Malaysia is considering a proposal to allow foreign hypermarket companies to open smaller, franchise-based outlets in the country in the hope of generating more foreign investment and consumer choice.
The country has strict restrictions on foreign retailers, although the 2002 ban on superstores has been relaxed. The rules were put in place to protect Malaysian traders from massive foreign retail groups.
Under the new proposal foreign hypermarket groups like Carrefour and Tesco would be able to open outlets slightly larger than convenience shops in Malaysia, which would be run under a franchise system.
Large foreign retail companies invested US$4.9bn in Malaysia in 2006, and it's this kind of financing the country wants to encourage.
Domestic trade and consumer affairs minister Datuk Shahrir Samad said the proposal would allow foreign traders access to the market and give consumers more choice without hurting local traders, because the outlets would still be owned by Malaysians.
Local business groups have objected to the expansion of foreign hypermarkets in the country, but the government said they wouldn't stop the foreign companies setting up shop and stunting consumer choice.
Mr Samad said there must be a balance between consumer interests and those of the trading sector.
The proposal will be submitted to the Malaysian cabinet for consideration next month.
