Warc Blog

Franchisors eye Indonesia

5 June 2013
JAKARTA: Food and beverages, healthcare, beauty and education are among the sectors being targeted by foreign franchising companies seeking to enter the Indonesian market.

Regional executives attending the recent International Franchise, License and Business Concept Expo and Conference in Jakarta, which attracted 143 local franchises and 36 foreign franchisors, indicated that ASEAN countries are likely to be prominent investors.

"We currently have 20 franchise brands in Indonesia and we believe that there is good opportunity to tap into the market, especially with easier flow of goods and services under the ASEAN single market in 2015," Malaysian Franchise Association chairman Abdul Malik Abdullah told the Jakarta Post.

His Filipino counterpart was of the same mind. "We are aware of ASEAN Economic Community and we expect to expand to other ASEAN countries, Indonesia is our top priority considering the huge market population and similarities we share," said Philippine Franchise Association chairman Samie Lim.

But Anang Sukandar, chairman of the Indonesian Franchise Association was concerned that the local market was losing out.

"We have less than 15 franchisors going global, but there are a lot more foreign franchisors coming in," he said, adding that the government needed to offer greater support to potential franchisors.

The number of international franchises has risen in recent years and by the end of 2012 stood at 350.

The impact on small local retailers, particularly grocery stores, has led to the government introducing new regulations requiring any retailer with more than 150 stores and any restaurant chain with more than 250 outlets to bring in additional Indonesian partners, a move which could affect the expansion plans of brands such as KFC and 7-Eleven.

The local Traditional Traders Association, however, thinks that is still too much. The organisation represents millions of mom-and-pop shops and has been lobbying the government to reduce the cap to just ten stores.

"If the government is really pro-people, then it should spread the wealth to as many people as possible, and give traditional traders the space they need to grow," Ngadiran, the secretary-general of the association, told the Wall Street Journal.

Data sourced from the Jakarta Post, Wall Street Journal; additional content by Warc staff

 
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