Government Starts to Embrace Foreign Retailers

The Trade Ministry has released Trade Minister Regulation (Permendag) No. 71/2019 on franchising. The regulation will revise four existing Trade Minister Regulations on franchise and modern stores at the same time, by relaxing three clauses. I Gusti Ketut Astawa, business and distributors supervision director of Trade Ministry, revealed to Kontan that the ministry hoped the relaxations would boost the development of the franchise industry in Indonesia.

The first revision is the annulment of the retailer’s outlet limit. The government will no longer limit the outlets of food and beverage retailers. Previously, the food and beverage owners could only open 250 outlets at most, modern retailers could have 150 outlets at maximum, and the expansions exceeding the limits should follow the franchise scheme. The second revision will downgrade the obligation to include 80 percent of local content requirements (TKDN) to a notice. However, the last amendment will no longer limit the holder of the advanced master franchise for foreign franchises. The government previously only allowed one master franchise holder.