Malaysia view

MALAYSIA’S government is considering allowing foreign hypermarket operators such as Tesco Plc to open convenience stores in the country, Domestic Trade and Consumer Affairs Minister Datuk Ismail Sabri Yaakob said.

His ministry has circulated working papers among several other ministries and is waiting for their feedback, Ismail told reporters in Putrajaya, outside Kuala Lumpur, today.

New regulations would need cabinet approval, he said.

Malaysia has eased restrictions on foreign retailers since a 2002 ban on superstores aimed at protecting local traders. While Carrefour SA, Tesco, Dairy Farm International Holdings Ltd, and Jusco chain operator Aeon Co operate hypermarkets and mega-stores in Malaysia, none have a significant presence in the smaller convenience-store arena.

“I’m not convinced at this point that there is a dying need or demand by other retailers to come in,” said Khair Mirza, an analyst with Maybank Investment Bank Bhd, in an interview by phone. “The market is not big enough.”

Carrefour already has a small number of Malaysian convenience stores through franchise arrangements. A franchise system enables big-name international operators to tie up with smaller local companies and investors, appeasing Malaysian business groups who have objected to the expansion of foreign hypermarkets.

“The government would like to see a win-win situation so that it doesn’t affect rural retail shops,” Ismail said.