Retail law would better regulate hypermart expansion

The government has passed a law designed to restrict store locations for retail chain operators including Carrefour SA and PT Matahari Putra Prima, Bloomberg reported Friday (28/12/07).

"The outlet locations of modern and traditional retailers should be administered more properly,'' Trade Minister Mari Pangestu said.

Local governments in 33 provinces “will have the authority to implement this zoning rule,” she said.

Indonesia is following Thailand and state governments in India in trying to apply stricter rule of spatial cities planning.

The new law encourages companies such as Carrefour, Europe's biggest retailer, to build new outlets outside cities.

"Competition is very tight,'' Handaka Santosa, chairman of the Indonesian Retail Merchants Association, said. “Large retailers with more capital certainly have bigger power, so regulation is needed.”

Irawan D. Kadarman, corporate affairs director at PT Carrefour Indonesia, declined to comment on the new zoning rule.

The country's total grocery sales rose to Rp63.59 trillion in 2006, up from Rp57.24 trillion the previous year, according to ACNielsen data.
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