Thailand's retail sector would register flat growth this year if the new Retail Business Act was implemented as the act controls business expansion by giant operators in this sector, the Thai Retailers Association warned yesterday.

Association president Thanapon Tangkananan said the government should not be hasty in implementing the act as the current draft would not help small retailers survive as intended but obstruct growth of the retail industry.

He said the retail sector, which is forecast to grow by 2-3 per cent this year, may have flat growth if the current act draft came into effect.

The association reported that growth in the retail sector slowed to 4 per cent in the first quarter, compared to 8-9 per cent in the same period last year. With a value of Bt1.2 trillion, the retail sector accounts for 14 per cent of Thailand's gross domestic product.

On average, the retail sector grows by 9-10 per cent a year, or double total economic growth.

"The forecast drop in retail business will have a domino effect on other industries as the retail sector involves many players, including wholesalers, suppliers, manufacturers and traditional retailers," Thanapon said.

He made his comments yesterday at a second focus-group meeting organised by the Commerce Ministry in an attempt to conclude details of the draft.

Participants included representatives of modern retailers, local state authorities involved with the proposed regulations, retail-related associations and members of the Federation of Thais Opposing Foreign Retailers.

The association presented its letter to the ministry, explaining the negative effects of the act.

In the letter, it also stated that the act would lower employment opportunities and affect investment growth in the country by both local and foreign investors.

The government should thoroughly consider the impact of this act before implementing it, he said.

In contrast, the Federation of Thais Opposing Foreign Retailers has called on the government to speed up implementation of the act in order to control expansion by giant retailers. Otherwise, small retailers will collapse as some of the giant retailers are aggressively expanding to small communities.

Panthep Suleesatira, president of the federation, said that almost half of the traditional small shops would be destroyed if the country had no regulations to control expansion by large retailers.

He said large retailers were independently expanding their outlets into suburban areas, as there was no regulation to control them.

Panthep said the FBA was the only hope for small retailers to survive.

Siripol Yodmuangcharoen, director-general of the Internal Trade Department, said the ministry would soon conclude discussions on the details of the draft act and send it back to the Cabinet.

Most of the participants, except large retailers, agree that the act should be implemented to balance benefits to all parties, while protecting small retailers, he said. The ministry will adjust some details.

Petchanet Pratruangkrai

The Nation