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Move over mom and pop, the big boys are
here
By Marwaan Macan-Markar
BANGKOK - Thai Prime Minister Thaksin Shinawatra
is receiving a barrage of criticism for turning his back
on a pledge made to the country's small trade retailers
that he would protect them from being driven out of the
market by foreign-owned hypermarkets.
Leading
the charge have been some of the local traders' clubs
and chambers of commerce, who are angered by the
premier's unexpected announcement last weekend that his
administration had scrapped a piece of legislation aimed
at regulating the foreign-owned giants.
"We are
discouraged by the prime minister's decision," said
Kamhaeng Sontanarat, secretary of the Chanthaburi
Traders' Club. "If we cannot rely on our leader, I don't
know who else we can rely on. This is a dangerous
decision because it will allow a few people to be rich
and take advantage of others." Similar sentiments have
been expressed by other small retailers, who fear that
the government's move would destroy the economy of the
country's many corner shops and mom and pop stores.
"It's too early to say exactly what we will do
next. But for sure we won't be standing still," Tawisan
Lonanurak, vice-president of the Nakhon Ratchasima
chamber of commerce, was quoted as saying in The Nation,
an English-language daily.
Thaksin's
announcement, made during a speech last Saturday to a
chamber of commerce in Udon Thani, also took some of the
retail giants operating here by surprise. For some of
the companies, the government's move was a welcome
measure but they felt it was too premature to take the
announcement as a victory.
The bill in question
- the Retail Business Act - was seen by local retailers
as an affirmation of Thaksin's pledge during the January
2001 election campaign to push through measures to boost
the local economy. Had it been passed in the Thai
parliament, where Thaksin's party enjoys a thumping
majority, it would have curtailed the activities of
retail giants such as Tesco-Lotus, Carrefour, Big C,
Tops supermarkets and Food Lion. The restrictions on
these hypermarkets included regulating prices of goods
sold and limits on expanding chains.
But such
measures, the prime minister declared over the weekend,
would have undermined Thailand's quest to attract more
foreign investment and also go against current global
free-trade policies.
This, however, does not
mean that the governing Thai Rak Thai (TRT) party is
abandoning the country's small retail traders, said
Pimuk Simaroj, a Bangkok parliamentarian and deputy
spokesman for TRT. "The critics have misunderstood the
prime minister."
According to Pimuk, the Thaksin
administration will stick to its "dual track" economic
plank articulated during the election campaign. Under
that, TRT committed itself to pursuing populist economic
policies, including shielding the local retail trade,
while at the same time seeking to attract foreign
investors.
"Thaksin felt that the Retail
Business Act was not necessary, because there are other
laws available to regulate the foreign-owned large
stores," Pimuk said. Among them are zoning laws to
determine where giant retail stores could be built and
regulations to determine the hours they stay open.
It is an argument that does not convince the
country's opposition. "By dropping the act, the prime
minister has gone back on a campaign promise made two
years ago," said Abhisit Vejjajiva, deputy leader of the
Democrat Party. "The retail issue is a very sensitive
one for Thailand. If the prime minister wanted to take
this line, he should have been more honest than
constantly making a case for policies promoting economic
nationalism."
For some economic analysts,
Thaksin's shift also reveals the limits of his populist
economic plank. Waving the banner of economic
nationalism through such bills as the Retail Business
Act would have driven away much-needed foreign direct
investment (FDI) the country needs to boost its economy,
which has stagnated since the 1997-98 regional financial
crisis.
And the retail giants are significant in
that regard, since they have been the largest foreign
investors in Thailand following the financial meltdown.
British-owned Tesco-Lotus heads the list of retail firms
that have pumped money into the Thai economy. It has
invested 44 billion baht (over US$1 billion) since 1998,
which, according to the company's records, represents
5.4 percent of FDI into Thailand. The company has 41
giant stores, close to half of which are based in the
Thai capital, Bangkok. Some 97 percent of those
supplying goods to their outlets are Thai producers. In
addition, a separate arm of the company purchases Thai
products for its stores in Britain and Europe. Last
year's exports of goods such as clothing, food products
and furniture amounted to 2 billion baht.
Thailand, according to market analysts,
currently has nearly 100 hypermarkets, a number that is
expected to grow to around 200 within the next two to
three years. Since setting foot in Thailand in 1998, the
foreign retailers have captured around 40 percent of the
country's retail market, up from 10 to 20 percent in
1998, analysts say.
Saraburi province, 108
kilometers northeast of Bangkok, is typical of those
regions where the retail trade has been transformed. It
had about 1,000 local retail stores before Tesco-Lotus
established one of its hypermarkets. Now has only about
200.
The Thaksin administration cannot
marginalize either group, The Nation argued in an
editorial on Tuesday. Yet mismanaging this fractious
issue could trigger a political backlash from retailers
who feel they are being "wiped out by
low-prices-every-day hypermarkets".
"The
government, especially the prime minister, should
establish clear and concise guidelines that are
satisfactory to all, otherwise this issue could blow out
of all proportion with nasty elements of nationalism
that will benefit no one," the editorial said.
(Inter Press Service)
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