Govt reaffirms its ban on foreign retailers

Govt reaffirms its ban on foreign retailers

JAKARTA (JP): The government ruled out yesterday any plan to
let foreign retailers operate in Indonesia before 2020, the
deadline for trade liberalization among members of the Asia
Pacific Economic Cooperation (APEC) forum, in order to protect
domestic traders.

Director General of Domestic Trade Tommy Poedjhiar said here
that the government has renewed its ban on foreign retailers in
Indonesia under Presidential Decree No. 54/1994.

"The condition of our traders now compels us to ban foreign
retailers from entering the country," Tommy told journalists at
his office.

He made the remarks in response to a call from the newly
established Indonesian Retailers Association that the government
maintain the ban.

Sudwikatmono, chairman of the governing board of the
association and also the owner of one of the country's biggest
conglomerates, contended that foreign retailers, which usually
own global chains and have access to immense amounts of capital,
would obviously out-match Indonesian retailers.

Despite the ban, however, many foreign retailers have entered
the country through franchise agreements and other forms of
business tie-ups with local companies, according to Sudwikatmono.

He suggested that local businessmen tap the expanding retail
trade opportunities without lying to themselves by hiding foreign
retail operations under franchise arrangements.

Examples of foreign franchised retail outlets are Sogo, Yaohan
and Makro, in which the investors are described as local
businessmen and only the technical know-how is franchised.

Protection

When asked about that matter, Tommy said: "Don't pinpoint a
certain case. What is important is that the government will
always defend the interests of local retailers. So, what the
government and the association want are just the same, to protect
local businessmen."

The government retains the retail business on its "list of
negative investments", which covers sectors closed to foreign
investments.

Under Government Regulation No. 20/1994, the government has
opened up nine public sectors for foreign investments -- which
require only a minimum of five percent in local equity holding --
including telecommunications, railways, shipping, civil aviation
and the media industries.

Tommy said the government might review its policy on the
entrance of foreign retailers into the country after the year
2020.

APEC's 18 members agreed in their informal summit in Bogor
last month that its developed members will liberalize trade and
investment by 2010 and its developing members by 2020.

APEC groups Australia, Canada, Chile, China, Hong Kong, Japan,
Mexico, New Zealand, Papua New Guinea, South Korea, Taiwan, the
United States and the six members of the Association of Southeast
Asian Nations (ASEAN) -- Brunei, Indonesia, Malaysia, the
Philippines, Singapore and Thailand. (rid)