Reorganize Economy on Java’s Non-Toll Routes

The Trans-Java toll road will boost Indonesia’s economic growth. On the other hand, micro, small and medium enterprises (MSMEs) on regular, non-toll routes are facing gloomy prospects.

KOMPAS/ABDULLAH FIKRI ASHRI

Signs still hang in front of a closed salted egg shop on Wednesday (13/6/2018) along the northern coastal road (Pantura) in Brebes regency, Central Java. The shops started closing last year when part of the Trans-Java toll road opened. Micro, small and medium enterprises (MSMEs) along Pantura, such as the salted egg businesses, went bankrupt when motorists switched to the toll road.

BREBES, KOMPAS – Kompas journeyed along the regular intercity beyond outside the toll roads on the northern and southern coasts and on the backstreets of West Java between Friday (8/6/2018) and Wednesday (13/6) to observe the current conditions of the micro, small and medium enterprises (MSMEs) on the routes. On its travels, Kompas found that many of the home businesses are having difficulties just surviving.

In Subang, West Java, the Srikandi Restaurant, which was popular among holidaymakers, is now closed for good. Restaurant employee Aday, 42, said the restaurant had seen fewer and fewer customers since the Purwakarta-Cirebon toll road opened. In 2016, the restaurant was closed and its building offered for sale, but no one had purchased it.

“Many came and asked about the place. Most were middlemen. Some said that they planned to turn the place into a factory. Reopening the restaurant would not be profitable,” said Aday, who opened a semi-permanent food stall in front of the Srikandi Restaurant in 2016. Aday is now facing the same gloomy future. During Idul Fitri in 2016, he earned a gross revenue of Rp 3 million (US$216) a day. Since last year, his daily gross revenue has halved.

Java’s new toll roads are also affecting the people’s economy on the backstreets between Bandung and Cirebon. Kusnadi, 38, an employee of the Tahu Bungkeng eatery chain in Sumedang, West Java, said that revenue had been declining since most holidaymakers had switched to using the toll roads. Before the toll road opened, a single Tahu Bungkeng branch could sell an average 43,200 pieces of tofu during the Idul Fitri holiday. After the toll road opened, a single branch could only sell an average 8,640 pieces of tofu during the holiday.

“We haven’t opened branches in the toll road rest areas. They are quite far from Sumedang and the cost of supplying tofu there would be high,” said Kusnadi.

Duck and batik

In Brebes, Central Java, salted egg businesses are collapsing. The Mutiara and Ibu Lina salted egg shops were two of the town’s largest salted egg businesses to close down. Some sellers have tried to rent 16-square-meter shops for Rp 10 million to Rp 20 million. However, since the toll road to Semarang opened, many have been anxious about their future.

“I used to be able to sell 700 eggs a day during the Idul Fitri holiday season. Now, I can only sell half of that. What must I do?” said salted egg seller Farkhuruji, 45, who rented a shop right in front of the Brebes tollgate in Kaligangsa. Renting a shop at a toll road rest area will cost him around Rp 6 million a month. “I cannot afford that, even if I increased the price of my eggs. Who’d want to buy salted eggs for Rp 10,000 each?” said Farkhuruji.

In Pekalongan, Central Java, batik sellers’ revenue has declined sharply since 2017. At the Setono wholesale market, the traders’ revenue dropped by 50-70 percent last year. Motorists cannot exit the toll road at Pekalongan; they can only exit either at Pemalang or Batang nearby.

Pekalongan trade, Cooperatives and MSME Agency head Zaenul Hakim said the city administration had taken several steps, including proposing the construction of a toll road junction and exit gate at Pekalongan. The city has also introduced the Batik Night Bazaar at the Gamer wholesale market to attract tourists.

Blueprint

Transportation Minister Budi Karya Sumadi said the Trans-Java toll road had affected MSMEs on the island’s northern coastal route. The ministry would talk with toll road operators and local administrations about the issue. Among the possible solutions were subsidies for MSMEs to open shops in toll road rest areas or parking lots.

“We will also provide spaces at toll road rest areas to promote local food and crafts,” said Budi.

Institute for Development of Economic and Finance (Indef) executive director Enny Sri Hartati said that toll roads should not be a cause for concern among MSMEs. Local governments must be bold and creative in boosting the local economies, and the effort should not have been one-sided from the beginning. “When the central government made the plan [for toll roads], it should have asked local [administrations] to sit together and talk about a collective plan,” said Enny.

(IKI/DIT/HEN)