Jakarta: Indonesia’s government has passed a law designed to restrict store locations for retail chain operators including Carrefour SA and PT Matahari Putra Prima.

“The outlet locations of modern and traditional retailers should be administered more properly," trade minister Mari Pangestu said in Jakarta on Friday. Local governments in Indonesia’s 33 provinces “will have the authority to implement this zoning rule." She didn’t provide other details on the new law.

Indonesia is following Thailand and state governments in India in trying to appease owners of small shops, which are losing market share to retail chains. The new law could force companies such as Carrefour, Europe’s biggest retailer, to build new outlets outside cities.

Eight of the 37 stores operated in Indonesia by Paris-based Carrefour were opened this year, Irawan D. Kadarman, corporate affairs director at PT Carrefour Indonesia, said on Friday. He declined to comment on the new zoning rule.

Carrefour’s 23 hypermarkets in the capital of Jakarta and its greater area and 14 in other cities in Java, Sumatra and Sulawesi islands compete with Matahari, Indonesia’s largest department store operator by sales. Indonesia’s total grocery sales rose to 63.59 trillion rupiah (Rs26,622 crore) in 2006, up from 57.24 trillion rupiah the previous year, according to ACNielsen data.