Aprindo urges imposition of retail zone restriction

Aprindo urges imposition of retail zone restriction

JAKARTA (JP): The Indonesian Retail and Merchants Association
(Aprindo) has called on the government to assist small retailers
by imposing a restriction against major retail chains in the
country.

Aprindo chairman Steve Sondakh said the introduction of a
retail zone, which limits the size of a company's retail outlets
to specific business areas, was an appropriate measure to protect
small retailers.

Steve, a Hero supermarket executive, said a large retailer
should not, for example, be allowed to open a retail outlet
measuring more 2,500 square meters in the heart of the city.

He said retail chains larger than 5,000 square meters should
only be allowed to operate in outlying areas.

He said retailers of medium size properties ranging between
2,500 square meters and 5,000 square meters should be allowed to
operate 15 kilometers from the center of a city.

"This retail zone restriction policy should have been applied
here a long time ago as it has been for years in Europe and the
United States," he said.

He said that currently there was no adequate regulation on
retail business zoning arrangements.

"The zoning policy is necessary to help the government create
a level playing field among local players as well as between
local and foreign retailers."

He denied that the proposal would serve as a business shield
to protect local retail chains from the aggressive expansion of
foreign retailers.

"It is simply aimed at protecting the existing retailers,
especially the small ones and traditional markets, so that they
should not have to compete head-to-head with giant retailers in
their neighborhoods."

Aprindo has been criticizing a government decision to allow
foreign hypermarket operators to open their spacious outlets in
the heart of Jakarta.

These giant new stores have caused a down turn in business for
medium-size and small retailers already in the areas, said
Aprindo executive director Kustarjono Prodjolalito.

"We're not against open competition. But there has been uneven
competition, resulting in about a 5 percent to 10 percent drop in
revenues of medium and small retailers surrounding the
hypermarkets. (They have) lost their regular customers to the
hypermarkets, which sell more complete items at prices they claim
are cheapest," he said.

Despite the fact that Indonesia is struggling through its
worst economic crisis in decades, Jakartans have had the
opportunity to shop at several new foreign franchise stores.

Their recent arrival followed the signing last year of a
letter of intent between the government and the International
Monetary Fund, which required the country to lift its
restrictions on foreign investment in the retail and wholesale
markets.

Prominent among the newcomers are the French supermarket
chains Carrefour and Continent. Operating as hypermarkets since
last year, they offer a wide variety of products, ranging from
groceries to clothes and household appliances.

Steve said the government should consider the proposal if it
was serious about enabling existing local retail businesses to
continue operating in the open and free trade era.

He said supermarkets and other medium size retail chains were
only expecting about 2 percent growth in 1999 and 2000. He said
they would be unable to compete with the hypermarkets, which are
predicting growth of more than 10 percent. (cst)