Retail sales may reach $4.46 billion this year<\/p>\n
JAKARTA (JP): Continued strong consumer confidence might boost
\nthis year's retail sales to Rp 42 trillion (some US$4.46 billion)
\nan increase of 20 percent from last year's Rp 35 trillion,
\naccording to a retail association on Friday.<\/p>\n
Chairman of the Indonesian Retail Merchants Association
\n(Aprindo) Kustarjono Prodjolalito said he expected this year's
\nsales growth to equal that of last year's growth by 20 percent.<\/p>\n
He said the retail industry began posting strong sales since
\nearly last year, after a meager four percent growth in 1999.<\/p>\n
\"The turning point was the early 2000 Lebaran season (the Idul
\nFitri festive season),\" Kustarjono told reporters in a press
\nmeeting.<\/p>\n
He added that this year's estimated sales figure also included
\nsales of wholesalers and hypermarkets, like Makro and Carrefour,
\nwhich were not members of Aprindo.<\/p>\n
The association comprises of 260 retail companies running
\nsupermarkets and department stores such as Hero, Sogo and
\nRamayana.<\/p>\n
Aprindo based its annual retail sales on that year's economic
\ngrowth rate, Kustarjono went on.<\/p>\n
\"We still hope to achieve a 20 percent retail growth rate
\nbecause we expect a four to five percent economic growth rate,\"
\nhe said.<\/p>\n
He then attributed this year's high retail sales to continued
\nstrong consumer confidence.<\/p>\n
\"People think it is better to spend their money on
\nconsumption, rather than keeping it in banks that offer
\nunattractive interest rates,\" he said.<\/p>\n
He said dropping interest rates on saving deposits, which fell
\nfrom as high as 60 percent to the current 12 percent, drove
\nconsumer spending up.<\/p>\n
\"It's like the surging car sales; where does all the money
\ncome from?\" he said.<\/p>\n
Last year's car sales more than tripled when it hit 300,000
\nunits from about 90,000 units in 1999.<\/p>\n
He said that unattractive interest rates had encouraged people
\nto start trading on their own.<\/p>\n
\"People opened their own shops and bought products from
\nretailers; this of course has benefited retailers,\" he added.<\/p>\n
Meanwhile, Kustarjono also urged the government to revoke its
\nnew tax policy on agricultural and animal husbandry products sold
\nat supermarkets.<\/p>\n
According to him, the new tax policy would not only lower
\nsales at supermarkets, but would harm farmers.<\/p>\n
\"For us it is just a matter of lower sales, but it will hurt
\nfarmers,\" he said, adding that these products made up only seven
\npercent of a supermarket's total sales.<\/p>\n
The government issued a series of new tax policies in the last
\nfew months, which among others imposed value added taxes of 10
\npercent on agricultural and animal husbandry products sold in
\nsupermarkets.<\/p>\n
It argued that the value added taxes would only burden
\nsupermarket shoppers, and help sales of traditional markets.<\/p>\n
But the new tax policy drew criticism from the Minister of
\nAgriculture Bungaran Saragih, who said he had not been consulted
\nabout it.<\/p>\n
Kustarjono said that supermarkets bought vegetables, fruits
\nand animal husbandry products from farmers who had specialized
\nas supermarket suppliers.<\/p>\n
\"These farmers have standardized their products and cannot
\nsimply switch sales to traditional markets; they already have
\ntheir own suppliers,\" he said.<\/p>\n
Mastur Fuad, a farmer supplying vegetables for several Hero
\nsupermarkets in Jakarta, said he had to spent 30 percent more in
\nproduction costs to meet their product standards.<\/p>\n
But because of the new tax policy, orders have dropped by
\naround 20 percent, he added.<\/p>\n
Mastur, who earns about Rp 360 million in annual sales,
\ncriticized the government for its lack of understanding the
\nfarmers' industry.<\/p>\n
Kustarjono further said that imposing value added taxes on
\nfruits that were sold as fruit, contradicted the meaning of the
\ntax name.<\/p>\n
\"We don't change the value of a fruit, like turning a piece of
\nmetal into a chair. What we are doing is just raising its price,
\nand that can only be taxed under sales taxes,\" he explained.<\/p>\n
He added that the tax policy hampered local farmers' efforts
\nto improve the quality of their products.<\/p>\n
\"We want our farmers to export their products, but with this
\npolicy this will be more difficult to achieve,\" he said. (bkm)<\/p>",
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