Jakarta’s bustling markets, long known as hubs for bargain hunters seeking affordable luxury, are once again under scrutiny for the rampant trade in counterfeit goods. At ITC Mangga Dua and the nearby Mangga Dua Morning Market in North Jakarta, stalls openly display knockoff designer bags, wallets, and accessories, despite repeated government efforts and international pressure to curb intellectual property (IP) violations. This persistent issue, highlighted in recent US trade reports, underscores the complex interplay of economic necessity, regulatory gaps, and global trade dynamics in Indonesia.

A Market of Imitations

In the crowded aisles of Mangga Dua Morning Market, the allure of luxury comes at a fraction of the cost. Shelves are lined with counterfeit Coach bags and Louis Vuitton wallets, with prices averaging over 1 million Indonesian Rupiah (US$59) and the cheapest items starting at 350,000 Rupiah (US$21), according to stall employees engaged in lively haggling with customers. The market’s merchants, ranging from low-tier sellers to so-called “premium” vendors, cater to a wide spectrum of buyers, offering everything from mid-range knockoffs priced at 150,000 Rupiah (US$9) to high-end fakes costing several million Rupiah.

Aristo, a vendor with over a decade of experience at the market, sheds light on the tiered structure of the trade. “We sell whatever is right in front of us” he told a local news outlet, hinting that some merchants may not even be fully aware they are dealing in counterfeit imports. He also noted that government raids, often targeting premium sellers, are a regular occurrence, yet the trade persists. Pointing to a row of busy stalls, he added, “But as you can see, they are still here.”

Many of these goods are sourced from other wholesale markets in Jakarta, creating a sprawling network of distribution that complicates enforcement efforts. For shoppers, the appeal is undeniable: access to luxury aesthetics without the hefty price tag. But for policymakers and international stakeholders, this thriving black market represents a significant challenge to IP rights and fair trade.

International Spotlight and US Pressure

Mangga Dua has once again been named a hub for copyright piracy and trademark counterfeiting in the 2025 National Trade Estimate Report on Foreign Trade Barriers, released by the Office of the US Trade Representative (USTR) on March 31, 2025. The report also broadly critiques multiple online Indonesian marketplaces for similar violations. In a related 2024 Review of Notorious Markets for Counterfeiting and Piracy, the USTR pointed to a lack of effective enforcement, citing stakeholders’ concerns over ineffective warning letters to sellers and the absence of criminal prosecutions.

The timing of the report’s release, just days before a sweeping US tariff policy announcement on April 2, 2025, by then-President Donald Trump, added to the tension. Although the policy was paused for 90 days a week later to allow for negotiations, the message was clear: IP violations in countries like Indonesia remain a sticking point in US trade relations. The counterfeit trade, therefore, is not just a local issue but a geopolitical one, with potential implications for Indonesia’s export markets and economic partnerships.

Regulatory Efforts and Gaps

Indonesian authorities have pledged to address the issue, but progress remains elusive. Trade Minister Budi Santoso announced on April 20, 2025, that his office would intensify monitoring and crack down on the circulation of counterfeit goods. Moga Simatupang, the director general of consumer protection and trade order at the Trade Ministry, reiterated this commitment, stating that the government would take immediate follow-up action regarding the situation at Mangga Dua. He also noted that under Law No. 20/2016 on trademarks, prosecuting the distribution of counterfeit goods often requires a formal complaint from the affected party—a significant hurdle given that many brand owners are based overseas.

The Industry Ministry has also weighed in, with spokesperson Febri Hendri Antoni Arif emphasizing the importance of regulating imports to prevent counterfeit goods from entering the domestic market. Earlier in 2025, Industry Ministry Regulation No. 5/2024 required importers to hold a trademark certificate before receiving approval from the Trade Ministry. However, this measure was quickly replaced by Trade Ministerial Regulation No. 8/2024, which eased import restrictions and removed the certification requirement. According to Febri, tracing and cracking down on counterfeit goods in local markets amid rising import volumes has proven ineffective, further complicated by the difficulty of securing complaints from foreign brand owners.

These regulatory flip-flops highlight a broader challenge: balancing the need for strict IP enforcement with the risk of creating trade barriers. Economist Andry Satrio from the Institute for Development of Economics and Finance (INDEF) described the issue as delicate. “If the government tightens import regulations, the US might view it as a trade barrier” he said, referencing last year’s protests from businesses over restricted raw material imports, which ultimately led to policy reversals. He advocated for stronger regional partnerships, such as with ASEAN countries, to combat illegal cross-border activities tied to the counterfeit trade.

Beyond policy, the counterfeit trade in Indonesia has deep economic roots. Bhima Yudhistira, executive director of the Center of Economic and Law Studies (CELIOS), pointed to a lack of oversight over unauthorized import channels as a key driver of the problem. He also highlighted the absence of meaningful sanctions for producers and retailers of counterfeit goods. “Though the government has confiscated some illegal goods, it was not significant” he said, estimating that retail sales of such items account for roughly 10 percent of Indonesia’s GDP—a staggering figure that underscores the scale of the underground economy.

For many merchants at Mangga Dua, selling counterfeit goods is a matter of survival. Low- to mid-tier vendors like Aristo cater to consumers who cannot afford genuine luxury items, filling a demand that fuels local livelihoods. This economic reality complicates enforcement efforts, as aggressive crackdowns risk alienating communities dependent on this trade. At the same time, the persistence of counterfeit goods undermines legitimate businesses and erodes trust in Indonesia’s markets, both domestically and internationally.

Broader Implications for Trade Policy

The counterfeit issue at Mangga Dua is emblematic of broader tensions in Indonesia’s trade policy. The country has enjoyed a trade surplus in recent years, partly driven by exports to the US, but looming tariffs and IP disputes threaten to disrupt this balance. The USTR’s criticism of Indonesia’s enforcement record could influence future trade negotiations, especially as the US seeks to address IP violations as part of its broader tariff strategy. If unresolved, this issue may lead to punitive measures that impact Indonesian exporters and, by extension, the national economy.

Moreover, the counterfeit trade raises questions about consumer protection. Knockoff products often lack the quality controls of genuine goods, potentially posing safety risks to buyers. While no specific incidents have been widely reported in connection with Mangga Dua’s offerings, the sheer volume of unregulated goods in circulation suggests a need for greater vigilance.

Looking Ahead

As Indonesia navigates the complexities of IP enforcement, the situation at Mangga Dua remains a litmus test for the government’s resolve. Stricter regulations, enhanced regional cooperation, and targeted enforcement could help curb the trade in counterfeit goods, but such measures must be balanced against economic realities and international trade obligations. For now, the stalls of North Jakarta continue to thrive, offering imitation luxury to eager buyers while policymakers grapple with solutions. Whether upcoming trade talks with the US and other partners will yield a breakthrough remains an open question, one that could shape Indonesia’s economic landscape for years to come.