Hypermarkets kill small businesses: Traders' group
The Jakarta Post, Jakarta
The Business Competition Supervisory Commission (KPPU) is looking into allegations that the city administration has violated regulations on hypermarket development in the capital.
The Indonesian Market Retailers Association's (APPSI) Jakarta branch chairman Hasan Basri said that the rapid development of hypermarkets had ruined the businesses of traditional market retailers in the city.
"Most hypermarkets are built without considering the survival of little people like us. The Jakarta administration seems to take the side of large businesses and break its own rules," he said on Friday.
According to City Decree No. 2/2002, a hypermarket with a floor size of up to 200 square meters must be located at least half a kilometer from a traditional market, while a hypermarket with a floor size of more than 4,000 sq m must be at least two-and-a-half km from a traditional market.
The decree also stipulates that between 10 to 20 percent of a hypermarket building must be allocated for traditional or informal businesses.
Hasan alleged that most hypermarkets in the capital were located close to traditional markets, causing nine traditional markets to close down and affecting the lives of thousands of retailers.
"I just want to say that the traditional market retailers in Indonesia are not afraid to take a stand on this matter. The market vendors are now so angry that they could start closing the hypermarkets down themselves," he said.
"We don't, however, want to do that. That's why we came here to ask the KPPU to help us deal with the municipal administration ourselves," Hasan added.
A member of the APPSI's advocacy group, Ryad Charil, said, "If such flagrant violations of the law continue, it will be the end of the 151 traditional markets left in Jakarta."
According to Ryad, a study conducted by AC Nielsen indicates that the growth rate of traditional markets in Indonesia is currently 8 percent. Comparatively, the growth rate of hypermarkets and franchises is about 32 percent a year.
"The growth has contributed to the closure of nine traditional markets so far," he added.
Some traditional market retailers, who attended the meeting, shouted and demanded that the KPPU pay attention to their plight and help them ensure that any hypermarkets breaking the law are shut down.
"We are only little people affected by the monopoly of the business giants," one said, complaining that the French supermarket franchise, Carrefour, had monopolized supplies.
"Some retailers must now go to buy their stock from Carrefour because the suppliers will not sell to us anymore, therefore we are forced to resell it at a higher price than they offer," he added.
KPPU commissioner Pande Radja Silalahi said that the KPPU would do its best to tackle the problem.
"Legal violations are an issue that we take seriously. We have actually predicted the negative effects of hypermarket growth, based on our experience, working on the previous Indomart case," he said.
KPPU member Mohammad Iqbal said that the principle of democratic economics is a factor that needs to be seriously considered by the government.
"If the government empowers the traditional markets, they can survive," he said.
"Outside Indonesia, for example in Singapore and Japan, the law only allows big hypermarkets to operate outside the city fringes, which means that customers must use their cars to get to those places."
"But in Indonesia, regional administrations are not yet capable of doing such things," he said. "We must ensure that competition only exists between markets of the same size and type."
He added that the KPPU is restricted to pressuring the local government to properly enforce regulations. However, he said, other problems outside of legal violations, such as pricing, can be directly handled by the commission. (005)