More foreign retail chains likely to enter Indonesia

JAKARTA (JP): More of the world's major retail chains are likely to open in Indonesia in the coming years despite the government's ban on their direct operation, says an executive of a retail property developer.

Wong Meng Sean, the marketing manager of the Mulia Group's retail property division, said here yesterday one of the retail chains would most likely be K-Mart, a major retail chain in the United States.

"Indonesia is becoming more attractive to overseas retail industry not only due to the growing number of people in its middle income group but also due to its cheaper retail property," he told newsmen in a break during a two-day shopping center forum, which started on Monday.

Wong was one of the speakers at the forum. Other speakers included a number of executives of local and foreign retail companies, such as Margareth Widelock, the chief executive of Singapore-based Addison Asia, Stuart Lloyd, the managing director of the Singapore-based Lloyd Martin Creating Consulting firm and Mike Connely of PT Chubb Lips Indonesia.

A number of large, foreign retailers are operating in the country, through franchising agreements, with local partners in spite of the government's policy to prohibit their direct operation. Those companies include Guardian Pharmacy and Metro, both of Singapore, The Body Shop of Britain, Yaohan, Sogo and Saebu, all of Japan, and Makro of the Netherlands.

Most of these companies are engaged in cooperation arrangements, such as technical and franchising agreements, to enable them to pass through the legal barrier.

Wong said more foreign retailers are likely to enter Indonesia in the coming years through such cooperation arrangements.

Threat

"The presence of major, foreign retailers is, in fact, not a threat to local companies because of the difference in their target market," he said.

Wong estimated that the retail industry would continue to grow in Indonesia, especially in cities such as Jakarta, Surabaya, Yogyakarta, Denpasar and Medan.

In Jakarta alone, there will be at least five major shopping centers opening next year, with an area of 60,000 square meters each, he said, describing the high growth in the retail industry in the country.

The new shopping centers, which are now under construction, include Senayan Square, near the Senayan sports stadium, BNI City, near the BNI building on Jl. Sudirman, Mega Pluit in North Jakarta, Lippo Village in Tangerang and Taman Anggrek Mall in Tomang, West Jakarta.

He said improvements in Jakarta's traffic systems, as well as the bordering areas of Tangerang, Depok, Bogor and Bekasi, all in the West Java province, will make the city a major shopping destination in Southeast Asia due to its expanding population.

"This is one of the reasons why Jakarta is so attractive to foreign retailers," he said, adding that the low prices of both goods and retail outlets have also turned shopping centers in Jakarta more profitable than those in other Asian countries such as Singapore, a major shopping hub in Southeast Asia.

He estimated that the increase in the number of modern shopping outlets in Jakarta would discourage wealthy Indonesians from going shopping in Singapore.

"The price of the same goods, with the same quality, is very much lower in Jakarta than in Singapore," he said about the competitive edge of the shopping business in the capital.(hen)