Biggest asset owners<\/p>\n
Much has been said and discussed previously about the
\nincreasingly high concentration of asset ownership and market
\npower in the hands of large business groups in Indonesia and the
\nimplications for economic efficiency and even political
\nstability. But the debates have rarely attracted mass media
\nheadlines, nor have they elicited comments from influential
\nanalysts or opinion makers. However, the reaction has been
\nstrikingly different in the wake of the recent comments on the
\nissue by Sumitro Djojohadikusumo, the country's most senior and
\nperhaps most respectable economist.<\/p>\n
There is actually nothing completely new in Sumitro's
\nobservation. The difference lies in the personality and stature
\nof Sumitro himself. Moreover, most mass media seem to assume that
\ncarrying Sumitro's observations or analyses, however critical
\nthey might be of the government, is \"safe\".<\/p>\n
Despite the absence of supporting empirical evidence, we are
\nall aware of, or can feel, the higher tendency toward
\nconcentration in economic asset ownership. Some estimates put the
\ncontribution of the 200 large business conglomerates to the gross
\ndomestic product at about 35 percent, of which around a third was
\naccounted for by the five largest groups. We are not sure about
\nthe reliability of the figures, but we think the degree of
\nconcentration is relatively high and that it may potentially
\nbecome a source of instability in the future.<\/p>\n
There are, we think, two major factors that make the
\ninequality in the asset ownership more apparent to the general
\npublic. One is the increasing number of big companies going
\npublic. The disclosure requirement has forced them to reveal
\ntheir financial data through the mass media. The size of the
\nvarious groups has become even more glaringly clear following
\nwhat many analysts see as \"greedy\" intra-group asset
\nacquisitions, whereby listed companies have acquired their own
\nsubsidiaries in order to raise more cheap funds from the public.<\/p>\n
The other factor was the circulation last year of a long list
\nof suspected delinquent bank debtors. The list showed how
\nenormous was the exposure of almost all major banks, including
\nstate banks, to the big business groups. Even though the list has
\nbeen rejected as inaccurate, later developments have proved that
\nthe list did contain some truth.<\/p>\n
These developments further strengthen the suspicions among the
\npeople that the conglomerates have preferred access to cheap
\nfinancial resources. They also raise questions about the
\nastronomical growth of some groups within so short a period of
\ntime. Further down the line, these questions cause doubts among
\nthe people about the government's willingness and determination
\nto develop small-scale and medium-sized businesses.<\/p>\n
We are greatly concerned that the pace of business
\nconglomeration has further increased as a result of the
\naccelerated process of deregulation in the various sectors of the
\neconomy. In the absence of clear-cut legislation, or rules, on
\nfair market competition, acquisition, merger and market monopoly,
\nand the extreme lack of transparency in the privatization of
\nstate companies, the seemingly legal conglomeration spreads
\nacross the whole spectrum of economic activities.<\/p>\n
Scanning the economic or business pages of the newspapers, one
\ncan see how almost every major new project announced is owned by
\nthe few big conglomerates who seem to have strong political
\nconnections. These groups seem to possess endless, huge streams
\nof cash flows and to own many big cash cows. Their business
\ntentacles are spreading everywhere.<\/p>\n
We do not have to be a seasoned political analyst to be able
\nto detect potential threats from such anomalies to our national
\nstability and unity. Sumitro's warning is not meant for any
\npersonal political interests. His strong appeal to the government
\nto seriously address the issue was prompted by his great concern
\nfor the future of the nation and the country.<\/p>\n
Hopefully, the government will indulge in some meaningful
\nretrospection on the great dangers of the unchecked, astronomical
\nrate of business conglomeration and will push ahead with a
\nstronger determination to implement all the theoretically sound
\nprograms it has formulated to develop small-sized and medium-
\nscale businesses.<\/p>",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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