Published May 5, 2009

KL freezes issue of hypermarket licences

Of 107 handed out to foreign operators, only 78 are in use

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(KUALA LUMPUR) The Malaysian government has capped the number of foreign hypermarket licences at 107 until the end of this year, to address the issue of unused licences, Malaysia's Business Times reported.

To date, of the 107 licences given to foreign hypermarket operators, only 78 stores are operational.

The remaining store openings have not happened due to reasons ranging from land issues, developers unable to carry out project, to hypermarkets unable to get state consent.

To help clear the unused licences, Domestic Trade and Consumer Affairs Ministry secretary-general Mohd Zain Mohd Dom said that it is willing to swap old or non-operating hypermarket licences for new ones.

'We want to clear the unused licences first. One hundred and seven is the benchmark that we are keeping for this year,' he told MBT.

The ministry is now undertaking a study and drawing out a five-year plan on what should be done beyond 2009.

The Domestic Trade and Consumer Affairs Ministry regulates the opening of foreign-owned hypermarkets. Local hypermarket operators such as Mydin, Econsave, Pacific and Sunshine are free to open without adhering to restrictions imposed on the foreign players such as Giant, Carrefour and Tesco.

Mohd Zain said that, for example, should a hypermarket operator surrender three of its licences, then it can apply for three openings at three other locations.

However, the new approvals will be subject to the usual criteria for foreign hypermarket openings.

Current guidelines state that only one hypermarket can open for every 350,000 population, which means only 75 hypermarket licences should have been given out in the first place.

However, with the 107 licence issues, the ratio is now around 243,000 based on a 26 million population.

The current guidelines, which are being reviewed, may look at revoking approved licences should the hypermarkets take too long to start operations.

'It would be reasonable to give two years from when we give the green light to get the building up and start operations,' said Mr Mohd Zain.