A new law designed to protect small retailers will be enacted in the next few months, Deputy Prime Minister and Finance Minister MR Pridiyathorn Devakula said yesterday.

Pridiyathorn blamed the presence of giant retailers, including Tesco Lotus and Makro, in the domestic market for driving many local small operators out of business.

"As Thailand has bowed to the force of globalisation and allowed giant retailers to build chains nationwide, this has led to many small retailers shutting shop," Pridiyathorn told participants at a seminar hosted by Mahidol University's Faculty of Social Science and Humanities.

Unregulated retail industry has had a serious impact on both income distribution and some aspects of cultural values, the finance minister said. Big retailers have bargaining power over not only manufacturers, but also small farmers, whose income from selling farm products is already minimal.

Although economies of scale reduces businesses' operating costs, it also damages cultural values, and the country must be very careful about these issues, Pridiyathorn said.

"The close social relationship between operators of small shops in communities and buyers ceased after the aggressive influx of the big players," he lamented.

Moreover, credit that mom-and-pop shops traditionally extended to low-income customers have also disappeared along with the small operators, he said.

However, he explained that it did not mean the government would not open up for economic liberalisation.

The government will be more focused on economic development than what the country has pursued over the past 50 years, he said.

The new law, which is aimed at allowing both big and small retailers to coexist, will be enacted in the next two or three months, he said.

As the government is close to concluding the process of drafting a new law, lobbyists have rushed to negotiate with the government, he revealed.

Pridiyathorn's view differs from that of former Finance Minister Thanong Bidaya in the former Thaksin government. Thanong often claimed that the growth of retail business had helped the government manage inflation effectively. He also said fierce competition among retailers had led to lower prices of goods despite skyrocketing oil prices.

Local small-scale operators organised protests and demanded the Commerce Ministry restrict expansion by the giant retailers during the tenure of the Thaksin government. But the government was slow in responding to their demands, forcing Surayud Chulanont's government to take it up.

Wichit Chaitrong

The Nation