PT Makro to expand Indonesian operations

JAKARTA (JP): Netherlands-based chain wholesaler PT Makro Indonesia said on Monday it would expand its operations in the country by opening more new outlets in various areas outside Jakarta.

Company president Matthijs van der Lely said Makro would open two outlets in Medan, North Sumatra, and Jakarta this year and planned to open three outlets per year in the future.

"We're looking forward to opening new stores in prospective areas such as Semarang, Bandung, Palembang, Batam, Makasar and Balikpapan. We're now in intensive talks to acquire some land in certain areas for our next outlets," he said.

He said the company expected to finalize the land deals immediately so that it could start the construction of two new stores this year.

He declined to reveal the amount of investment Makro had allocated to finance its expansion plan, but said that it cost about US$10 million to develop one outlet.

Makro Indonesia, which is 83 percent owned by the Dutch retail chain operator SHV Holdings, started it operation in 1992 when its first outlet opened in Pasar Rebo, East Jakarta.

Van der Lely said Makro's business was currently concentrated in Jakarta, where it operated six outlets.

He said that outside Jakarta, Makro had three other stores, located in Surabaya, Bandung and Bali.

Makro will open next week a newly built outlet in Medan, North Sumatra, as well as an outlet in Ciputat, in southern Jakarta, which was burned down during the 1998 riot. The Ciputat outlet is scheduled to open on the week end.

He said retail market in Indonesia was expected to continue to pick up after being depressed, especially during the political crisis in 1997 and 1998 when mobs attacked and burned a significant number of retail outlets.

He said several new foreign retailers planned to enter Indonesia to take advantage of the predicted growth in the local retail market.

Among the potential foreign retail chains soon to enter Indonesia, he said, were British hypermarket chain Tesco and Germany's diversified retail chain Metro International AG.

"Tesco, for example, is already operating in some Asian countries like Malaysia and Thailand. It will eventually come here as well," he said, adding that new foreign retailers would likely come here through mergers and acquisitions.

Van der Lely also predicted that the existing foreign hypermarket chains would further expand their operations here by opening more new stores in the coming years.

He said in order to anticipate the influx of other giant foreign retailers, Makro would move deeper into its targeted market, the local smaller retailers.

The company's plan to expand to outer islands is also part of the strategy to anticipate fiercer competition from foreign wholesalers, he said.

He said Makro's plan of expansion would not necessarily threaten major local retailers like Matahari and Hero.

"We are not their competitor," he said.

Major local retailers have been accusing foreign hypermarkets of destroying small retailers and traditional markets by developing their huge stores in the heart of the city and selling their goods at cheaper prices.

Van der Lely said none of the local retailers' criticism was leveled at Makro, since his company located its stores only in suburban areas and sold its goods mostly to retailers and corporate buyers. (cst)