BACKGROUND

The times are demanding efficiency and effectiveness in all fields. The
existence of modernization which is certainly understood also due to the
insistence of modern capitalist forces pushed the establishment of modern markets
in the midst of Indonesian society. In a short period of time, modern retailers with
extraordinary capital abilities spoil consumers with positive things related to
convenience when shopping, safety, convenience, increasingly diverse product
variations, product quality is increasing, and prices are getting cheaper because of
the existence competition.
However, although the contribution of the modern market to the growth
of the retail industry in Indonesia has benefited consumers, the growth of modern
retailers has actually brought about its own problems in the form of the
elimination of domestic agricultural, fishery and livestock products from the
Indonesian people's dining table. Modern markets have quality standards that
cannot be met by Indonesian agricultural products, so even for food that already
exists in Indonesia, such as meat, vegetables and fruit, they must be imported
from abroad to be able to meet their quality standards.
On the other hand, the fate of traditional markets, which are the main
distribution channels of Indonesian people's agricultural products, is currently at
the brink of not being able to compete with the modern market. Though not a few
people who depend their lives on the traditional market. When hit by the
economic crisis, traditional markets are able to support the lives of some
Indonesian people, both those who work as traders, and farmers who are only able
to market their agricultural products through these people's markets. With the
erosion of traditional markets, it has affected local suppliers who are generally
unable to enter large retailers.
The growth of modern markets has proven to jeopardize the position of
traditional markets and other traditional retailers in the vicinity. As a result of the
Local Government's policy of allowing the development of many modern
markets, according to Asosiasi Pedagang Pasar Seluruh Indonesia (APPSI), since
2004, eight markets in Jakarta have been closed due to abandonment buyers and
overhead costs are quite high, namely the Blora market, Cilincing, Cipinang Baru,
Kramat Jaya, Muncang, Prumpung Tengah, Sinar Utara and Karet Pedurenan.
Unemployed traders are estimated to reach at least 2,100 traders. Traders who
have survived to date experienced a turnover decline of up to 75 percent. While
other traditional markets in the Jakarta area, the occupancy rate is only 40-60%
and abandoned buyers. APPSI notes that, out of a total of 151 traditional markets
in Jakarta, there are 51 markets close to modern markets and 45 hypermarkets
close to hypermarkets, with an average proximity radius of less than 2.5 km.
It is very tragic when traditional markets must be confronted with
modern markets "face to face" and more tragically the almost absence of
government alignments with traditional markets, resulting in increasingly sharp
social inequalities. Equitable distribution of income will not be achieved if the
main media of people's economic activity is weak economy, left out.
Empowerment of traditional markets as a microeconomic container is absolutely
necessary.

DISSCUSION
Impact of Modern Market Development
1. Modern Markets Provide Comfort and Prestige for Consumers
The existence of modern markets today has become the demands and
consequences of modern lifestyles that are developing in the midst of Indonesian
society. Not only in metropolitan cities but has penetrated to small cities at the
sub-district level in the country. These places promise a comfortable shopping
place with various facilities and attractive prices. Modern markets provide high-
quality goods at fixed prices, and sometimes offer discounts. What's more, they
offer a variety of payment system choices, from credit cards to funding for larger
items. Shopping areas are also clean, bright, and have well-functioning facilities
such as toilets, dining areas and large parking lots.
2. Competitive Advantage of Modern Markets Seizing Customers in
Traditional Markets.
Modern markets and traditional markets compete in the same sector,
namely the retail industry. On the one hand, the modern market is managed by
professional hands and complete facilities. While on the other hand traditional
markets are still confined to classic problems, management is still far from
professional, to the inconvenience of shopping.
Modern retailers are able to provide all necessities at prices that are
comparable to traditional markets of all types of goods, with better quality. If
traditional markets are considered superior in providing relatively lower prices for
many commodities, with far better shopping facilities economies of scale modern
retailers are large enough and their direct access to producers can reduce their cost
of goods sold so that they are able to offer more prices low. Instead of traditional
market traders, they generally have a small scale and face a marketing chain that
is long enough to buy the goods they will sell. The advantages of low-cost
traditional traders are now beginning to erode.
In the past, the advantages of traditional markets were also obtained
from the location. People will prefer to shop at markets that are located closer.
However, modern shopping centers continue to develop to hunt for potential
locations. With the increasingly widespread and widespread location of modern
shopping centers, the superiority of the location will also be increasingly lost.
Proximity to location is now no longer a source of sustainable excellence.
3. Modern Market Exploits Suppliers
The next problem of the retail industry is related to the imbalance of
positions between suppliers and retail businesses. Modern retailers have been
transformed into extraordinary powers. In product supply chain management to
consumers, modern retail is now a crucial part, because its ability to bring
consumers is very large. The strength of suppliers is getting weaker because
competition among themselves also occurs very tightly, while modern retailers in
one region do not have many competitors. As a result, modern retailers can freely
use their market power.
First, goods sold in the modern market need to go through rigorous
selection, where small suppliers who are unable to meet quality standards, storage
costs, and cannot afford a longer payment period than traditional retailers, will be
rejected. At this point alone, many local suppliers are not eligible to enter the
modern market. Meanwhile, traditional markets are being abandoned by buyers,
so these local suppliers are automatically losing consumers.
If the suppliers have passed the quality standard requirements, start the modern
retailers apply various trading terms (trading terms), so that the supplier has the
potential to become a land of exploitation for modern retailers. Then came what
became known as listing fees, minus margins, fixed rebates, terms of payment,
regular discounts, common assortment costs, opening costs / new stores and
penalties (Table 2). Even in its development, the trading terms have turned into a
part of their own income for retailers.
4. Modern Markets Increase GDP, but Cause Inequality In Income
Distribution
Retail is one of the backbone of the national economy. In 2003, the retail
business market potential reached around Rp. 600 trillion. The contribution of the
retail sector to the Gross Domestic Product (GDP) reached 20%. In terms of
quantity, from around 22.7 million the number of businesses in Indonesia as many
as 10.3 million or around 45% are wholesale and retail trade. Aprindo stated that
the retail sector is the second sector after agriculture, which absorbs the largest
workforce in Indonesia, with the ability to absorb 18.9 million people.
The latest developments in the composition of the Indonesian retail
industry are described in a survey conducted by AC Nielsen in 2004-2005. This
survey data shows that in terms of quantity, the number of traditional retail
businesses is far above the number of modern retail businesses with a very
significant quantity difference. However, modern retail turnover is in the range of
IDR 50-60 trillion per year, with the remaining turnover around IDR 550-600
trillion from traditional retail, it is very clear that the turnover of modern retail is
far above traditional retail (KPPU: 2007).
Various types of modern retail have concentrated the power of large
capital on one person or trade group. This makes competition unbalanced with
traditional markets which have been one of the driving wheels of economic
activity in an area and are one of the public facilities that support and develop the
economic activities of the majority of the Indonesian people. Market control by
modern retail will gradually increase capital accumulation in the middle and upper
economic classes, so that economic equality is not achieved. The main cause of
income distribution inequality is very unequal ownership of assets (wealth,
resources, or factors of production).
5. Foreign Investment in Modern Markets Can Reduce Foreign Exchange
There are many causes of the rapid growth of modern markets in
Indonesia. The first impetus was born from the emergence of policies that were
pro to retail liberalization, among others manifested in the form of removing retail
businesses from the negative list for Penanaman Modal Asing (PMA) as stated in
Presidential Decree No. 118/2000 concerning Closed Business Fields and Opened
Business Fields With Certain Requirements for Investment. This policy has
caused no more restrictions on ownership in the retail industry. As a result,
businesses in this industry continue to emerge. Even the latest developments show
the emergence of signals of the entry of foreign retailers in the retail segment
which has been banned for Penanaman Modal Asing (PMA) such as in
minimarkets and convenience stores. (KPPU: 2007)
In fact, the impact of foreign investment in the long run can reduce
foreign exchange earnings, both in the current account and capital account. The
current account balance may deteriorate due to massive imports of intermediate
goods and capital goods, while the capital account is further deteriorated due to
the return of profits, interest, royalties, management service fees, and other funds
to the country the origin. (Todaro & Smith, 2003: 173)
Conversely, if the traditional market is able to succeed in Indonesia, it will have a
positive effect on Indonesia's balance of payments. If the majority of Indonesian
people prefer to shop at traditional markets, the modern market invasion will be
able to be detained. High quality local products currently sold in the modern
market can be transferred to export commodities. While leakage due to the flight
of domestic funds abroad can be reduced.

CONCLUSION
The existence of modern markets has a positive effect on consumers and
provides a sizeable contribution to GDP. However, the development of modern
markets has a negative effect on the existence of traditional markets and micro
suppliers, by taking over traditional market customers and exploiting suppliers,
which results in capital accumulation in the middle and upper economic classes,
so that economic equality is not achieved. In the long run, the domination of
modern markets that originate from foreign investment will also harm Indonesia's
balance of payments.
To maintain the existence and increase the potential of traditional
markets as an economic driver of the small people, a traditional market
development model is needed, in which the government acts as a regulator of the
role of stakeholders and regulators. Regulations regarding traditional and modern
markets must regulate the division of business zones, opening hours, prices of
goods, and types of retailers. Strategies that can be used to regulate the price of
goods are by differentiating products and prices, as well as through tax regulations
and efficient management of user fees. Besides that, it is also needed human
resources that manage traditional markets with modern management while still
maintaining the distinctive taste of traditional markets.