Government Reveals Cross Border Trade Application Threatens The Existence Of Indonesian MSMEs

Illustration (Photo: Doc. ANTARA)

JAKARTA - The Coordinating Ministry for the Economy has opened its voice regarding various cross-border trade applications such as TikTok Shop and Temu which have the potential to disrupt domestic micro, small and medium enterprises (MSMEs) markets and businesses.

Acting Deputy IV of the Coordinating Ministry for Economic Affairs, Musdhalifah Machmud, said that the government is aware of the potential for disturbances faced by markets and MSME players from the emergence of various digital trade cross-border applications that cut distribution lines and include imported goods directly from China.

"Learning from the TikTok Shop case, not all digital model/digital platform businesses are in accordance with Indonesia's needs. In the TikTok Shop case, the platform presents opportunities but simultaneously changes the operational business model and MSME transactions which have the potential to have a further impact (negative) on aspects of business competition and the birth of business monopolies," he said in a media briefing on the development of digital economy policies, Wednesday, June 12.

Musdhalifah said this phenomenon could damage the existing market ecosystem, create unfair competitions resulting in declining demand for local products, and potentially eliminating some jobs in the distribution sector.

Therefore, Musdhalifah conveyed that to overcome this challenge, the government is committed to protecting and empowering local MSMEs through a series of strategic policies.

As for one of the quick responses, the government issued the Minister of Trade Regulation No.31/2023 which seeks to separate social media and e-commerce.

On the same occasion, Assistant Deputy for Cooperatives and MSMEs at the Coordinating Ministry for the Economy, Herfan Brilianto Mursabdo, said that the application must be anticipated because it could threaten the existence of MSMEs.

"Yesterday we talked a lot about TikTok, now Temu has reappeared. In reality, it is like this Meeting has been operating in several countries and we need to anticipate if they operate in Indonesia," he said.

For information, the Temu application can connect directly between factories to buyers. This is what can kill MSME players because there will be no more resellers, affiliates, and third parties who can be involved in the supply chain of these products.

Herfan explained that the government had carried out several earlier anticipations regarding this matter, such as through the Regulation of the Minister of Trade (Permendag) Number 31 of 2023 which regulates social commerce.

"In the Permendag there are several provisions related to PMSE (Trafficking Through Electronic Systems) that we can use as a reference for, not holding back, but regulating other applications more precisely," he said.

Herfan said, as in one of the reasons, there is an obligation for companies engaged in this field to have representatives in Indonesia for their operational areas.

According to Herfan, the regulation is one way to restrain or ensure that the new innovation application does not immediately have an impact on MSMEs.

"Temuan itu kan menghubungkan langsung antara pabrikan dengan customer, ini biasanya terjadi untuk mayoritas barang-barang yang harganya relatif sangat murah. Dalam Permendag itu juga ada pasal yang memertukan kewajiban minimum pricing untuk kegiatan lintas negara, di mana minimal itu hargaya 100 dolar AS untuk pengiriman barang," ucapnya.

In addition, Herfan said that the regulation was not enough to save MSMEs because digital innovation continued to develop.

Therefore, his party will continue to learn the impact of digital innovations.

"This is quite a big homework because again related to MSMEs, our first homework increases digital literacy first. Invites our MSMEs to start entering digital literacy," he added.