Indomaret puts chain expansion on hold

JAKARTA (JP): Retail chain Indomaret decided to stop its expansion in the city, pending the government's approval of its operation permit application for its 142 outlets in the city, a company director said on Friday.

The company's operational director Josep Setiawan admitted that Indomaret had so far run its business without operation permits. However, he claimed that all of the outlets had secured building and business permits.

"We propose to get the operation permits," he said in a hearing with City Council Commission B for economic affairs.

He said that 90 of the 142 outlets belonged to the company while the remainder belonged to cooperatives and individuals that cooperated with firms through a franchise system.

Indomaret was earlier accused of violating gubernatorial decree 50/1999 on retail business. The decree stipulates that a shop measuring up to 200 square meters should get operation permits from the city administration.

Meanwhile, commission B secretary Dani Anwar regretted that the administration was late in anticipating the growth of retail shops.

"Since the beginning, the administration should have decided whether to give permits or not. It should not have waited until the shops amounted to hundreds," Dani of the Justice Party said, disclaiming any interest while questioning Indomaret.

Chief of the market division of the city's economic office Retno Kumorowati admitted that the administration was still processing Indomaret's application for operation permits.

"We have yet to issue the permits since some requirements have not yet been fulfilled," Retno said.

In the hearing, the company's executives complained about why only this company was questioned about its operation permits.

Commission member Ugiek Soegihardjo denied that the council was discriminating against Indomaret.

"We will also invite Alfa Mart. It's not only for Indomaret," Ugiek of the Indonesian Democratic Party of Struggle told reporters after the hearing.

Alfa Mart reportedly cooperated with city administration-owned retailer Waserda Jaya to develop dozens of outlets in the city.

The Business Competition Supervisory Commission (KPPU) announced earlier that there were indications that Indomaret had forced other small retailers out of business.

Indomaret has been accused, among other things, of controlling more than 50 percent of the small retail market and killing off similar retailers in the process. It also has been accused of solely marketing products from its parent company, publicly listed PT Indofood Sukses Makmur.

However, Josep denied all the accusations on Friday, saying that only 10 percent of the products that were sold by Indomaret came from its parent company.

He said the remaining 90 percent came from various firms, such as the Unilever and Nestle groups. (jun)