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Jakarta Post

Government plans to scrap limitation of franchise outlets

  • News Desk

    The Jakarta Post

Jakarta   /   Thu, January 3, 2019   /   12:02 pm
Government plans to scrap limitation of franchise outlets An Alfamart convenience store in South Tangerang, Banten. (JP/Evi Mariani)

The government plans to revoke the limitation on the number of franchise outlets of convenience stores as well as food and beverage outlets to accelerate investment in retail business.

But the Indonesian Employers Association (Apindo) warns that such a policy could affect local retail business, including small shops.

“In the revision, there will no longer be a limitation. It is to accelerate investment,” said Trade Ministry business and distributors supervision director I Gusti Ketut Astawa on Wednesday as quoted by kontan.co.id.

Under Trade Ministerial Regulation No. 68/2012 on franchise for convenience stores, outlets are limited to only 150. If a company wants to open more outlets, they should be managed through a franchise scheme, with the maximum number of franchise outlets at 40 percent.

Meanwhile, food and beverage outlets were ruled under Trade Ministerial Regulation No. 7/2013 on partnership development. Each company can have a maximum of 250 outlets, while the maximum number of franchise outlets is 40 percent for a maximum investment of Rp 10 billion (US$690,585) and 30 percent for investment of more than Rp 10 billion.

Indonesian Retailers Association (Aprindo) secretary general Solihin supported the government policy. He even pushed the government to remove all limitations for outlet establishments.

However, Apindo deputy chairman Shinta Widjaja Kamdani warned the government that such a policy could kill local retail outlets.

“The elimination of such a limitation should be implemented carefully so that it does not kill local retail outlets, because they will face more tough competition,” Shinta said as quoted by kontan.co.id. (bbn)