October 9, 2024
JAKARTA – The Cooperatives and Small and Medium Enterprises (SMEs) Ministry has announced an interministerial meeting over the recent entry of Chinese e-commerce platform Temu into Indonesia.
Aside from the SMEs Ministry, the meeting is to include the Trade Ministry and the Communications and Information Ministry.
“This week there will be another meeting, because Temu is now available on the App Store and Play Store,” said Fiki, a special staff member at the SMEs Ministry, on Monday, as quoted by Bisnis.
The meeting was aimed at halting Temu’s operations in the country, he said, claiming that it jeopardized the business of local SMEs.
“Although [Temu] has yet to begin operating, it is available [on the App Store and Play Store]. We will try to take it down,” he vowed.
Temu would be putting local SMEs at huge risk because it allowed consumers to conduct direct transactions with factories based in China, Fiki added.
The platform’s business model of selling products directly from factories cuts out resellers, affiliates and third parties from the supply chain, which threatens the business model of domestic SMEs, according to the ministry.
Furthermore, the online marketplace has faced allegations that subsidies enabled it to sell products at artificially low prices.
Read also: Govt keeps close eye on Chinese e-commerce platform Temu
Temu operates in dozens of countries with a focus on expansion in the Southeast Asian region.
The entry of Temu into the country has sparked concern among some small businesses, which worry that local industries would struggle to compete against the platform, according to the head of local entrepreneurs’ association IPKB, Nandi Herdiaman.
“It will disrupt the local industry, especially the textile industry, which has been facing a lot of pressure in Indonesia from large imports and price-dumping practices,” Nandi was quoted as saying in a separate Bisnis report.
The textile industry was integrated from upstream to downstream businesses, he said, and that ecosystem was at risk of being disrupted by the uncontrolled entry of cheap goods into the market and the risk of illegal imports and low-quality products.
Read also: Retailers oppose shifting imports of textiles, other goods to eastern ports
“The textile industry in Indonesia provides millions of jobs, it is at risk of experiencing a decrease in productivity and an increase in unemployment if platforms like Temu dominate the industry,” Nandi explained.
Nandi also expressed concern about Temu eliminating jobs in the distribution sector, which was the source of income for many people in Indonesia.
“Enforcing stricter […] nontariff barriers and import duties is very important to protect the local industry,” he said.
He suggested that the government keep a close eye on cross-border e-commerce transactions to ensure that imported products complied with local regulations. Moreover, the government should help local industries bolster their business competitiveness by giving incentives, investing in technology and pushing for the use of domestic products.