Govt closes regency towns to new major retailers

Govt closes regency towns to new major retailers

JAKARTA (JP): The government has closed towns outside
provincial capital cities to new big retailers in a bid to
promote small and medium traders.

Minister of Industry and Trade Tunky Ariwibowo announced
yesterday that big retailers or retail chains already operating
in towns outside provincial capitals were required to establish
business partnerships with small and medium retailers.

"Big retailers, however, can still set up in areas outside
provincial capitals which have very high economic growth but they
will need special licenses from the ministers of home affairs and
industry and trade," Tunky said.

Tunky was speaking to reporters yesterday after briefing
President Soeharto on a joint decree he and the Minister of Home
Affairs Moch. Yogie S.M. signed on geographical restrictions for
big retailers and coordinated development of small traders.

The decree stipulates that big retail businesses, with special
licenses from the ministers, can open outlets in towns with very
fast economic growth on the condition that they help develop
traditional markets and small traders through partnerships.

The ruling allows existing big retail chains in towns to
continue operations provided they gradually form partnerships
with small and medium businesses.

"A joint task force will be set up soon to work out technical
details for implementing the joint decree," Tunky said.

He said partnerships could be either subcontracting
arrangements for consignment or rental space in department stores
and modern shopping centers for small firms.

Tunky said his office would deal mainly with the business
aspects of retailing, while the Minister of Home Affairs would
decide on retail outlets' site placements according to a city's
or a town's site plan.

The plan to close towns outside provincial capitals to big
retailers was first made public after the first cabinet session
on poverty alleviation last month.

Many had speculated that the plan was a political move rather
than a rational economic response to the outcries of small
businesses.

The Association of Indonesian Retailers has cautioned the
government against a blanket ban on big retail chains in regency
towns, suggesting that the different economic levels among towns
outside provincial capitals should be taken into serious account.

The association said the government should clearly define
which regency towns were out of bounds to big retailers.

It argued that some regency towns had reached higher economic
development stages than others or were major tourist destinations
and badly needed big retail outlets to maintain growth.

The association warned that a complete ban on modern retail
outlets in towns outside provincial capitals would keep small
retailers uncompetitive, as they would be denied access to new
retail technology and concepts.

More than 100 big retail chains operate in towns, the
association said.

But some businessmen, including tycoon Sudwikatmono, who owns
the Golden Truly chain, have praised the decision.

He said the decision would force big retailers to focus their
expansions in provincial capitals or abroad, leaving small
retailers to prosper in regency towns. (rid)