Juggling the Best Approach for A Competitive Food Retail Market in Indonesia

Abstract

Food retail industry in Indonesia is one of the best examples to depict the battle between different competition policies in the country. As reflected in the past eighteen years since the opening up of the market to foreign retailers, starting from the contest between the necessity to protect small to medium enterprises (SME) and that to achieve efficiency, the concern on what could be the most suitable policy for the industry has been also how to allow the market at the same time to be competitive and take into account of the interest of consumers. To even complicate the reasoning, the industry has also been regulated in certain issues as seen in the regulation on franchise and local regulation on location so called “zoning” policy. The interference of ex-ante regulation in the industry aiming at ensuring the interest of SME and thereby maintaining the number of competitors might contribute to keep the market competitive. However, setting aside the effectiveness of the regulation, the question remains as whether such regulation might create entry barriers and therefore, whether taking the ex-post approach by leaving the market to the work of competition law could be more appropriate. After analyzing both approaches in the context of the applied competition policy in food retail industry in Indonesia, this paper examines the possibility of a workable balancing between competition policy approaches.

Key words: Retail, competition, regulation

Wahyuningtyas, S.Y. and Nugroho, A.Y.A.  (2015). Proceeding. The 1st International Conference on Business Administration and Policy (ICBAP) 2015. Leveraging Competitiveness through Innovation and Value Creation,  1, 2-9