Govt to regulate markets, hypermarkets

Urip Hudiono, The Jakarta Post, Jakarta

Besides preparing better regulations on the operation of hypermarkets in the country, the government will also empower traditional markets to make them more competitive against giant retailers.

Speaking at a hearing with House of Representatives Commission VI on industry and trade on Monday, Minister of Trade Mari E. Pangestu said the government rules on both traditional markets and hypermarkets would only act as guidelines for regional administrations.

"In the regional autonomy era, the implementation of the regulation depends on policymakers at the region level," she said.

In the proposed presidential decree, to be issued this year, regional administrations will have more power to issue permits for hypermarkets based on the region's development planning.

The new decree -- which will annul decrees No. 145 and 57/1997 on modern markets issued jointly by the Ministry of Trade and the Ministry of Home Affairs -- will also forbid hypermarkets from operating outside provincial capitals. It will also oblige hypermarkets to build partnerships with traditional markets and local small and medium enterprise (SME) suppliers.

Mari, however, denied that the new decree was intended to limit hypermarkets from investing and operating in the country. Currently, the government is identifying problems concerning the proliferation of hypermarkets and how to address the matter.

"The government needs to focus on how we can improve traditional markets, particularly the physical condition, the management and supply systems," she said.

Improving traditional markets' appearance, she added, was essential to encourage customers to shop there.

"Obviously, we have to make (traditional) markets cleaner," she said. "Convenience of a place influences someone to shop either at traditional markets or hypermarkets.

"Traditional markets' management should also involve traders in policy-making related to the markets' condition," she added. "As for supply, the trade ministry will conduct a thorough study on the supply chain to identify existing problems, particularly related to illegal fees that hamper supply.

"We can also imitate and cooperate with the supply chain system of hypermarkets for traditional markets to make their supply chains better."

Data from the trade ministry shows that traditional markets still make up 84 percent of the total markets in the country, while hypermarkets make up only 16 percent.

Nevertheless, modern markets are considered to threaten the existence of traditional ones.

To address this, some regional administrations have passed bylaws on the operation of hypermarkets.

Jakarta, for example, has issued Bylaw No. 2/2002 on private markets, stipulating a private market occupying 4,000 square meters may not be built within 500 meters of a traditional market.