Government told to rein in retail expansion

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.