T

he government has called on Japanese convenience store giants 7-Eleven and Lawson to expand their business permits as both operate beyond the scope of their licenses.

The convenience store owners currently hold business permits that allow them to sell food and beverages, but they in fact operate as retailers of consumer goods, Trade Minister Gita Wirjawan said on Tuesday in Jakarta.

“The problem is simple: They hold licenses for restaurants from the Tourism Ministry, instead of from the Trade Ministry. However, they sell not only food but also other items. This must be clarified,” he told reporters at the State Palace.

The Trade Ministry sent warning letters to 7-Eleven and Lawson about two weeks ago, urging them to comply with prevailing regulations.

Under 2007 President Regulation, the government allows foreign investors to own 100 percent stakes in supermarkets, department stores, hypermarkets and wholesale stores with a minimum 1,200 square-meters.

In contrast to this, the Investment Negative List rules out that mini markets under 400 square-meters should be 100 percent owned by local investors.

“This is pertaining to foreign ownership. Retail stores [minimarkets] must be 100 percent owned by local investors, so they probably obtained the permit for restaurants because it did not violate the negative investment list,” Gita further said.

Currently, 7-Eleven’s partners with local franchisee PT Modern Putra Indonesia, operating 76 outlets nationwide, while Lawson teams up with local retailer PT Midi Utama Indonesia, which also owns minimart chain Alfamidi, and runs 63 stores.

Representatives from 7-Eleven and Lawson did not respond to The Jakarta Post’s inquiry over the matter.

Indonesian Retailers Association (Aprindo) deputy secretary-general Satria Hamid said that the government should issue other permits for 7-Eleven and Lawson to accommodate their existing business. At present, 7-Eleven and Lawson are registered as non-ordinary members of the retail association.

“The retail business is very dynamic and develops according to changes in consumers’ lifestyles. The expansion of a restaurant to a retail business should be accommodated by the government,” he told the Post.

Satria also said that the government should make regulations issued by the central government and local administrations congruous as each level could issue different rules for restaurants and retailers.

Indonesian Committee for Franchises and Licenses (WALI) chairman Amir Karamoy expressed similar concerns, saying that the combination of food and beverage service and retail was an innovation that should be addressed by the government through regulatory frameworks.

“The mix between restaurants and retail outlets is a trend that will flourish in the future. The government needs to cater to this innovation by regulating mixed trade instead of banning it,” he said.

It could issue dual or triple franchise permits, as is common in other countries, in order to cope with this new trend, Amir said, adding that this could be included in the drafted rule on the franchise of modern stores and restaurants.

The new rule, currently being finalized by the Trade Ministry, will limit the number of company-owned units operated by franchisors to 100 outlets to encourage the development of franchise ownership and expand business opportunities in the country.

It is slated to support another regulation on franchises, which was issued earlier, aimed at creating a favorable business climate for franchise businesses in Indonesia.