Wed, 25 Jun 2008
A dispute over retail-supplier contracts for medium enterprises has resurfaced in the wake of rising fuel and commodity prices after being silenced last year by a presidential decree.

In 2005, PT Sariboga Snacks won a case against Carrefour after reporting the retail giant to the Business Competition Supervisory Committee (KPPU) over a disputed listing fee, a sum suppliers have to pay to get their products onto retailers' shelves.

In response, President Susilo Bambang Yudhoyono last year issued a decree restricting retailers to seven specific trading terms.

However, National Meat Processor Association executive director Haniwar Syarif said his members had to cope with more than the seven terms allowed by the decree.

"Aside from listing fees and promotion discounts, some retailers have added new product support to the trading terms.

"It's a mandatory cost every time we introduce a new product," Haniwar said, though he refused to name names due to ongoing closed debates between the association and retailers on the issue.

Article eight, verse four, of the decree stipulates that retailers can only charge suppliers for regular discounts, fixed rebates, conditional rebates, promotional discounts, promotional budgets, distribution costs and listing fees.

"Some of my members have complained they're paying Rp 10 million for trading term costs, up from the Rp 3 million they were paying last year before the decree was issued," he said.

Meat suppliers currently pay an average 25 percent of market meat prices to cover the trading terms, Haniwar said.

Susanto, president of the Indonesian Modern Retailers Suppliers Association, said Carrefour, which bought local retail chain Alfa Mart last year, for example, had been charging Alfa's existing suppliers a "grand-opening" fee every time they placed their goods in a new Alfa store.

"An owner of a medium enterprise just complained to me that he was charged Rp 7.5 million for each store that he opened. He plans to supply 29 new stores, that's over Rp 200 million in costs."

Gunaryo, the Trade Ministry's director for market management, told The Jakarta Post the reports were true.

"We have also received reports of illegal trading terms and we are in the process of inspecting these contracts," Gunaryo said.

However, Carrefour's director of corporate affairs Irawan Kadarman said the company had always complied with existing regulations, adding that the charges were made in agreement with the suppliers.

"The main point is that everything is done under agreement, there is no cheating or strong-arming involved," Irawan said, adding that the ongoing talks between relevant parties should help clear things up. (anw)



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