GOVERNMENT TO DOWNSIZE DOMESTIC CONSUMPTION THROUGH RULES AMENDMENT

The Ministry of Trade was expecting some understanding among businesspeople in regard to the plan to revise Regulation of the Ministry of Trade Permendag no. 53/2008 on the guidelines for Management and Development of traditional market, shopping centers, and modern shops. The revision plan was more focused on efforts to balance up consumption level of Indonesians. Indonesia ranked first in terms of consumption in Southeast Asia. At global level, Indonesia was in fourth position. “The Government’s target is that by 2014, Indonesian consumption level would drop by up to 95 percent” the Directorate General of Domestic Trading of the Ministry of Trade Gunaryo disclosed to Business News (7/9).

Permendag no. 53/2008 specified on rules of discount for regular prices, discount of fixed prices, discount of special prices, discount of promotional prices, and promotion expenses. The Regulations had their strong influence on modern retail business. Meanwhile there was mounting anxiety that traditional markets would not be able to compete against modern retails who often offered special prices to consumers. “We do not wish to be accused of overacting by the regulation amendment plan, but there is the spirit behind the revision of Permendag. We are only anxious to reduce over consumption” Gunaryo remarked.

The philosophy of Permendag no. 53/2008 was to set up a balance condition in the real condition of national industry who were in uncompetitive condition. While being uncompetitive against modern retail, domestic products were not getting any facility as they deserved. “There are modern shops which fill up one full floor of their shop with foreign brands, while domestic products are placed in the shelves in the dark corners of the shop. This is the sort of condition most undesirable” Gunaryo said.

Meanwhile the Ministry of Trade had prepared two tools to restrict foreign brands and to balance up composition of domestic brands. Meanwhile the local content being mandatory was 80% by the execution was not even maximized. On the other hand, retailers were also afraid that some brands which entered the domestic market in Indonesia could be marketed overseas. “In fact we are not restricting them, but in the revised regulation the Government was not giving unlimited time for imported products to stay in outlets or ships” Gunaryo remarked.

In addition to the above, the revised Permendag Rules also solved scarcity problem of raw materials at home. However if there were really need for certain raw materials which were not available at home, the Government would permit import for such. For example garment products made of special leather. Apparently such raw material were not available at home, so there was eased regulation for import. “There are brands of such products in Indonesia. To uphold brand image, they could not use any raw material there was no other way but to import. In this case the supervisory and appraisal team would decide”.

Meanwhile Chairman of the Industry and Specialty Division, Association of Indonesian Coffee Industry and Exporters (AEKI) Pranoto Sunarto was not worried about the so many foreign brands of coffee business and coffeeshops. In fact Indonesian coffeeshops were not inferior to foreign franchise coffeeshops like Starbucks. As a matter of fact many mall visitors including foreign expatriates were enjoying Indonesian coffee. “We feel sure that Indonesian coffee can compete against foreign coffee. Our coffeeshops are stormed by visitors especially during business hours. To drink coffee in mall has become a lifestyle. The way it has been we never heard of the word tea shop, there is only coffeeshop”. Soenarto told BusinessNews sometime ago.

The Tiam coffee from Malaysia was no threat to Indonesian coffee retailers, because the word Tiam was non existent in franchise business and therefore there was no evident of any violation of intellectual right on that brand. Another example was the word warteg in Jakarta (a word that denotes traditional restaurant) which was found in many streets in Jakarta. The word Warteg was not a proper noun that existed in the domain of intellectual rights (HAKI), it was just a common noun that anyone can use. “The case of Tiam coffee may be regarded as a case of HAKI violation, unless there is any additional word like Lauw brand Tiam coffee which is a Chinese surname, but if only the word Tiam Coffee is used, it is not a violation, just like the way it is with Warteg” Soenarto concluded.

 Business News - September 12, 2012