Hypermarkets kill small businesses: Traders' group

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)