Local retailers prepare for tighter competition

JAKARTA. The 2015 ASEAN Economic Community (AEC) will create more challenges for the country’s retailers as the door will open for competitors from neighboring countries to enter Southeast Asia’s largest economy, Indonesian Retailers Association (Aprindo) has said.

The AEC, however, should also serve as an opportunity for the country’s some 500 retail firms to improve their performance and expand their business beyond Indonesia, Aprindo deputy secretary-general Satria Hamid said on Thursday.

“It is natural that with easier access to the [Indonesian] market, more foreign retailers will come,” he said.

The AEC, also known as the ASEAN single market, will provide freer movement of goods, services and people among ASEAN member countries.

Malaysian retail conglomerate Texchem Resources Bhd. has already said it would be entering the Indonesian market.

The firm announced earlier that it would open Japanese food chain restaurant Sushi King in Indonesia, attaching itself to Japanese corporate retail group AEON.

AEON reportedly plans to build 20 shopping malls in Greater Jakarta by 2023.

PT AEON Indonesia president director Toyofumi Kashi said previously that AEON had so far constructed three new malls in East Jakarta, Bekasi and Tangerang.

The malls were expected to start operating in 2015.

A Thai retail giant, the Central Group, is another foreign retailer that will try to cash in on the growing Indonesian market.

Suthichart Chirathivat, deputy chairman of the group’s board, told The Nation that the group would focus more on expanding its business overseas next year.

“The local retail sector has reached maturity as the big local players have fully penetrated the market and gained a high competitive advantage over foreign retailers,” he said.

“However, the implementation of the AEC will allow major local retailers to penetrate new markets in other AEC countries,” he said, adding that Indonesia and Vietnam were among the targeted countries.

Meanwhile, Satria with Aprindo said that Indonesian retailers had an edge over incoming foreign firms because they already had experience handling the challenges of the Indonesian market, which was regarded as more difficult than other those in other ASEAN countries.

“The history also has proven that several foreign retailers have failed when attempting to enter our market,” he said, referring to giant Dutch wholesaler Makro.

Satria also said that the tighter competition brought on with the AEC had to be seen as an opportunity for local retailers to improve their expertise and expand into other ASEAN countries.

He said that local retailer PT Sumber Alfaria Trijaya, which runs minimarket chain Alfamart, was an example for other local retailers, as it was already planning to open stores abroad.

Alfamart president director Pudjianto said previously that his firm would open 50 minimarkets in the Philippines in the second half of this year.

“We are upbeat that we will be very big there because there are no minimarkets in that country,” he said.

Satria added that he also expected the government could provide more support for local retailers looking to expand overseas.

“Local retailers have so far done everything themselves to enter other countries. Meanwhile, Japanese retailers, for example, get help from their government, which lobbies our government to obtain easier access into our country,” he said. (Khoirul Amin)