Jakarta – The growing number of minimarkets and convenience stores in Jakarta is forcing many small-scale traders out of business.
"I lost most of my customers when a minimarket opened up right in front of this market (Bintang Mas market in Kemanggisan, West Jakarta) a few months ago," Lilis, a shopkeeper, said Wednesday.
After receiving a number of complaints from traders like Lilis, who have suffered financial losses due to the proximity of minimarkets to traditional markets, the Jakarta administration has decided to ban the establishment of new minimarkets in the city through Gubernatorial Decree No.115/2006.
"We are trying to temporarily stop issuing licenses for the establishment of minimarkets, because there are too many such shops opening up, Subaning Rustriantono, the head of the city administration's small and medium enterprises and market activities division, was quoted as saying by weekly business tabloid Kontan.
There are at least two convenience stores in many neighborhoods – mostly franchised minimarkets – often just a few hundreds meters away from each other. The rights to operate a francise usually cost some Rp 300 million (about US$32,000)
According to data from AC Nielsen, in 2005 two of the nations major retail chains experienced growth of more than 20 percent in their number of outlets.
Alfamart had 1,263 outlets last year, 22 percent higher than 973 in the previous year, while Indomaret recorded a 29 percent growth in the number of shops to 1,420 in 2005 from 1,001 in 2004.
With such growth, the market share of traditional stores, currently at 70 percent, is predicted to drop by 2 percent per year.
"We are very disappointed with the governor's instruction, it is not fair to implement a regulation for one side only," Tutum Rahanta, the secretary-general of the Indonesian Retailers Association, told The Jakarta Post on Wednesday. He said the ban would not only seriously impact traders but leave consumers with less options.
Rather than restricting the number of minimarkets in the city, Tutum said the city administration should better regulate operations in the retail sector.
"Convenience stores are a new form of the old stores we established through trial and error. If the government intends to improve small- and medium-scale enterprises, we can help them by providing assistance."
He said that even after the economic crisis hit the country in 1997, the retail sector had continued to prosper. "We have proven that we can improve our performance without government interference," he said.
An operational manager of one of the major retail chains, who asked not to be named, said the government should focus more on quality control management at the existing stores, rather than preventing the establishment of more minimarkets.
"The problem is the conventional shops are not willing to improve their services and quality," he said.