Celios Highlights Protection for SMEs on Local Marketplaces Amid Rising Logistics Costs

Jakarta (ANTARA) - Nailul Huda, Director of the Digital Economy at the Center of Economic and Law Studies (Celios), is pushing for special protections for local products, particularly those from micro, small, and medium enterprises (UMKM), on local marketplace platforms and/or e-commerce sites. This comes after UMKM players recently complained about the high administrative and logistics costs charged by the digital trading platforms they use. “In terms of incentives, the government, in this case the Ministry of UMKM, must provide different treatment between local products and imported products,” Huda said when contacted in Jakarta on Friday. He stated that currently, local UMKM products face tough competition due to the abundance of imported products sold on marketplaces. Additionally, the high deductions by platforms are creating new challenges for continuing business on these digital trading platforms. “I have often stated that most goods sold on e-commerce are imported goods. Therefore, local goods need protection, one of which is from the logistics cost side,” Huda said. One thing the government can start doing to protect UMKM products on marketplaces, Huda continued, is to tag goods according to their place of production (made in). “The government must also carry out tagging of goods first so that it can see where this good is made in. This tagging policy has never been implemented even though it is important to use as a reference for policy-making data,” he explained. Regarding the factors influencing the rise in marketplace service costs, Huda assessed that one of them is the change in strategy by platforms that are now more oriented towards seeking profit (profit-oriented). “This action by platforms is not separate from the shift in platform strategy which is now starting to chase profits. Previously, platforms might still be able to incur losses because they were chasing valuation. However, now they can no longer do so because they must be profitable,” he said. “Tight funding has become one of the causes of the strategy shift for platforms. Several have even gone public where investors also need positive company performance instead of negative,” he added. The rise in platform service costs, Huda added, has the potential to affect consumers’ desire to shop because selling prices will also increase. “So when there is a price increase from the platform, whether administrative costs or logistics costs, there will be a decrease in demand,” Huda said. “Even if it is passed on to the seller, the seller will pass it on to the consumer, so in the end, demand will slow down,” he added.