Indonesian Government to Regulate Convenience Stores

Regulation seeks to protect the country’s traditional markets.

June 01, 2017

JAKARTA – The Indonesian government is studying whether to issue a presidential regulation that sets new rules for regulating convenience stores and minimarkets in the country’s provinces.

Indonesia Investments reports that the new regulation would not be aimed at undermining the minimarket and convenience store sector of Indonesia, but to protect the country’s traditional markets. Over the past decade, minimarkets and convenience stores have grown in Indonesia, especially in urban areas. The news source writes that their success comes at the expense of the traditional markets and shops (including the traditional small restaurants locally known as warung) that are typically operated by people who live close to the country's poverty line. In contrast, the convenience stores are owned and operated by the “richer segments” of society.

Indonesia's middle and upper income level consumers are increasingly purchasing their food and beverage products at these modern retailers and therefore form the main competitor of the traditional, independent small grocers. The modern retailers are also popular because they are clean, air-conditioned, and have a high degree of food safety.

Minister of Economic Affairs Darmin Nasution told the news source that the new presidential regulation would also cover the products sold in convenience stores. The government wants to open opportunities for the nation's micro, small and medium-sized enterprises to sell their products in minimarkets and convenience stores, which would result in less space for the retailers to sell private-label products.

Currently, 65% of the minimarkets and convenience stores in Indonesia are operated by large companies. For example, Sumber Alfaria Trijaya owns Alfamart, while Indomaret is owned by the Salim Group. The remaining 35% is owned by others through franchise agreements. The new presidential regulation is not expected to add new rules regarding the number of outlets that can be owned.

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