commerce platforms
- Local business
- E-commerce platforms
- Targeted products:
- Textiles, clothing, shoes
- All types of products
- Textiles, clothing, shoes
- All types of products
- De minimis policy:
- Strictly reduced
- Generally high
- Strictly reduced
- Generally high
- Government support:
- Promote local businesses
- Encourage imports
- Promote local businesses
- Encourage imports
- Economic impact:
- Protection of 60% of GDP
- Rapid growth in online sales
- Protection of 60% of GDP
- Rapid growth in online sales
- Challenges:
- Competition with cheap imported products
- Regulations and Restrictions
- Competition with cheap imported products
- Regulations and Restrictions
- Save local businesses
- Promote e-commerce
- Increase up to 200%
- Reduction or absence of rights
- Local business
- E-commerce platforms
- Textiles, clothing, shoes
- All types of products
- Strictly reduced
- Generally high
- Promote local businesses
- Encourage imports
- Protection of 60% of GDP
- Rapid growth in online sales
- Competition with cheap imported products
- Regulations and Restrictions
FAQs
Q: Why does Indonesia charge high import duties?
A: To protect local businesses against competition from cheap imported products.
Q: What types of products are affected by these import duties?
A: Textiles, clothing, shoes, cosmetics, and electronics.
Q: Which e-commerce platforms are the most popular in Indonesia?
A: Shopee, Lazada, and TikTok Shop.
Q: What is the de minimis policy in Indonesia?
A: It was lowered to $3 to restrict low-value imports.
Q: Can local businesses still survive with competition from e-commerce?
A: Many struggle to compete with the low prices of imported products, but some stand out with unique, quality products.