Top e-marketplace Shopee Indonesia has closed off 13 product categories from foreign products in following government orders to protect local micro, small and medium enterprises (MSME).
As of Tuesday (May 18), the closed categories include Muslim clothes, outerwear, veils, mukena (head-to-toe prayer gowns), prayer accessories, batik and kebaya (traditional blouses), among other categories.
The Cooperatives and SME Ministry is identifying other product categories to be closed.
“We will keep reviewing how we can restrict and give priority to local products and sellers, ” said Shopee Indonesia executive director Handhika Jahja on Tuesday.
“These 13 types of business are our initial study that we will continue discussing in line with government orders.” Handhika said the restriction was not expected to hurt the company’s business as foreign products accounted for only around 3 per cent of the products traded on the platform.
He also said the restriction applied to foreign products regardless of the country of origin.
He did not disclose the number of merchants affected by the restriction
In recent months, the government has shown an inclination to limit imported goods volumes on e-commerce platforms to shield MSMEs, an economic sector that absorbs 97 per cent of the work force and that relies on e-commerce platforms to expand market reach and maintain sales amid mobility restrictions.
The Trade Ministry is currently preparing a revision of ministerial regulation No. 50/2020 on e-marketplace merchants that is slated to prioritise local MSMEs and tighten control over foreign merchants on the platforms.
These moves follow President Joko “Jokowi” Widodo’s comment that citizens should echo “hate” over imported products, which prompted protectionism concerns among investors.
Cooperatives and SME Minister Teten Masduki said Shopee Indonesia’s restriction would unlock an estimated Rp 300 trillion (US$21.02 billion) annual market for MSMEs.
Restricting the Muslim fashion industry would unlock Rp 280 trillion and the batik industry Rp 5 trillion.
“Aside from developing MSMEs and improving the well-being of the players, we also have a duty to protect our MSMEs from unfair competition, including recently from the surge in foreign products that were sold cross border through e-commerce, ” Teten said in an online presser on Tuesday.
The Covid-19 pandemic has led to an annual growth of 54 per cent in Indonesian e-commerce’s gross merchandise value (GMV) to $32 billion last year, according to the e-Conomy SEA 2020 Report by Google, Temasek and Bain & Company.
The value is expected to grow 2.6-fold over a five-year period to US$83 billion in 2025.
