Consumerist: Hypermarkets – Papa/Mama Shops Die, Malaysia Bleeds Foreigners Overjoyed! (Part 1)

 

 

Dato Jacob George

 

Consumerist: Hypermarkets – Papa/Mama Shops Die, Malaysia Bleeds Foreigners Overjoyed! (Part 1)

When the issue of foreign based hypermarkets was first addressed I was among the single digit voice ‘crying out in the wilderness’

I was upset that the growing number of hypermarkets in the country would pose a serious threat to our local cuisine – the ‘Papa and Mama stores/shops!’

Of course, I am advised, in fact reassured that I should not be worried of the likes of Walmart, Costco and Metro entering Malaysia.

Really?

Then other little and bigger Napoleons tell me that a foreign player has to adhere to stringent regulations on expansion and other requirements and also thanks to ‘zig zag policies and u-turns’ which are all part and parcel of the Malaysian scenario and thus those intending to come must brace itself for ad-hoc rules that most often than not involve extra costs.

Really?

But the truth is the rules governing foreign hypermarket operations in Malaysia have changed numerous times since 2001, so much so that it is easy to lose count on those changes that have been made.

Both whether good, bad or indeed ugly!

At present, the rules governing foreign hypermarkets in Malaysia come under The Guidelines on Foreign Participation in the Distributive Trade Services Malaysia 2004 (revised in 2010).

The guidelines, to name a few, require hypermarkets to be located beyond the 3.5km radius of a town centre, have a floor size larger than 5,000 sq metres and that only one hypermarket is allowed for every 250,000 population.

The initial rules by the then Domestic Trade and Consumer Affairs Ministry, coincidentally shortly after Tesco announced its entry into Malaysia, were to stop the death of sundry shops or my beloved Papa and Mama stores!

And you do not have to be a rocket scientist to know what initiated these were fears and growing complaints that the expansion of foreign hypermarkets was to the detriment of the traditional Papa and Mama shops and stores!

If I remember correctly among the foreign players already in the market at that time were Giant, Carrefour and Makro Cash & Carry.

And policies were put into place to assess the impending damage and among them, an impact and comprehensive study on a particular neighborhood.

Of course, I am aware that there were various ad-hoc rules some incorporated into the guidelines when some hypermarkets came out with an ingenious plan to go 24/7 and its immediate response from the domestic trade ministry after I screamed out loud was – a strict ‘Nay!’

After which over the weeks that followed with the outburst from consumers, papa and mama stores owners and irritated consumerist like me was new rules were again introduced!

Among them – a five-year freeze on openings in certain location was imposed and about two years ago, the ministry decided that it would not issue new licenses but simply swap old unused licenses for new ones.

Another ingenious spin?

And then, there are other obligations that a hypermarket operator has to adhere to.

Then there was the fallacy that each foreign player had to nurture and teach local small- and medium-sized enterprises (SMEs) how to label and package their products.

Did that work?

Then another ingenious person thought of another plan which I considered the ‘mother of all stupidity!’ – the so called Tukar program (small retailer transformation programme) was introduced.

Hypermarket operators are to help sundry shops to modernize and efficiently manage their stores to improve their competitiveness. Each hypermarket is required to pledge that it will transform a certain number of stores.

So poor Papa and Mama Stores had to take if I am not wrong about RM60,000.00 from a local bank to renovate their premises according to the ‘whims and fancies’ of these hypermarkets and their contractors and expose price sensitive information on their workings and virtually end up in more debt!

And since we are on this page did the guidelines, to name a few, which require hypermarkets to be located beyond the 3.5km radius of a town centre, have a floor size larger than 5,000 sq metres and that only one hypermarket is allowed for every 250,000 population work out in reality?

Or the need to hold a public hearing when the population to hypermarket ratio is not met?

The plain truth which is nonexistent in 1Malaysia a long time ago is public hearings have not worked, local councils have not all played their rightful role and obligation to hold a public hearing.

The many Napoleons there are another huge hurdle to cross!

I wonder what their interest is?

To justify my argument on the geographical area and distance!

Look at Paradigm and opposite we have Tesco, Kelana Jaya we have Giant, Subang Jaya we have the clash of the titans at Summit and main space Subang Jaya with Tesco, Mydin, Giant, Carrefour and at Kota Damansara Tesco and Carefour and at Shah Alam another clash of Tesco and Giant?

So much on the geographical spacing bull shit!

The truth is it is not working.

More frightening is at least one if not many do not own any property here, have no 30% local participation and huge profits sent home abroad!

I am advise as much as 80% goes out!

So if they decide to pack and leave our suppliers and others are royally screwed big time!

It is time to put the brakes on the mushrooming of hypermarkets in the public interest or treating them with kid gloves!

Next: The issue of food Security!

 

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