Oyos Saroso H.N, The Jakarta Post, Bandarlampung | Mon, 02/08/2010 10:49 AM
Rapid expansion of large franchise retailers is being blamed for a drastic 40 percent drop in turnover by local retailers in Bandarlampung.
The big retailers were blamed for threatening the existence of not only medium-scale traders in the capital of Lampung province, but also owners of small neighborhood shops.
“We’re threatened by their expansion. We are facing bankruptcy as large-scale retailers are also present in the subdistrict level, close to densely populated areas,” Noval, a local retailer, said. He blamed the ease in obtaining business licenses and lack of protection of small retailers for the problem.
Citing an example, he said no clear regulation was made by the city administration to regulate the establishment of a shop belonging to big retailers. “This is unhealthy competition,” Noval said.
He said the presence of such retailers down to the village level probably benefitted the consumers as they often offered cheaper prices.
“But other facts, such as how such and monopolistic practices could kill off local retailers, cannot simply be ignored,” said Noval.
Chairman of the Lampung retail business owners’ association (April), Syahril Taufik, said local retailers had filed a protest with the administration three years ago but had received no response to date.
He said the administration agreed in 2007 to stop issuing new business licenses to national franchise business retailers until a clear bylaw on the matter was laid out.
“But they keep issuing the licenses, as evidenced by the presence of hundreds of franchise retailer shops in the city, posing threats to small local kiosks,” he said.
Shop owner Husni, who runs his business on Jl. Dewi Sartika in Bandarlampung, said he did not mind competition as long as it was fair.
Yuria Putra Tubarat of the Lampung branch of the Indonesian Chamber of Commerce and Industry (Kadin) said the local administration should provide clear regulations on the matter to ensure the survival of local retailers. “There is a misconception among regional administration heads who see the presence of large retail businesses in their areas as indicators of development, thus ignoring the existing business potential of their own people,” he said.
Unless protection is given to small-scale local retailers, he said it would be difficult for them to compete against the larger businesses due to limited working capital.
Syaiful, who owns several franchise retail shops in Bandarlampung, said running such a business was profitable, and that he could break even in two years.
“I need is a few hundred million Rupiah to build a shop and pay the employees’ salaries. The franchise owner takes care of the merchandises and the management,” he said.
Bandarlampung Mayor Eddy Sutrisno said his administration was preparing a bylaw on the establishment of retail business owned by large franchise retailers. In the meantime, he added, the administration would continue issuing new licenses for large retailers as long as they did not set up businesses alongside small shops.
