Govt to issue new franchise regulation<\/p>\n
JAKARTA (JP): The government will soon issue a new regulation
\non franchises that will include a local content requirement for
\nforeign franchises, Minister of Cooperatives and Small
\nEnterprises Subiakto Tjakrawerdaya said here yesterday.<\/p>\n
\"We'll issue the franchise regulation later this year. We and
\nthe Ministry of Industry and Trade are working on it,\" he told
\nThe Jakarta Post after a hearing with the House of
\nRepresentatives Commission VII for finance, trade, cooperatives
\nand logistics.<\/p>\n
He said that the planned regulation should help develop and
\nprotect domestic franchisees that have yet to fully benefit from
\nthe franchise business.<\/p>\n
He said that until now about 90 percent of the profits earned
\nthrough foreign franchises go to foreign countries.<\/p>\n
\"This is particularly caused by the fact that the franchisees
\nhave to import raw materials such as meat and potatoes to
\nmaintain the quality of their products.\"<\/p>\n
He added that the franchise business is a good model to copy
\nto promote partnerships between big and small companies, one of
\nthe aims of a program recently launched by President Soeharto.<\/p>\n
According to Subiakto, the franchise business is integrated in
\nterms of production and marketing managements, allowing them to
\nbe readily adoptable by interested franchisees.<\/p>\n
\"The franchise business is a readily-copied package. What is
\nneeded now is to improve the quality of our human resources to
\nbenefit,\" he said.<\/p>\n
AK & Partners, a franchise consulting firm, reported recently
\nthat foreign franchise businesses in Indonesia have grown by an
\naverage of 445.8 percent per year during the last four years,
\nwhile the number of local franchisers only grew by 5.9 percent.<\/p>\n
The consulting firm pointed out that the number of foreign
\nfranchises operating in the country, excluding hotel chains,
\nincreased from six in 1991 to 113 last year. The number of
\ndomestic franchisers only rose from 21 to 26 in the same period.<\/p>\n
Food and beverage franchisers ranked first, with 46.15 percent
\nlocal franchisers and 55.75 percent foreign franchisers, followed
\nby non-food retail, training and consulting, laundry, fitness and
\nbody care and other products.<\/p>\n
The firm reported that the United States is the largest
\nexporter of franchises to Indonesia with 76.11 percent of the
\nfranchises already set up in the country, followed by Japan,
\nAustralia, Britain, Singapore, the Philippines, France and Italy.<\/p>\n
With the number of foreign franchises expected to grow by 31.8
\npercent per year, the consulting firm said that the outflow of
\nforeign exchange will also continue to increase.<\/p>\n
Increase<\/p>\n
In answer to the commission's questions, Subiakto said that
\nthe government is now taking inventory of the latest partnerships
\nbetween being forged between state-owned companies and small
\nfirms.<\/p>\n
The government requires state-owned companies to allocate
\nbetween one and 3 percent of their profits to help develop small
\nbusinesses. They are also required to set up partnerships with
\nsmaller firms.<\/p>\n
\"Until now only four state-owned companies have submitted to
\nthe government their assessments of those cooperatives and small
\nbusinesses that they might choose as partners,\" he said.<\/p>\n
During the period of 1990-1995, he said Rp 741.7 billion
\n(US$321.09 million) had been collected, of which 79 percent has
\nalready been channeled from state-owned companies to smaller
\nbusinesses.<\/p>\n
He cited a number of problems hindering the development of
\nbusiness partnerships, including the poor quality of human
\nresources in small businesses, a lack of information about the
\nprogram among small firms and the difficulties of the state
\ncompanies in selecting their partners.<\/p>\n
Meanwhile, the Ministry of Cooperatives and Small Enterprises'
\nDirector of Urban Cooperatives Development, Mamiet Maryono, said
\nat yesterday's hearing that Bank Indonesia, the central bank,
\nwill raise interest rates on credits for members of primary
\ncooperatives from 14 percent to 16 percent per annum.<\/p>\n
Bank Indonesia and other state-owned banks until now provide
\ncredits of no more than Rp 50 million for investments and working
\ncapital for each primary cooperative.<\/p>\n
According to Mamiet, Bank Indonesia is also likely to ask the
\nbanks to raise their cooperatives credit portfolio from 25
\npercent to 40 percent. \"But it will be hard to realize,\" he said.
\n(13)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/govt-to-issue-new-franchise-regulation-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}