New draft to rein in retail giants

A new draft for regulating businesses will be submitted to the Cabinet by the Commerce Ministry in September, so the law is ready for implementation early next year.

The new Act will ensure fairness, because the lack of a specific law has allowed retail giants to decimate small traditional shops in the country.

According to the Internal Trade Department, modern retail businesses in the Kingdom have been increasing considerably since 2005. For instance, there are now 633 Tesco Lotus outlets from 184, 77 Big-C outlets from 50, 34 Carrefour stores from 23, 42 Makro stores from 29, 109 Tops Supermarkets from 81 and 4,943 7-Eleven convenience stores from 3,311.

A senior official from the Commerce Ministry said yesterday that after going through several rewrites, the draft should be ready to be presented to the Cabinet by September, before it is submitted to the Parliament for a final reading and rectifying so it can be implemented next year.

Under the proposed law, four types of businesses will be regulated, namely hypermarts and superstores, discount stores, supermarkets and convenience stores that earn more than Bt1 billion per year. In other words, retail giants such as Tesco Lotus, Lotus Express, Carrefour, Big-C, Macro, Tops Supermarket and 7-Eleven will come under the regulation. Convenience stores based in petrol stations will also be put under control, provided they earn more than Bt1 billion a year.

However, department stores, speciality stores and fresh markets do not come under the jurisdiction of this new law.

Meanwhile, the law will also stipulate that hypermarts and superstores, discount stores, as well as supermarkets be at least 5 kilometres away from a municipal area within a community district. Violators of this and other regulations under the Act will be subjected to one year in jail or Bt1 million in fines or both.

However, some large retailers have objected to the jail sentence, saying that the Bt1-million fine should be enough.

Jit Siratranont, deputy secretary-general of the Board of Trade, said the draft should be very closely studied to ensure fair play between retail giants and small stores.

“The government must proceed by issuing a specific law that reins-in the number of large retail outlets that can be set up in each community. The rise of giant retailers has been hurting small operators,” Jit said.

He added that the government should also set up clear regulations on things such as operating times, so traditional retail stores are also given a chance to sell goods. Controlling the location of convenience stores is needed because they are starting to destroy traditional mom-and-pop operations.

Jit said that the level of punishment proposed in the draft was fair, because if business operators are ethical, they should not be afraid of the long arm of the law.

At present, in order to set up a new retail and wholesale business in the country, enterprises need to seek permission from the provincial committee. The new Act will also include concrete regulations for provincial panels to use while considering applications.

The new law will also require businesses to set up a “Retail Fund” so that small retail operators have access to funds for development.

The Nation, July 31, 2009