This week, operators of large retail chains, including Tesco Lotus, Big C Supercentre, Carrefour, 7-Eleven convenience stores and Tops Supermarkets, spurned the Commerce Ministry's request for them to sign a memorandum of understanding (MoU) to freeze all new investment projects pending talks on possible changes in relevant laws and regulations. Caretaker Deputy Commerce Minister Preecha Laohapongchana threatened to issue ministerial directives to curb their expansion temporarily if they failed to sign the MoU at a meeting scheduled for next Wednesday.

Also next Wednesday, thousands of small retailers are planning to stage a mass protest at the ministry, to pressure the government into complying with their demands. Small traders want the current caretaker government or future governments to rein in multinational discounters and operators of supermarket and convenience-store chains, so they can maintain or expand their dwindling share of the market.

Any decision on this dispute will not be easy.

Operators of modern retail businesses, backed by state-of-the-art global supply chains, invariably beat small retailers in pricing and quality of service and are very popular among consumers. But small retailers are demanding the government help protect their businesses against what they describe as foreign domination in the retail trade.

The value of the retail sector is expected to hit Bt1.7 trillion this year, and the larger retailers, with a combined total of 6,000 outlets countrywide, have already cornered 60 per cent of the market, with the rest shared among the hundreds of thousands of small retailers.

The ministry's aggressive stance against big retailers can be attributed to the fresh general election scheduled for late this year; the ruling Thai Rak Thai Party is expected to do almost anything to please voters. One conservative estimate counts more than 500,000 small street-corner retailers throughout the country. Based on this, the number of small retailers and their dependants might add up to well more than 1 million people - a significant interest group that political parties cannot afford to ignore in an election year.

The dispute has been simmering for about a decade. The Thaksin government, which came to power in 2001, promised regulatory measures aimed at giving small retailers a fighting chance against the big retailers' onslaught. It spent more than a year drafting a retail-business bill that included zoning restrictions, only to abandon it in late 2002.

It has become clear the Thaksin government does not have the political will to resolve this long-standing dispute, nor even a sincere interest in doing so. Let's hope its ongoing efforts stem from a serious intention to create a favourable business environment that will enable small traders to compete more efficiently while avoiding creating the impression of discrimination against the retail giants.

To be fair, while large retail operators have forced more than 100,000 small retailers out of businesses and threaten to wipe out more, each new hypermarket also creates hundreds of new jobs, provides business opportunities for local suppliers, pays local taxes and supports community development. Many consumers also prefer doing all of their weekly shopping under one roof and saving a significant amount of money, as hypermarkets offer discounts on most items.

The government must make it clear this is not a cut-and-dried choice between trade protectionism and free-wheeling free trade.

Any solution to this dispute must not be motivated by a desire for short-term political gain. The current or future government must come up with a long-term sustainable solution based on a balanced approach, one that takes into consideration principles of fair competition, protection of consumers' interests and social and environmental factors.