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Retail Trade and Department Stores Partnerships: Supporting MSEs in Indonesia

Indonesia is one of the countries with a rapid growing retail sector. An essential component of this industry involves the retailing of various non-food, non-beverage, or tobacco-related items in supermarkets or department stores. In an effort to develop this sector while supporting micro and small enterprises (MSEs), the government has issued regulations and guidelines that govern partnerships in this retail trade.

KBLI 41791 is the Standard Indonesian Business Field Classification covering the retail trade of various types of goods in supermarkets or department stores. Items traded in this category include clothing, furniture, jewellery, children's toys, sports equipment, cosmetics, and more. However, what is most interesting is how partnerships are regulated within this trade according to Minister of Trade Regulation No. 23 of 2021.

Partnerships in this retail trade refer to cooperation between shopping centre or supermarkets and MSEs. This is a significant step in supporting small and micro-businesses in Indonesia. Article 1, Number 8 of the guidelines issued by the Ministry of Trade states that partnerships are cooperation in the business context, involving MSEs and large businesses, based on the principle of mutual necessity, trust, strengthening, and benefit.

These partnership arrangements can take several forms, including:

  1. Marketing Cooperation: Supermarkets can collaborate with MSEs in marketing products produced by MSEs. This may include repackaging products with the supermarket's brand or other agreed-upon brands to enhance the value of the goods.
  2. Provision of Business Locations: MSEs can obtain business locations within shopping centre or supermarkets according to agreed-upon terms.
  3. Supply of Goods: Shopping centre or supermarkets can supply the goods needed by MSEs from participating suppliers.
  4. Franchise Partnerships: Additionally, partnerships can be established in the form of franchise arrangements, in accordance with relevant laws and regulations.

Obligations and Outlet Ownership Restrictions
The government has established several business licensing obligations that must be complied with, including provisions outlined in Government Regulation No. 5 of 2021 concerning Supermarkets. These obligations include compliance with regulations related to supermarket business establishment, restrictions on supermarket outlet ownership, partnerships with micro or small businesses, and periodic reporting to the Central Government regarding the number of outlets, the number of MSEs in partnerships, and the number of employees absorbed.

One noteworthy aspect is the commitment to support domestic products. This includes the prioritization of local production in the supply of goods, which will help drive the growth of domestic industries.

These partnerships represent a significant step in promoting the growth of micro and small businesses in Indonesia. They can take advantage of facilitations such as training, consultation, the supply of goods, capital, and other forms of assistance to develop their businesses.

Shopping centre and supermarkets also have an obligation to submit periodic reports to the Central Government regarding the number of outlets, the number of MSEs in partnerships, and the number of employees absorbed. This enables the government to monitor the progress of these partnerships.

Supermarkets, especially when using their own brands, bear the responsibility of ensuring compliance with intellectual property laws and regulations. This also provides them with an opportunity to contribute to the development of domestic products and brands.

Overall, partnerships in retail trade in Indonesia are not just about profit-making but also about supporting micro and small enterprises and promoting domestic products. With a strong legal foundation, the government is committed to creating a fair and inclusive business environment that supports sustainable economic growth.

If you, a prospective client, have further inquiries about the topic discussed above, Schinder Law Firm is one of many corporate law firms in Indonesia that has handled numerous similar matters, with many experienced and professional corporate and civil lawyers in its arsenal, establishing it as a leading consulting firms in Indonesia. Feel free to contact us at info@schinderlawfirm.com for further consultation.

Author: Budhi Satya Makmur

Schinder Consultant London Ltd.


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