Story : James Goyder
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The decision by Tesco to sue two Thai citizens for libel may have made headline news in the English supermarket giants’ homeland but in Thailand it is symptomatic of a wider issue that has been the subject of increasing scrutiny, both by politicians and the media. The expansion of chains of supermarkets, and Tesco (or Tesco Lotus as it is known in Thailand) in particular has been on the increase and there are growing concerns that this expansion is coming at the expense of old fashioned and typically family owned retailers.
Jit Siratranon, a former Thai MP and now vice general secretary of the Thai Chamber of Commerce and Kamol Kamoltrakul, a Bangkok Biz News columnist, are facing libel damages claims of BHT 1.1 billion and BHT 100 million respectively. Tesco are also pursuing Bangkok Biz News editor Nongnart Harnvilai for BHT 100 million.
Their offences? Siratranon made a speech to activists at Bangkok’s Kasetsart University, describing Tesco Lotus’s expansion as ‘aggressive’. Kamol alleged that Tesco Lotus exploited complex accounting structures in order to repatriate revenues to the UK parent and reduce the amount of tax it had to pay in Thailand. Both men erroneously claimed that Tesco Lotus contributed 37% of the company’s global revenues. Harnvilai suggested, in a tongue in cheek newspaper column, that Tesco did not ‘love’ Thai people.
There is growing concern in Thailand that small traders, popularly referred to as ‘Mom and Pop’ stores are being forced out of business due to their inability to compete with supermarkets such as Tesco Lotus. Small retailers have been taking their protest to the Commerce Ministry and see Tesco Lotus which, according to the Business Development Department, is the largest modern retail operator here with 492 outlets as the main culprit. Other major players include 7-Eleven, which has more than 3,000 units, Big C with 59 outlets, Makro with 45 and Carrefour with 29.
Under the terms of a proposed retail and wholesale business bill existing major retailers will be able to expand but under the proviso that they comply with new regulations. According to the terms of the bill hypermarkets, supercentres, discount stores and cash and carry stores must be located at least 12 kilometers from a city centre and serve a population of at least 100,000. Supermarkets must be five kilometers from a city center with a population of at least 50,000. All the major retailers agreed with the terms of the bill with the exception of both Tesco and Big-C who were unhappy with some of the proposals.
Nowhere has this issue been more prevalent than in Phuket where there are already two Tesco Lotus stores and work on a third has already begun despite opposition from locals. Protestors are unhappy that the latest Tesco development, in Wichit, will have a negative impact on vendors at the nearby Moom Muang market. The second Tesco Lotus store opened in Bang Tao last year amidst fierce protests from locals fearing that it would force small traders out of business. There was also a question mark over the legality of the development with protesters claiming it exceeded the maximum surface area permissible under Thai law of 1000 square metres.
Free speech campaigners have criticized Tesco for pursuing these lawsuits describing them as, ‘heavy handed’. Roby Alampay, of the South East Asian Press Alliance (Seapa) accused Tesco of attempting to stifle discussions and debate over legitimate public concerns. According to him, ‘Seapa sees the Tesco Lotus suits as harassment, pure and simple.’
The good news for Jit Siratranon, Kamol Kamoltrakul and Nongnart Harnvilai is that there is no precedent in Thai law for a payout of the level at which Tesco are seeking. Whatever the outcome of the forthcoming court cases Tesco have, perhaps unwittingly, brought the issue of giant supermarket expansion to the publics’ attention once again. It is an issue which has proved sufficiently contentious in the past to cause Tesco’s joint-venture partner, the Charoen Pokphand Group, to sell all of its shares in the Thai arm of the business.
The bad news, for ‘Mom and Pop’ traders is that in the meantime the expansion of Tesco Lotus and other so called supermarket giants continues unabated. While Tesco would argue that they are providing a valuable service to communities there is clearly a sense amongst many Thais that these supermarket giants are contributing to what they perceive to be a gradual erosion of traditional Thai culture.
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Compiled by Li Zhou
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