The Ministry of Trade planned ro re-regulate foreign franchise in Indonesia with considerations of the positive/negative impact on business opportunity in Indonesia. The Ministry of Trade still referred to regulation Mandag no. 31/2008 on Franchise business and business opportunity so all franchise business were permissible as long as create job opportunities. “We would evaluate foreign franchises. We would reform every business opportunity, but with the spirit of creating job opportunities, avoid monopoly etc”. The Director General of Domestic Trading (DJPDN), Ministry of Trade, disclosed to Business News some time ago.
Foreign franchise were today mushrooming, especially those managed by PT Modern Putra Indonesia. The company would even turn octopus is 2012. PT Modern had set target to open 57 outlets, way above previous target of 37 outlets. The company continued to increase capital expenditure (capex) of Rp 150 billion, while half of the capex had been spent on opening branch outlets.
The company set target to open one new branch every month. To look at the ambition of PT Modern, the Ministry of Trade once had ‘warning’ from the Commission of Control of Business Competition (KPPU). “Yes, KKPU reminded that operational domination of a business atmosphere, so we question once again Permendag no 31/2008. From the domestic side we would evaluate the positive/negative side of foreign franchise which is today at large” the Director General was quoted as saying.
The Ministry of Trade was also hoping that local Governments (provinces, cities) could create a healthy atmosphere in regard to franchise business. The provincial Governments could open more room for applicants of the domestic franchise, because the Ministry of Trade saw that the number of local applicants were still relatively little. “The number is very small or even nearly non existent”.
In view of the above the Ministry of Trade planned that every permit issued for every domestic applicant be accompanied by assistance, nurturing, facilitation etc. hence domestic franchisers could compete better against foreign franchisors. “But we are not exercising protective policy for domestic franchise. Business opportunity is getting better and may last longer, so registration system would soon be stipulated, wither to be centralistic (the Ministry) or decentralist involving local governments”.
Other points to underscore was that the govt. were observing rules and regulations which were being applied by the neighboring countries. The Ministry of Trade saw that franchise management in Indonesia, in terms of registration and permit issuance tend to be unfair. By the time foreign franchisors intended to apply to operate in the domestic market, the procedures was very easy. The process was way different when it comes to the degree of hardness experienced by local franchisors who intended to expand overseas. “We demand equal treatment so we feel it necessary to reform the existing rules. Domestic franchisors find it hard to apply overseas but overseas franchisors walk into our domestic market very easily”.
In view of the above the Ministry of Trade planned that every permit issued for every domestic applicant be accompanied by assistance, nurturing, facilitation etc. hence domestic franchisers could compete better against foreign franchisors. “But we are not exercising protective policy for domestic franchise. Business opportunity is getting better and may last longer, so registration system would soon be stipulated, weather to be centralistic (the Ministry) or decentralistic involving local governments”.
Other points to underscore was that the govt. were observing rules and regulations which were being applied by the neighboring countries. The Ministry of Trade saw that franchise management in Indonesia, in terms of registration and permit issuance tend to be unfair. By the time foreign franchisors intended to apply to operate in the domestic market, the procedures was very easy. The process was way different when it comes to the degree of hardness experienced by local franchisors who intended to expand overseas. “We demand equal treatment so we feel it necessary to reform the existing rules. Domestic franchisors find it hard to apply overseas but overseas franchisors walk into our domestic market very easily”.
In view of the above the Ministry of Trade was also planning rules for restricting the number of outlets for foreign franchisors. In principle, within a certain time frame the opening of new outlets for foreign franchisors. In principle, within a certain time frame the opening of new outlets were limited to a certain number. Although licensing for foreign franchise was in high demand among local businesspeople, the number of outlets must not exceed the allowed number. “They cannot open as many outlets as they wish. We don’t see this as a form of protection, but we are copying the rules in other countries which had been applied long before-hand in the franchisor countries”.
In addition to the above, the Ministry of Trade would also set up a criteria to differentiate between franchise and non franchise. By giving away certain logo during registration and permit issuing, applicants were bound to rules according to the respective logo. The Ministry would also find it easy to control and nurture domestic franchise. “But we are still in the process of probing deeper into the plan and discuss the matter with stakeholders. As soon as they agree on the key points we would elaborate them into articles of the Act thoroughly. So by the time the Ministers signed the regulations we made, the implementation afield would run smoothly”.
Meanwhile observations made by Business News afield showed that the 7 Eleven outlets were having various modifications. Among them was the 7 Eleven in the Senayan District South Jakarta. The management staged live music and many visitors use the 7 Eleven as a place for hangout. Another outlet being opened in Menteng Central Jakarta was being visited by more and more visitors especially young people. It seemed that the management was making the best of nearness to public facilities like mall or park to attract visitors.
Business News - February 22, 2012
Business News - February 22, 2012
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