RETAIL BUSINESS Law 'should give room to all players'

But some fear it will cement the strong position of overseas giants,seminar hears

The retail business law, which is expected to be implemented in the near future to control the rapid expansion of modern mega-retailers, should give all stakeholders, including small and big retailers and suppliers, enough space to run their business.

The proposed law is designed to ensure free and fair practice for all players throughout the

supply chain and deliver the maximum benefit to consumers, according to the Commerce Ministry.

Vatchari Vimooktayon, deputy director-general of the Internal Trade Department, said the latest amendment of the draft retail business act had been written in line with global practice al-ready implemented successfully in many developed countries to create free and fair trade for both traditional and modern retailers.

"Our idea is to create a business environment where all parties can stay together. They should enjoy sustainable economic growth, showing self-restraint and ethics and good corporate governance," said Vatchari, adding that the new draft was in the hands of the commerce minister and was being prepared for submission to the Cabinet.

She said that under the new law, the department would look further into the expansion of large discount stores which might have an impact on existing retailers in an area, as well as the appropriateness of locations in terms of community economics and the number of existing retailers.

Vatchari, who attended a seminar on the proposed law held by The Nation last week, said the retail industry in Thailand was dominated by four big foreign players: Tesco Lotus, Big C, Carrefour and Makro.

"The monopoly situation created by big foreign retailers has many side-effects and long-term impacts on the country, including the spread of consumerism based on their huge discount promotions. Those modern retailers have also destroyed traditional and rural trades as well as their way of living and culture," said Vatchari.

"In principle, we can support the idea of having a law to govern the retail and wholesale busi-

ness. However, the guiding principle of all laws is that all concerned should be treated with equality and fairness," said Tesco Lotus senior vice president Darmp Sukontasap.

"Therefore, the retail act that we would like to see is one that clearly spells out the roles and responsibilities of all involved in the retail and wholesale business. This includes the suppliers, wholesalers and modern-trade operators," he said.

Darmp added that the law should also include specific measures to increase the competitiveness of mom-and-pop stores. Most importantly, it should be able to explain in tangible terms how the law can serve the long-term interests of consumers.

It would be a shame, he said, if the law placed all the burden on the modern-trade business and served the interests of suppliers and wholesalers at the expense of mom-and-pop stores and consumers.

Darmp said that he did not think traditional small retailers would suffer a big impact from the expansion of discount stores.

"Today, modern retailers share only 36 per cent of Thailand's total retail trade worth Bt1.44 trillion. Tesco Lotus itself has 18 per cent of the modern retail trade and only 6 per cent of total retail trade in the Kingdom," said Darmp. "We have opened 250 small-size Express stores, accounting only 3 per cent of overall convenience stores opened in the country, which is between 6,000 and 7,000 outlets."

Captain Jit Siratranont, vice secretary-general of the Thai Chamber of Commerce, said that existing zoning regulations used by the former government to control retail expansion were just a tool and not the real medicine for controlling the problem.

He said that from a total of 145 zoning areas throughout the Kingdom, only four provinces - Bangkok, Samut Prakan, Nonthaburi and Phuket - had adopted zoning regulations covering the entire province. Most of the remaining provinces have a zoning system which only covers major districts.

The zoning regulations also provide too much power to the local authorities of each province in deciding whether to allow modern discount stores to open in their area, he added.

"We need a retail business act which is able to control those modern retailers to expand their stores in more appropriate and reasonable ways. It should promote free and fair trade in the business community," said Jit.

He said the discount-store chains had more competitive advantage over small retailers as they enjoyed many sources of income, rather than just buying and selling. This includes marketing and entrance fees charged to suppliers, as well as a fee from tenants who rent retail space in their complexes.

Viroj Chunprathipthong, president of Tang Hua Seng Department Store, said the new retail business law should define and control the expansion of certain modern retailers, such as large-scale discount stores and shopping malls, from opening in city areas.

The law should, however, allow specific retail outlets such as department stores and medium-size supermarkets to open in inner-city areas, as they focus on the sale of expensive items and fashion-oriented products and have no broad impact on society, he said.

"The new retail business law should also focus on the control of opening times for the discount stores opening in city areas. An opening time of 10am to 10pm would be appropriate, as it would allow small retailers in the area some time in the morning to run their business [without competition from retail giants]. Big discount stores should also be forced to close one day a week," said Viroj.

He suggested that the government come up with concrete measures to assist traditional retailers who have daily sales of less than Bt50,000 in competing with the discount stores, such as in the collection of income tax. The government should consider 90 per cent of their sales revenue as operating costs and corporate income tax should be calculated solely on the remaining 10 per cent, he said.

Viroj also said local wholesalers should be strengthened, including possibly combining their purchases, so they would be efficient enough to deliver products to small retailers at a competitive price.

Kitti Tangjitrmaneesakda, deputy secretary-general of the Federation of Thai Industries, said the proposed changes to the draft retail business law should be implemented together with other regulations, such as a business competition act and zoning law, to provide the maximum benefits in terms of controlling foreign discount stores.

"The new retail act should not be a 'barrier' to protect discount stores already existing in the area. We can apply all the best practices and regulations successfully implemented in other countries, but they should be formulated and adapted to fit the current economic and social situation in Thailand," said Kitti.

Thanapon Tangkananan, president of the Thai Retailers Association, said the Kingdom already had zoning regulations and building controls, which were improved in 2004 to restrict the expansion of large-scale retailers into inner-city areas.

"The new retail business act will be more complicated and quite difficult in practice," he said. "I am not quite sure whether the launch of new retail regulations set to limit the expansion of discount stores will really solve the problems faced by small retailers. But it would instead create a monopoly for both traditional and modern retailers which already exist in the area."

He said that traditional mom-and-pop retailers would not gain any crucial benefit from the new law, but only big suppliers and wholesalers. Meanwhile, modern retailers and consumers would lose advantage.

Niroot Vatcharapichart, head of the Federation of Thais Opposing Foreign Retailers, said the federation was set up last August by small retailers in 12 districts, including Pak Chong in Nakhon Ratchasima, who could not compete with Tesco Lotus. The UK-based chain has increased its numbers of both large and small outlets throughout the country.

The number of district members has since risen to more than 100 in 54 provinces, he said.

From : Nation News
By : PLA
Date : Feb 19, 2007

 
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