Government Aims to Ignite Shopping Tourism, Overcoming Regulatory Hurdles for Sector Growth

Government Aims to Ignite Shopping Tourism, Overcoming Regulatory Hurdles for Sector Growth
Government Aims to Ignite Shopping Tourism, Overcoming Regulatory Hurdles for Sector Growth

In a bid to fortify its position on the global tourism map, the Indonesian government is gearing up to transform the nation into a shopping tourism, rivalling popular destinations like Singapore and Thailand. The focus is on revitalizing the retail sector, and the government is actively working to streamline regulations, ensuring a conducive environment for retail businesses to thrive. From simplifying licensing procedures to facilitating smoother import activities, the authorities are leaving no stone unturned.

Acknowledging the need for a strategic approach, Airlangga Hartarto, the Coordinating Minister for Economic Affairs, underscores the significance of learning from the success stories of Singapore and Thailand. These neighboring nations have adeptly utilized shopping tourism to attract a significant influx of international tourists.

Airlangga notes that, unlike Indonesia, which primarily relies on natural attractions, these countries have successfully leveraged the appeal of shopping experiences.

During the virtual National Congress (Munas) of the Association of Retailers and Shopping Center Lessees of Indonesia (Hippindo), Airlangga stated, “Our shopping tourism has not been emphasized. Therefore, it is Hippindo’s task to elevate shopping and culinary tourism to be on par with various other countries.”

Ensuring a conducive environment for retail businesses is at the forefront of the government’s agenda. Airlangga emphasizes that ongoing efforts include refining regulations to simplify business processes, ranging from permit issuance to import activities. In his view, the retail sector plays a pivotal role not only in promoting national products but also in driving overall economic growth.

“Regarding business permits, we will continue to facilitate the implementation of retail openings,” assures Airlangga, highlighting the commitment to easing bureaucratic hurdles for businesses.

However, challenges persist. Budihardjo Iduansjah, Chairman of Hippindo, sheds light on the existing gaps in government support for the burgeoning retail industry.

Notably, the process of establishing a supermarket or shopping center (mall) involves navigating through more than 50 permits, leading to a cumbersome expansion process. Drawing comparisons with countries like Vietnam and Cambodia, where the retail sector experiences more fluid growth, he underscores the need for a more streamlined regulatory framework.

The intricate regulatory landscape has led to a situation where many investments have diverted from Indonesia, opting for more favorable conditions in Vietnam.

Furthermore, tightened import policies, particularly concerning branded goods, have posed significant challenges to specific sectors within the retail industry. Many stores selling branded goods have faced stock shortages due to these policies.

For instance, Budihardjo cites an electronic store in Indonesia currently holding only 60% of the stock keeping unit (SKU) compared to Singapore and Malaysia. This imbalance has resulted in branded goods being priced 40% higher in Indonesia than in its neighboring countries.

As the retail industry grapples with these challenges, there is a call for a more supportive regulatory environment. The government’s commitment to learning from global success stories underscores its dedication to propelling Indonesia into a leading shopping destination, ensuring sustained growth for the retail sector and contributing significantly to the nation’s economic landscape.”