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Foreign retailers ready to penetrate Indonesia

Friday, 30 December 2016 | Ramadhani Prihatini

JAKARTA. The competition of retail industry in Indonesia will be heating up in 2017, as three foreign retailers are ready to penetrate Indonesia’s market. LC Waikiki from Turkey and a retailer from Japan will start their businesses in Indonesia, while Central Retail Corporation Ltd from Thailand will expand its investments in Indonesia.

Central Retail has opened two department stores in Grand Indonesia (Central Jakarta) and Neo Soho Central Park (West Jakarta). A source of KONTAN said, Central Retail will penetrate the segment of hypermarket in 2017.

As information, a retail store in average needs an investment costs as much as Rp 50 billion, not including the costs for market research. In order to achieve the business escalation, a retailer has to open 20 stores. Therefore a retailer has to prepare as much as Rp 1 trillion investments.

The source of KONTAN revealed that those three foreign retailers will penetrate to Indonesia without building cooperation with the local partners.

According to Director of Retail Savills Indonesia Rosaline Stella Lie, LC Waikiki will open their first stores in Gandaria City (South Jakarta) and Lippo Mall Puri (West Jakarta). Each store will occupy 2,000 meter square area.

Savills Indonesia is optimistic that Jakarta has been chosen by foreign investors. “Most of them penetrate to Jakarta first, and then to other big cities,” Rosaline told KONTAN, Thursday (29/12).

Meanwhile, Investment Coordinating Board (BKPM) has not yet confirmed the information. Deputy of Investment Controlling at BKPM Azhar Lubis said that he did not have information related to the investment plans of those foreign retailers.

Chairman of Indonesian Retail Merchants Association (Aprindo) Roy N. Mandey hopes, the government takes firm stances over the penetration of those foreign retailers. In this case, they have to sell the local products and absorb the local manpower. “They may not only sell the imported goods,” Roy said.

Aprindo also requested the government to review the Presidential Regulation 44/2016 on investment negative list (DNI). The regulation has just opened the opportunities to foreign investors to have 67% ownership of department store with the minimum area of 400 meter square. Whereas, previously the foreigners were only allowed to open the department store in the area of minimum 2,000 meter square.

According to Aprindo, the composition of local and foreign retailers is 80:20. If it is assumed that the turnover of national retailers in 2016 is Rp 200 trillion, then the foreign retailers’ turnover will be Rp 40 trillion.

Corporate Communication Manager of PT Matahari Putra Prima Tbk Fernando Repi said that the local retailers have to find right strategy to survive. The import products of the foreign retailers may sell well in major cities, but it does not necessarily sell well in smaller cities. Therefore, Matahari will open ten Hypermart in the eastern part of Indonesia. Matahari will also the target some regencies and municipals.

Transmart Carrefour is also targeting the regions level II. “Therefore, the consumers can reach the local products we sell,” said General Manager of Corporate Communications at Transmart Carrefour. (Muhammad Farid/Translator)

Reporter: Ramadhani Prihatini
Editor: Barratut Taqiyyah
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