Deregulation welcomed, but criticisms persist<\/p>\n
JAKARTA (JP): Several analysts and politicians welcomed
\nyesterday's deregulation package, although they lamented its lack
\nof solutions to various distortions caused by monopolistic
\npractices in the Indonesian economy.<\/p>\n
\"Overall, especially its emphasis on a gradually-scheduled
\nreduction in tariffs, the package is a step in the right
\ndirection...but it lacks any concrete solutions to the problems
\nin relation to the powerful monopolies,\" Rizal Ramli, director of
\nthe Econit think-tank, told The Jakarta Post yesterday.<\/p>\n
The government announced yesterday the latest deregulation
\npackage which aims to cut tariffs on 6,030 items, place tariffs
\n-- instead of non-tariff barriers -- on various sectors and to
\nrelax various investment regulations, including the opening of 10
\nsectors to private investors.<\/p>\n
The package also lowers all tariffs over 20 percent to a
\nmaximum of 20 percent by 1998 and to maximum of 10 percent by
\n2003.<\/p>\n
The package is meant to boost economic competitiveness and
\nefficiency, officials said.<\/p>\n
\"To be sure, the tariff reductions on some crucial items like
\nnewsprint (the import tariff has been slashed to five percent
\nfrom 20 percent) and automobiles (maximum tariffs have been cut
\nto 75 percent from 100 percent) are great news, but it is evident
\nthat the package fails to touch upon distortions in the economy,\"
\nRizal said.<\/p>\n
Other economists, including those grouped in the World Bank,
\nhave said that distortions caused by monopolized importations and
\ndistributions cost Indonesian firms in 1993 around US$10 billion
\nmore than they would have had to pay at international prices for
\ntheir intermediate inputs.<\/p>\n
Dominance<\/p>\n
Rizal also said yesterday that the package does not address
\ntrade regulations or policies which have contributed to the
\ndominance of certain producers and distributors over various
\nindustrial and agricultural commodities such as cement, wheat
\nflour processing and the crushing of soybean.<\/p>\n
\"The monopolistic policies on wheat, soybean and sugar are
\nespecially worrisome since they directly affect the welfare of
\nthe people...These inefficient policies also benefit certain
\nparties only,\" Rizal said.<\/p>\n
The importation and distribution of sugar, soybean and wheat
\ngrain are controlled by the National Logistics Agency (Bulog) as
\npart of an import substitution drive.<\/p>\n
In addition, the processing of wheat grain and soybean is
\nconducted by two firms which, so far, hold exclusive contracts.<\/p>\n
Contrary to the expectations of various observers, the
\nderegulation package issued yesterday maintains existing Bulog
\npolicies, save for the importation of rice-sacks.<\/p>\n
\"Instead of dismantling it, the new package seems to enforce
\nsuch a monopolistic policy,\" Rizal said.<\/p>\n
The analyst's criticism was echoed yesterday by legislator
\nTadjuddin Noer Said from the ruling political group Golkar.<\/p>\n
\"Although the package shows our commitments to tariff
\nreduction, it fails to address the root of our recent problems,\"
\nsaid Tadjuddin, who is a member of the House's budgetary
\ncommission.<\/p>\n
\"It does not address monopoly at all,\" he said.<\/p>\n
In the meantime, James Castle from the consulting firm
\nBusiness Advisory Group, said the package came as he expected.<\/p>\n
\"The package's tariff reductions and relaxations on some
\ninvestment procedures are good as expected, but I knew that it
\nwould not be earthshaking in regards to distribution and some
\ndomestic trade policies,\" he said.<\/p>\n
Iman Taufik, a leading businessman, also welcomed the
\nderegulation package's schedules on tariff reduction because it
\ngives businessmen an opportunity to anticipate and make
\nadjustments.<\/p>\n
\"We appreciate such a gradual mechanism,\" said Taufik, who is
\na member of the executive board of the Chamber of Commerce and
\nIndustry. (hdj)<\/p>",
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