Tesco give in - for 90 days
To make Cedric happy?
Tesco gives in, halts Express expansion. The country's largest retailer Tesco Lotus yesterday U-turned and agreed to halt expansion of Lotus Express outlets for three months.
The Commerce and Interior Ministries had, meanwhile, been preparing to employ stern measures to deal with the United-Kingdom-based chain as protests against its expansion plans continued. Until yesterday's reversal the company had been reluctant to concede to Commerce Ministry encouragement to suspend building more of its smaller outlets. The company claimed suspension would result in huge losses and affect its suppliers and employees.
The ministry had earlier asked mega-retailers to voluntarily halt expansion into smaller provincial communities.
The sudden change at Tesco Lotus may have resulted from a letter from the Commerce Ministry to the Interior Ministry this past Friday. It asked Interior's Public Works and Town and Country Planning and Local Administration departments to forbid new construction and supervise closely the renovation and reuse of buildings for modern retail expansion purposes in all provinces.
In addition, Commerce sought the imposition by Interior of stringent restrictions that would prevent large retailers from building outlets closer than 15 kilometres to towns and communities. It said these measures would eliminate the adverse effects felt by small local retailers.
Participating at the annual meeting of the Thai Chamber of Commerce here yesterday, Com-merce Minister Krirk-krai Jirapaet said Tesco had written to the ministry agreeing to suspend expansion. Tesco agreed to halt expansion of its Express shops. These have between 300 and 800 square metres of floor space. Previously the company had insisted on doubling the number of Lotus Express outlets to 200 nationwide this year.
"The ministry is working for the best solution to solve this conflict between retail giants and small local retailers and trying to help all to do business in this country," Krirk-krai said.
Darm Sukontasap, a senior vice president of Ek-Chai Distribution System, which operates Tesco Lotus, said it would cooperate with the government to write regulations to control retail giants and wholesale business expansion in a bid to end the dispute. "The company decided to cooperate with the ministry because of faith in the minister. We decided that halting expansion for 90 days was the best way out of the problem," he said. Darm added that since the ministry had established a committee to find solutions to the dispute within 60 days the suspension would have little effect on the company.
"The company had refused to cooperate in the past because it was not confident the previous government would have employed fair practices. However, we believe in the interim government's transparency and that it does not have a hidden agenda," Darm said. More than 200 small retailers nationwide represented by the Federation of Thais Opposing Foreign Retailers demonstrated at yesterday's chamber meeting here. It is opposed to the rapid expansion of multinational retailers, particularly Tesco Lotus. Federation president Panthep Suleesatira said that if the government failed to take urgent action to control multinational retailers about 1,000 small shopkeepers nationwide would march to the National Legislative Assembly and complain to assembly Speaker Meechai Ruchuphan.
The dispute reached boiling point in the middle of the year when Tesco Lotus began entering smaller provincial communities. Another mega-store opponent, Nirut Vacharapichart, coordinator of the Opposition to Multinational Business Union, said small retailers wanted immediate measures to control giant-retailer expansion. "Although Tesco Lotus has agreed to suspend its Express expansion for a while, the company will continue to enter communities through its other business models, such as Tesco Market, which are bigger than 1,000 square metres," he said. Nirut demanded the government introduce the Retail Business Act that would control long-term expansion.
The Commerce Ministry is amending a draft bill that should be completed by the end of the year. The legislation has been on the back burner since 2003 but was never passed because it failed to receive the approval of the Thaksin-Shinawatra government.
Chamber of commerce chairman Pramon Sutivong said it had asked Krirk-krai this past Wednesday for a solution. It has encouraged the ministry to use tough powers provided by Trade Competition and City Plan legislation. Pramon said the chamber, too, wanted to see early implementation of a Retail Business Act. He said it had offered to act as middleman between large and small retailers.
Petchanet Pratruangkrai
The Nation
NAKHON RATCHASIMA
