Government told to rein in retail expansion

Zakki P. Hakim, Jakarta

The government must limit the number of modern retailers in urban areas to protect traditional markets and shops, according to a top official of PD Pasar Jaya, which operates traditional markets in Jakarta.

PD Pasar Jaya director Prabowo Soenirman said the current regulations must also be revised as the "situation has drastically changed", and many modern retailers had violated the regulations by setting up outlets in close proximity to traditional markets.

"The realities in the field are totally different today," Prabowo told The Jakarta Post on Wednesday, saying several modern retail outlets are located as close as 200 meters from traditional markets.

Jakarta has a bylaw that stipulates that minimarkets must be located outside a radius of 0.5 kilometers from traditional markets, while hypermarkets must be outside a radius of 2.5 kilometers. The bylaw also requires that minimarkets not price their goods lower than goods in traditional markets in their area.

"Conditions have changed, so the bylaw must be reviewed for the benefit of all stakeholders," Prabowo said.

The Central Statistics Agency, in its 2003 National Labor Force Survey, reported that jobs in the retail sector during the year declined by 7.42 percent to 4.24 million from 4.58 million in 2002.

The agency suggested that this might have been the result of the rapid expansion of modern retail outlets such as hypermarkets and minimarkets, causing many traditional grocery stores to close down because they could not compete.

Industry analyst Yongky Surya Susilo of AC Nielsen acknowledged that the market share of traditional shops had been declining since 2000, while the share of modern retail outlets had increased.

But he said the expansion of modern retail outlets was inevitable because it was linked to changing lifestyles in urban areas.

"It is inevitable, more and more people are turning to modern retailers. It is a matter of lifestyle," he said.

Yongky said the government could lessen the impact by limiting the location of modern retailers to the outskirts of the city. Such strict zoning was applied in other countries such as Malaysia, he added.

But Yongky said that traditional grocery stores must eventually adopt modern retail strategies in order to survive, while acknowledging that traditional stores would encounter skill and capital gaps.

French-based hypermarket operator Carrefour dismissed suggestions that modern retailers were the cause of job losses in the retail sector.

Carrefour's human resources director, Agoes Adhie, said the firm's hypermarkets employed a huge number of workers.

"One Carrefour outlet can absorb an average of 500 workers," he said, adding that many small and medium-sized businesses also opened outlets on the hypermarkets' premises.

He acknowledged, however, that his company only hired people with a minimum of a high school education.

More than half of the country's workforce are primary school graduates.

Carrefour and other modern retailers such as Matahari, Hero and Indomaret are among the most successful retailers in the country.

Vivien Goh, corporate secretary of PT Hero Supermarket, said modern retailers provided numerous employment opportunities.

She said that Hero's Giant hypermarkets supported about 500 vendors operating around and inside each store, as well as some 1,000 small and medium-sized businesses that supplied goods to the hypermarkets.