In a move aimed at restricting store locations for retail chains like Carrefour SA and PT Matahari Putra Prima, Indonesia’s government has enacted a law under which local governments in the country’s 33 provinces will have the authority to implement the zoning rule.
“The outlet locations of modern and traditional retailers should be administered more properly,” Trade Minister Mari Pangestu told reporters in Jakarta. Local governments in Indonesia’s 33 provinces “will have the authority to implement this zoning rule,” she said, without providing other details on the new law.
Indonesia is following Thailand and state governments in India in trying to appease owners of small shops, which are losing market share to retail chains. The new law could force companies such as Carrefour, Europe’s biggest retailer, to build new outlets outside cities.
Eight of the 37 stores operated in Indonesia by Carrefour were opened this year, Irawan D. Kadarman, corporate affairs director at PT Carrefour Indonesia, said, but refused to comment on the new zoning rule.
Carrefour’s 23 hypermarkets in the capital of Jakarta and its greater area, and 14 in other cities of Java, Sumatra and Sulawesi islands compete with Matahari, Indonesia’s largest department store operator by sales.
Matahari had 83 department stores and 27 hypermarkets as of May, and planned to spend 1.1 trillion rupiah to open five department stores and 12 hypermarkets this year.
Indonesia’s total grocery sales rose to 63.59 trillion rupiah ($6.7 billion) in 2006, up from 57.24 trillion rupiah the previous year, according to ACNielsen data.
