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)