Retailers may survive for another six months<\/p>\n
JAKARTA (JP): The country's large retailers would manage to
\nsurvive the economic crisis for another six months, but many
\nwould go bankrupt if the situation kept worsening, Association of
\nIndonesian Retailers (Aprindo) executive director Kustarjono
\nProdjolalito said yesterday.<\/p>\n
"Retailers call it a survival period, which will last until
\nJune," Kustarjono told The Jakarta Post.<\/p>\n
Kustarjono said the retail sector would experience a slowdown
\nafter the Idul Fitri holiday as the price of food and essentials
\nwas expected to increase and the purchasing power of the public
\nwould decrease.<\/p>\n
"People will still buy goods a week after Idul Fitri, but they
\nwill rarely go shopping after that," Kustarjono said.<\/p>\n
He said retailers would only manage to survive the next six
\nmonths if they initiated efficiency programs, like increasing
\nworker's productivity and reducing the profit margin to draw more
\nbuyers.<\/p>\n
"The association's members have agreed not to lay off their
\nworkers, but they might have to do that if economic conditions do
\nnot get better in six months," Kustarjono said.<\/p>\n
The fact that most retail space owners had agreed to set a
\nlower exchange rate for rent would also help retailers survive
\nduring the period, he said.<\/p>\n
The dollar's appreciation is expected to considerably raise
\nrent, and as a result, retailers' operating costs, as rent is
\ncharged in dollars.<\/p>\n
However, Kustarjono said, 90 percent of existing retailers had
\nmanaged to reach agreements with rental space owners to set the
\nrupiah's exchange rate much lower than the market rate for three
\nmonths until March.<\/p>\n
"The other 10 percent are going to close some outlets since
\nowners charge rent according to the real exchange rate,"
\nKustarjono said.<\/p>\n
The agreed-upon rupiah exchange rate ranges between Rp 2,700
\nand Rp 3,400, compared to the exchange rates of between Rp 10,000
\nand Rp 17,000 over the past two weeks.<\/p>\n
Rental rates<\/p>\n
Property consultancy firm PT Procon Indah\/Jones Lang Wootton
\nsaid the rent of retail space located in prime Jakarta locations
\nranged between US$46 and $70 per square meter per month.<\/p>\n
Retailers would not enjoy the low exchange rate for long as
\nspace owners would increase the rate considerably in the next few
\nmonths to collect more dollars for the payment of their debts,
\nKustarjono said.<\/p>\n
"The low exchange rate is only a short-term solution. In the
\nlong run, space owners have to raise the rate to survive and that
\nmeans a threat to the survival of retailers," Kustarjono said.<\/p>\n
Aside from rent, retailers have also to pay owners a service
\ncharge -- which includes security, electricity and water costs --
\nin dollars, which ranges between $5 and $7 per square meter per
\nmonth.<\/p>\n
Kustarjono said the association requested that the service
\ncharge be paid in rupiah, since all rental space owners paid for
\nsecurity, water and electricity in rupiah, too.<\/p>\n
However, the owners turned down the request.<\/p>\n
Procon Indah\/Jones Lang Wootton said another 151,900 square
\nmeters of retail space would enter Jakarta's retail market this
\nyear with the completion of Ratu Plaza, Plaza Senayan Phase II,
\nPasaraya Manggarai and Mega ITC Cempaka Mas.<\/p>\n
Occupancy rates, especially in upscale malls, will decrease
\nunless attractive discounts on rent are offered to potential
\nlong-term tenants.<\/p>\n
The firm also said some retailers who were committed to
\nrenting the new spaces were negotiating with space owners to
\ndelay openings until late this year. (jsk)<\/p>",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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