The rapid development of technology, particularly generative artificial intelligence (GenAI), has brought significant transformation in the creative economy. GenAI has shown its capability to produce original artworks, presenting both opportunities and challenges for traditional artists. In this research we examine the perceptions of informal creative economy actors, particularly street painters in Braga Street, Bandung, and assess the local government’s response to the emergence of GenAI. In this study, where we make use of stakeholder interviews and SWOT analysis, we found that artists’ perceptions of AI are divided: some see AI as a tool, while others feel threatened by it. In the study we also highlight the absence of legal frameworks in Indonesia that regulate the ethical use of AI in the creative industry. Our findings reveal Bandung city as the leading art hub in Indonesia, responding to AI development through knowledge, artistic, and stakeholder networks. This study therefore contributes by highlighting the importance of artists’ awareness and government policies to minimize risks and optimize the potential of GenAI in the arts sector.