Local retailers say keep ban

Local retailers say keep ban

JAKARTA (JP): The newly established Association of Indonesian Retailers appealed yesterday to the government that it maintain the restriction on foreign investment in domestic retail businesses.

The association's chairman, E. Dachlan, said yesterday that the country's retail industry should be closed to foreign investments to protect local companies.

Speaking at a hearing with the Trade and Monetary Commission of the House of Representatives, Dachlan said medium and large scale retailers are still unable to compete with foreign rivals, which are not only stronger in terms of capital but also in technology.

Despite the ban, foreign retailers are able to operate in the country by exploiting legal loopholes, such as by being engaged in franchising operations with local partners. Some of them use technical cooperation to cover up their Indonesian operation.

The operation of such big names as Japan's Sogo, Yaohan and Saebu as well as Metro of Singapore in the capital's most strategic areas indicates how ineffective the Indonesian regulation is.

Other big names in the world's retail industry, such as K-Mart of the United States, will also follow suit and tap into the growing local retail industry.

An executive of the association said the mushrooming of foreign retailers has resulted from the government's obscure ruling.

Anton Lukmanto, the association's deputy chairman for supermarket operations, said that the government's regulations for retail activities were often misinterpreted due to the lack of clear guidelines.

He did not directly criticize the banning of foreign retailers but said that the existing ruling did not fully protect the interests of local retailers.

"What we want is a clear-cut ruling so that we can be secure in conducting business," he said at the hearing.

The association was established last December as a professional organization grouping retail companies, including those involved in the sale of construction materials.(hen)