Australian groups hail Indonesian deregulation

Australian groups hail Indonesian deregulation

SYDNEY (Reuter): The prospect of Indonesia deregulating its transport and retail sectors has been welcomed by Australian transport group TNT Ltd. and wholesaler/retailer Davids Ltd.

Both Australian companies are establishing significant operations in the distribution and retailing sectors in Indonesia in ways which find routes through regulations restricting foreign investment.

Erroll Graham, Davids finance director, said yesterday his group expected the Indonesian government would introduce de- regulations covering the company's presence in Indonesia, possibly by establishing a new category for wholesaling.

"We expect them to (do so)," he said.

Davids holds a technical service agreement with Indonesia's biggest supermarket group, PT Hero Supermarket. The agreement operated as "a joint-venture of sorts", Graham said.

Davids has been in discussion with the Soeharto government on retailing deregulation for "a good 12 months", pressing for the creation of a separate category for wholesaling, he said.

It was still uncertain whether the Jakarta government would introduce full deregulation for retailing, Graham said. "We were hoping that it would be introduced by now," he said.

Deregulation of retailing was supposed to have come in the last Indonesian government package, but didn't, he said.

Davids was helping Hero with its distribution and waiting for deregulation changes with a view to running its own operation in its own right, he said.

Mark Gell, TNT group relations executive, corporate development, told Reuters that TNT had already started warehousing and related operations in Indonesia in its joint- venture with PT Tigaraksa Satria.

"A couple of things (remain) outstanding with the regulatory approach," he said.

Anything which would improve the distribution of goods in Indonesia would assist TNT's operations, he said.

Tigaraksa Satria is Indonesia's leading national distributor of food, consumer products and related items.

TNT's joint-venture with the company technically stops short of distribution, which legally remains closed to foreign investment.

Comments by TNT and Davids follow the announcement of plans in Jakarta this week by Indonesia's Coordinating Minister for Industry and Trade Hartarto, that a major package of economic deregulation was planned for introduction before year-end.

The package would include measures to liberalize internal distribution of goods, he said.