Indonesia is awash with counterfeit products, with losses in various sectors of the economy estimated at Rp 37 trillion ($4 billion) a year, according to a new study by the University of Indonesia and the Indonesian Anti-Counterfeiting Society.
“The circulation of counterfeit products in Indonesia is very concerning,” Ibrahim Senen, head of legal and government relations at the society, also known as MIAP, said on Wednesday. “Most of the counterfeit products are copies of popular brands, which are well-known to the public and easy to sell.”
Out of 12 sectors of the economy, the study found counterfeiting was most rife in the cosmetics industry, with 16 percent of cosmetics on the market believed to be knockoffs. Around 15 percent of pesticides sold in Indonesia were counterfeit, while the automotive parts, office and electronic equipment, cigarettes, pharmaceuticals, non-alcoholic beverages, leather and footwear sectors were all around 10 percent, the study found.
The true level of losses from counterfeiting in Indonesia is likely to be well above $4 billion a year, given that sectors especially open to fakes, such as clothing and sunglasses, were not covered by the study.
Ibrahim said some counterfeits were produced domestically, especially cosmetics and shampoos, while knockoff medicines and electronics were generally illegally shipped into the country. “Most of the [imported] products come from China,” he said.
Aside from the monetary losses to companies, the study estimated that in the last eight years, 174,000 workers had lost their jobs due to conterfeiting because companies could not compete with knockoff goods.
In the clothing industry, international investors were reluctant to invest in Indonesia because there was such a high level of counterfeit goods in the market, Ibrahim said. “The government needs to take serious step to deal with the problem.”
Ricky M Safir, marketing manager of sunglasses producer Oakley Indonesia, said that counterfeits were causing his company to lose sales in Indonesia. Oakley recently held a sweeping in six areas of Jakarta, visiting sunglass retailers. During the sweep it found around 5,000 pairs of counterfeit sunglasses, he said.
In order not to raise suspicion and to mislead the buying public, some retailers of counterfeit products are now no longer selling counterfeits at far cheaper prices than the real thing, Ricky said. “Counterfeit goods will be sold at the original price, but with an additional discount of say 20 percent. The retailer will say that the discount is only in their stores because they get it directly from producers,” he said.
Widyaretna Buenastuti, MIAP’s chairwoman, said counterfeit products were also endangering the health and safety of the public, especially fake pharmaceuticals and cosmetics.
Maya Gustina Andarini, head of product evaluation at the Food and Drug Monitoring Agency (BPOM), said this month that counterfeit cosmetics often contained hazardous chemicals such as mercury, hydroquinone, retinoic acid and rhodamine.
“These are carcinogenic and can damage the kidneys,” Maya said.