Big retailers want clear regulation

JAKARTA (JP): The Association of Indonesian Retailers asked the government yesterday to take into account different economic levels of regency towns in its plan to limit big retail operations.

The association's chairman, Steve Sondakh, and director executive, Kustarjono Prodjolalito, said the government should clearly define which regency towns were out of bounds for big retailers.

They said some regency towns were economically developed or tourist destinations so needed the presence of big retailers.

"Are we going to ban big retailers in towns like Balikpapan (East Kalimantan), Batam (Riau), Bogor (West Java), Depok (West Java), Bekasi (West Java), to name a few?" Sondakh asked.

Sondakh is also president of Hero, one of Indonesia's biggest supermarket chains.

President Soeharto recently instructed the Ministry of Industry and Trade, the Ministry of Home Affairs, and the Investment Coordinating Board to issue a regulation limiting the operation of big retailers in regency towns to protect small retailers.

The coordinating minister for production and distribution, Hartarto, said the regulation would be completed in two months.

"Big retailers who have operated in regency towns are called on to cooperate with cooperatives," he said.

Kustarjono said more than 100 big retail outlets operated in regency towns.

Analysts see the decision as political rather than economic.

They said it is part of the government's strategy to win the people's sympathy ahead of the general election.

Some businessmen, including tycoon Sudwikatmono, who owns the Golden Truly chain, praised the decision.

He said the decision would make big retailers focus their expansion on provincial towns or abroad, leaving small retailers to prosper in regency towns.

"Golden Truly will not open outlets in regency towns," he said.

But Kustarjono warned that protection would make small retailers uncompetitive and that they would not survive once the ASEAN free trade area started in 2003.

"That's why the decision should be followed by government measures to educate small retailers," he said.

He said traditional markets where small retailers mostly operated had failed to compete with big retailers mainly because inadequate government support in improving their management skills.

A spokesman of the Jakarta administration-owned market company PD Pasar Jaya, Lihardi Sipayung, said the government did not have enough money to manage traditional markets to the point that they could compete with big retailers.

He said small traders had become less competitive because big retailers paid less for their merchandise.

Small retailers bought goods from sub-agents while big retailers bought directly from producers, he said.

If the government wanted to promote small traders it should make laws ensuring small traders had equal access to producers, he said. (jsk)