Apriadi Gunawan, Medan – Many small- and medium-scale businesses in Medan have reportedly shut up shop over the past six months due to the low purchasing power of consumers there.

Head of the Medan Market Traders Association, Azri, said most of the bankrupt enterprises were those dealing in the cottage and garment industries and shop-front retail.

Azri said it was estimated that some 25,000 out of a total of 50,000 small- and medium-sized businesses in Medan had been forced to cease activities. He warned that this figure would likely rise over the next few months due to increasing losses.

"I'm pessimistic about their ability to survive in the months ahead. If they can, they would actually be using up their capital and biding their time before they go out of business," Azri told The Jakarta Post over the weekend.

Azri, who is also chairman of the Medan Restaurant and Handicraft Business Association, said many business owners were forced to sell their assets to repay bank loans.

He said he had to sell several of his assets to maintain his restaurant and shoe businesses, which had been incurring losses over the past two months due to price increases in raw materials. He then began experiencing difficulties in selling his products as a result of consumers' low purchasing power.

"I suffer up to Rp 30 million (US$3,350) in losses every month. The source of overhead costs come from my bank loan, which I have to repay monthly. Where would I get the money to repay the loans if not from selling my assets," said Azri, adding that 30 of his employees are now at risk of losing their jobs.

A trader at Medan's Petisah Market, Khairani, said the condition of small-scale traders was critical, due mainly to a decline in consumer numbers. She said it was difficult to sell her products at base price, let alone after minor markups.

"If I may say, the condition of most traders is now grave. We're just waiting to die." Khairani, and others like her, wait in hope of a government plan to bail them out of their current situation.

Head of Petisah Market's management, Adinda Putra Jaya, said as many as 1,034 traders at the market had stopped their business activities due to the low purchasing power of consumers. He said the closures had been occurring since last year, but that because some traders were still able to survive, closures had taken place slowly.

It goes without saying that lagging business has also had an adverse effect on the overall takings of the market's management.