Malaysia halts Tesco expansion

PLANS by Tesco to open a chain of hypermarkets in Malaysia are under threat from a government ban on the opening of big stores. In what appears to be a political move to protect the interests of smaller shopkeepers, the ban is to be imposed immediately.

State governments and local councils have been told not to consider any applications from local and foreign hypermarket operators to open new stores or to add to existing ones, Trade Minister Muhyiddin Yassin said.

Grocers have been complaining to their members of parliament that the new stores are slashing their sales, as they cannot compete with the massive buying power of the giants.

Tesco, under chief executive Sir Terry Leahy, planned to launch four stores in Malaysia this year as part of its Asian expansion. The first was due to open in May, and the company had selected Mike Daniel, 42, from its Romford, Essex, branch to head the training programme.

Tesco already operates 10 Express stores in Thailand, and this week revealed that it was seeking to expand into Japan and China.

The supermarkets chain last year received approval to set up a joint venture with Sime Darby of Malaysia, and planned a total of 15 supermarkets around the country at a cost of M$1.2bn (£219m).

Foreign operators have targeted the fragmented Malaysian retail sector. Other big operators of superstores in the country include Carrefour of France and Dairy Farm of Hong Kong.

Sime Darby executives believe there is plenty of room for superstores and corner shops, and recently forecast big expansion for the joint venture.