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n anticipation of the ASEAN Economic Community (AEC) in 2015, the government must boost communication among regional franchise industries and consolidate policy differences that hamper preparations for the single market, an industry insider has said.

Amir Karamoy, chairman of the national committee for franchising and licenses at the Indonesian Chamber of Commerce and Industry'€™s (Kadin) said on Friday the region needed to have a single platform to discuss disparities in franchising policies among countries.

Amir said this would resolve the conflicts arising from protectionist policies that aim to deter foreign franchises from crowding the domestic markets of member countries. '€œWhat I fear about the AEC is that no one is doing anything to form a permanent forum for information exchange among industry players. I'€™m sure that every single country will safeguard their respective markets,'€ he said on the sidelines of the 2014 Franchise and License Expo in Jakarta, on Friday.

Amir said franchises were not keen on expanding their businesses into neighboring countries due to the low returns on investment caused by overly protectionist policies. In Indonesia'€™s case, businesses from other ASEAN countries have strongly rejected the government'€™s requirement for sourcing 80 percent of goods locally for franchises operating in the country, he said.

'€œNo business would keep using imported raw materials that can be sourced locally for cheap. So, the use of local goods must be supported by government initiatives to boost their quality and quantity,'€ said Amir, who is also advisory board chairman for the Indonesian Committee for Franchises and Licenses (WALI).

'€œThese are things I think need communicating. I urge [the Trade Ministry] to empower Kadin and other associations by creating a discussion forum consisting of public-sector figures from within ASEAN, so that issues can be resolved and recommendations be forwarded to the respective governments.'€

Under the 2013 Trade Ministry Rule on modern retail shops, franchises are only allowed 150 company-owned outlets.

The rule also stipulates that the shops must source 80 percent of goods they trade locally, although exceptions are possible with approval of the trade minister. In addition to that, the rule applies retroactively, affecting businesses that opened before it was introduced.

In the same spirit, under the 2012 Trade Ministry rule on franchises, business owners can only build 250 outlets by themselves, and upon reaching that ceiling they must partner with third parties to open up business opportunities to small and medium enterprises.

The government plans to revise both rules '€” passed under the leadership of former trade minister Gita Wirjawan '€” which it claims will improve the business climate in the domestic retail industry.