Malaysia to mull over foreign hypermart rules

 

The Cabinet will mull over the long-awaited new rules that will govern the lucrative business of foreign hypermarkets in the country, as early as today, sources say

The new rules would be crucial because the government froze licences for new stores for foreign retailers like Tesco, Giant and Carrefour last year.

Foreign retailers make up about 13 per cent of the total retail industry revenue, collectively posting about RM9 billion sales a year.

"It is not certain if the recommendations will be approved in totality by the Cabinet," the source told Business Times. The Ministry of Domestic Trade, Co-operatives and Consumerism will present the revised guidelines to the Cabinet.

He was unable to reveal the changes and recommendations, but said that the 30 per cent Bumiputera equity for foreign hypermarkets remains.

"The government wants to ensure an orderly development of foreign hypermarkets."

The guidelines, officially known as the Foreign Participation in the Distributive Trade Services Malaysia, were first issued in 2004.

The ministry has had to review and revise the initial guidelines due to strong criticism from participants in the retail industry.

For foreign hypermarket players like Tesco, Giant and Carrefour, their expansion in Malaysia hinges on the number of licences approved by the ministry.

In fact, based on the 2004 guideline of one hypermarket for every 350,000 people, the ministry has given out more than the 75 licences it should have.

Last year, the government capped the number of foreign hypermarket licences at 107 until the end of the year to address the issue of unused licences.

Foreign hypermarket operators were instead allowed to swap old or unused hypermarket licences for new ones.

On whether the temporary freeze would continue into this year, the source said it would depend on the outcome of the presentation to the Cabinet.

Industry players have indicated that changes could include a reduction in the population-to-hypermarket ratio and the revocation of licences if retailers took too long to start operations.