Asian experts urge better control of Western retailers

Asian experts urge better control of Western retailers

Due to aggressive expansion by Western retailers, Asian countries should set up specific retail and wholesale business laws to ensure a fair and level playing field between retail giants and small stores, Asian business experts said yesterday.

Published on January 9, 2008

At a Bangkok seminar entitled "The Asian Forum on Retail and Wholesale Business", panellists from Asia shared the view that large Western retailers had hurt small local stores.

They concluded that with specific retail business laws, Asian countries would be able to protect local shops and create fair business practices.

The director-general of the Internal Trade Department, Yangyong Phuangrach, said the Commerce Ministry planned to proceed with proposed changes to the country's Retail and Wholesale Business Bill by submitting a draft of amendments to the next Cabinet. This would ensure that small shopkeepers and retail giants compete on the basis of fair regulations.

"The current conflict between large and small retailers in Thailand cannot be solved without a specific law to manipulate them," Yangyong said, adding that all Asian countries agreed on the need for such specific legislation.

He said it had not been smooth sailing for changes to the Retail and Wholesale Business Bill because the National Legislative Assembly had stopped its task of considering new laws and had left a decision on the draft to the new Parliament.

A senior official of South Korea's Commerce, Industry and Energy Ministry, Lee Joong Yeop, said all Asian countries had faced the same problem of Western retail giants "plaguing the region". It had damaged all local operators.

To solve the problem, he said governments must set clear measures to support small- and medium-sized enterprises (SMEs) as well as creating median laws to formulate the retail business.

Before 1994, local retailers in South Korea held more than a 98-per-cent share of the retail market. Now, their share is less than 75 per cent and is gradually decreasing because of Western retail expansion, he said.

A representative of Malaysia's Domestic Trade and Consumer Ministry, Mohamed Elias Bin Abu Bakar, said specific laws were a must for countries that were facing massive expansion by modern traders, to protect mom and pop stores before they disappeared altogether and to create fair trading practices.

He said that in the face of multinational retail expansion, Malaysia had formed its own guidelines and enacted specific laws to formulate the retail business. These provide a minimum distance from the capital for large retailers, and at least 50 per cent of the goods they sell must be provided by local producers. This increases opportunities for local SMEs as well as ensuring that benefits will not go to foreign shareholders alone.

A representative of Vietnam's Industry and Trade Ministry, Do Truong Giang, said specific legislation was required to regulate retail business and to allow local stores to survive.

He said a lack of measures to manipulate the retail business had led modern retailers to expand aggressively in Vietnam over the past decade. In 1995, the country had

only 12 supermarkets and two trading centres, but by last year, the number of supermarkets had reached about 300 - and most were owned by foreigners.

To protect local retailers and consumers and create fair practices for foreign investors, he suggested that governments create dialogue concerning the implementation of fair retail business laws involving both the public and the private sector.

Representing the Indonesian Alliance of Consumer Goods Producers and Traditional Market Traders for Fair Trade on Retail Business, Haniwar Syarif said modern retail trading had grown very rapidly in Indonesia, Malaysia and Singapore, at a rate of more than 30 per cent per year. This has forced some traditional retailers to close down because of a lack of competitive efficiency.

He said good and workable regulations to restrict retail operators were essential. Governments should also consider setting up independent regulators to oversee the relationship between large and small retailers, as well as suppliers.

Petchanet Pratruangkrai

The Nation