Riots ruining the retail sector
The retail sector is part of the backbone of the country's economy. But the sector is ailing now, as retailers see their operations shrinking and delay expansion due to the economic, political and social storm that has swept the country. The Jakarta Post's team Benget Simbolon, Budiman Moerdijat, Devi M. Asmarani, Ida Indawati Khouw, Primastuti Handayani, Reiner Simanjuntak, Sugianto Tandra and P.J. Leo uncover the fears and tribulations afflicting the industry's players here.
JAKARTA (JP): Once was enough for siblings Hendra and Aming, when they decided in July to rebuild their razed electronics shop located in the heart of the Jakarta Chinatown district, Kota, in West Jakarta.
Pelangi Audio, a family business built up in the last 20 years, was looted and destroyed by angry mobs in the mid-May unrest.
Hoping to avoid similar misfortune, which had cost them Rp 900 million (US$121,621) in losses, the brothers furnished the new store with fireproof materials for the front door and the roof, like many of their neighboring shopowners.
Tragedy, however, seems to be dogging their path.
When more unrest erupted on Nov. 14, a day after a fatal military showdown quashed a massive student protest, the store became a target again for the riotous mobs. This time, it was saved from total destruction.
A week later the brothers found their business in the teeth of another round of rioting as a clash between ethnic groups in the Ketapang area, West Jakarta, intensified into a church-burning and property-destruction orgy.
"We are so traumatized by the experiences that we don't dare display all our merchandise in the store anymore," Hendra said.
Customers are now only shown catalogs before they decide on their choice during transactions, prior to the items being picked up from a house in Grogol, West Jakarta.
Apprehension stemming from heightening political tensions has forced retailers to limit the display of goods in their stores.
This is especially felt among the ethnic Chinese community, which largely controls the retail sector, and which for decades has been targeted during social disorder.
Retailer Tatang Setianto says he too no longer displays all the merchandise in his electronic components shop in Tangerang, West Java.
"I place some of them, especially the expensive items, in the store room. I will only serve customers who are seriously searching for an item," Tatang said.
Deborah, who runs the Concorde Toys baby and toy products outlet at the International Trade Center (ITC), Mangga Dua in West Jakarta, says she is particularly reducing the inventory of imported products at her store.
But even as shop owners are getting smarter and more cautious, it does not mean they are free of daily worries over more riotous outbreaks.
Deborah said retailers are on constant alert against possible upheaval.
"The mass media particularly TV and radio are our sources of information. But we have also developed a kind of information network among retailers here," she said.
Anxiety affects their sales, as the unrest has deterred customers from shopping in certain riot-prone areas like the bustling commercial district of Chinatown.
Deborah said the tempest in the last two weeks had caused a 70 percent drop in turnover.
Setyadi Surya, the director of human resources and public relations of PT Ramayana Lestari Sentosa, said unrest had largely affected customers psychologically.
"Riots and high crime rates disturb the people's peace, even when shopping," Setyadi said.
Ramayana, one of the country's largest retail chains, had suffered the most in the May riots.
Twelve of its outlets were burned, and 14 were looted and vandalized, incurring up to Rp 100 billion in total losses.
The store did not suffer any material losses in the last two outbreaks.
The 14 stores which were looted have begun operation again, while the 12 razed ones had not been rebuilt.
The publicly-listed Ramayana had planned to open a new outlet in Cengkareng, West Jakarta to replace the burned outlets, but it is delaying the plan until security improves, Setyadi said.
Security
It is general knowledge that retail businesses cannot survive without political stability.
"Retail business in this country is actually promising because of the large population, but without security it's nothing," says Rudi Sumampow, a spokesperson of the Matahari department store.
The lack of confidence in the government and its ability to ensure security has delayed many expansion or even reconstruction plans in the retail sector.
Matahari, a competitor of Ramayana, had no plans to rebuild its six stores burned in the May riots, Rudi said.
Three of Matahari's six outlets are located in Surakarta (Solo), Central Java, and another three in Tangerang. The chain's seven other outlets in Jakarta were also looted.
Says Kustarjono Prodjolalito, the executive director of the Indonesian Merchants Association (Aprindo): "It's good enough that we can survive through this episode."
Aprindo's members have suffered about Rp 7.5 billion in financial losses since the four-day Special Session of the People's Consultative Assembly on Nov. 10. The losses come from both inactive businesses -- those generating no revenues -- and the riots.
This amount is in addition to Rp 661.52 billion losses suffered during the May riots, in which at least 125 stores owned by the members were burned and 119 others were looted and vandalized.
Many retailers have chosen to wait until the end of 1999 after the planned general and presidential elections while some may just have to close down some of their branches and dismiss some of their employees for survival's sake.
Some retailers are placing their hopes on the coming four major events -- the Christmas, New Year, Idul Fitri and the Chinese New Year celebrations -- to regain the profits they've lost in the recent disturbances.
After the holidays, however, the stores would likely reduce inventory again as the country is gearing up to complete its political agenda, which has proven unrest-sensitive in the past.
Laurensius S., the manager of the Lotte Branded Center at ITC, said he planned to reduce inventory by 50 percent after the Idul Fitri Holiday as a cautionary measure against possible unrest in the run-up to the general election in May.
Kustarjono said some retailers are considering moves to safer places like the tourist haven Bali or the commercial island of Batam, and some are planning to leave the country if conditions do not improve.
Setyadi said he placed "great hope in the Armed Forces" to secure stability.
But he might be one of the rare people with such optimism in the military, whose image has been tainted by its violent handling of the student movements and by allegations of human rights violations in the past.
While mobs were looting and vandalizing properties in mid-May, security personnel reportedly did very little to stop them.
Recent findings are pointing to the involvement of some elements within the military in the May riots.
Laurensius said he was very disappointed by the government, which had earlier promised that there would be no repeat of the May horror.
"They've given us false hope. The government's credibility is now questionable," he said.
Similar hopelessness is envisioned by Tatang: "There's no longer hope of doing business here, so how can we open our shops when we are always in fear of being targeted in riots again?"