The Recurring Closure of Business

As my main discussion with my wife revolves around the 'boycott corporations supporting Gaza genocide' recently, I can’t help but find myself contemplating the closure of so many businesses in our local area.

I understand the potential impact of boycott – it might harm the business, but let’s not get ahead of ourselves. Not everyone is boycotting everything that has relation with Israel.

What particularly bothers me is the multitude of businesses closing in our vicinity, and strangely enough, we seem to overlook it. For some, it's merely seen as an inherent outcome of entering the business world. To phrase it more elegantly, it's considered business as usual.

In a recent conversation with my wife, we observed a disconcerting trend in our neighborhood – the closure of numerous stores in North Bekasi area.

It is relatively vibrant area, with storefronts of various enterprises. However, some of them are now marked by empty spaces.

It looks like running a business in North Bekasi appears challenging when considering the high count of closed stores. Fortunately, some have already been replaced, indicating a thriving business environment.

Additionally, there has been a surge in the construction and renovation of new properties into shophouses. However, it raises another question: will their tenants survive their business?

The recurring closure of businesses may paint a bleak picture, suggesting a challenging environment for entrepreneurs. However, the constant churn also reveals a parallel narrative – a continuous stream of new businesses replacing the old. This flux, while indicative of economic vitality, raises questions about the sustainability and challenges faced by local enterprises.

Apart from the positive, the initial shock and concern gave way to a nuanced realization that beneath the surface, there is something wrong here.

Assuming that North Bekasi represents a small sample of Indonesia, I can’t help but ponder: who actually bears the responsibility for the fluctuating fortunes of businesses in Indonesia?

Is it the government, the business owners, or the nature of the market itself?

The Government?

The government appears to have taken substantial steps to bolster the local business ecosystem. A pivotal initiative in this direction was the adoption of the Ease of Doing Business (EoDB) survey by the World Bank, which was designated a national priority agenda in 2014, right after President Jokowi's inauguration (until it became suspended due to integrity issue).

It had everything. EoDB was a comprehensive survey that covered ten essential indicators that spanned the entire spectrum of business operations, ranging from how to establish a business, how to operate it, and how to close it when it’s necessary. It was all for helping local Micro, Small, and Medium Enterprises (MSMEs) in every country that being surveyed.

These indicators, subsequently evolved into guidance for the government in the formulation and adoption of policies regarding business licenses. Even after the survey was suspended.

On the other hand, Law No. 11 of 2021 on Job Creation, which was then revised by Government Regulation in Lieu of Law No. 2 of 2022, which then enforced as Law through Law No. 6 of 2023 on the Stipulation of Government Regulation in Lieu of Law No. 2 of 2022 (or let’s just call it The Omnibus Law), showcases Government’s dedication in providing better business landscape for entrepreneurs in Indonesia.

Apart from its pros and cons, The Omnibus Law stands as a testament to the government's commitment to fostering an environment that is conducive to the growth and prosperity of MSMEs. It also enticed appreciation from notable organizations such as?The World Bank and The IMF.

Through the Omnibus Law, there is a clear indication of the authorities' recognition of the pivotal role played by MSMEs in driving economic development. The focus on creating a conducive environment signals a strategic approach to empower these enterprises, ensuring they not only survive but also thrive in the competitive business arena.

Yet, with closures persisting, one wonders whether these measures are sufficient. Is there a need for further refinement, or is the problem beyond the government’s policy?

The Business Owner?

The fluctuating business which affects Indonesian business owners, may also come from the business owners themselves. Lack of knowledge and lack of strategy became the scapegoats.

On the flip side, the entrepreneurial spirit among Indonesians, particularly in the MSMEs sector, seems resilient. Take Covid-19 pandemic for example.

During the pandemic, we witnessed a remarkable transformation in Indonesian people. There were so many individuals adapting to crisis which led to unemployment, by turning their garages into street food stalls. They became businessmen overnight thanks to that difficult circumstance.

Some people were also offering their services through various digital platforms including Facebook, Instagram, TikTok, and even through WhatsApp status updates.

This adaptability showcases a commendable determination among Indonesian business owners to thrive despite adversity.

As previously stated, the recurring closure of businesses in North Bekasi, followed by the emergence of new replacements, highlights the ingenuity of Indonesian business owners.

I (subjectively) can confirm that many Indonesian business owners are devoted to starting their business, but they find it difficult to run it afterward.

The Market?

The two manifestations above, led me to another contention. The fluctuation – specifically the closure of business, possibly exists thanks to the Indonesian market itself. That the market may be a limiting factor.

Indeed, Indonesia boasts a significant population. With more than 270 million people or equivalent to 3.45% of the total world population, one can assume that Indonesia is a massive market for any products and services. Suffice it to say, more people means more markets to sell.

But then the critical question arises: How many among the populace possess the purchasing power to buy whatever the local businesses sell? Moreover, of the consumers with purchasing power, are they inclined to buy from their neighborhood enterprises and MSMEs?

The challenge may also extend beyond those questions. We've heard that wealthy individuals prefer to save their money, and that's within their rights. However, this implies their inactivity as consumers, which is less than ideal for the overall economy.

Another vital issue, like gambling, can significantly impact the economy too. Gambling, being a form of discretionary spending, diverts resources away from the business owners. Individuals engaged in gambling activities often channel their disposable income towards such endeavors rather than supporting their local businesses. Hence, the closure of business because nobody is buying their product.

Finding The Right Balance

I believe that what’s happening in North Bekasi, also happens in various parts of the world. That it’s part of business and entrepreneurship cycle – ‘It’s business as usual’.

As we ponder these questions, it becomes evident that finding an ideal balance is essential. The key players: the government, business owners, and consumers, have to understand their role in building collaboration accordingly to boost economic landscape.

Although I agree that recurring business closure followed by new business is natural, it is imperative that we focus on understanding why, how, and when these businesses encounter issues that result in closure.

Collectively, we must reduce the closure from happening.