Big retailers want clear regulation
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)