No monopoly, cartel in cement trading: Association<\/p>\n
JAKARTA (JP): The Indonesian Cement Association flatly
\nrejected yesterday claims that it was a cartel or that the
\nIndonesian cement industry was oligopolistic.<\/p>\n
At a hearing with the Trade and Finance Commission of the
\nHouse of Representatives, the association's chairman, Soepardjo,
\ndenied that monopolistic cement trading occurs in Indonesia,
\nsaying that people were free to choose whatever brand of cement
\nthey like.<\/p>\n
\"If what is meant by monopolistic practices is something like
\nthe distribution of electricity and oil by the state-owned
\nelectricity firm PT PLN and the oil firm Pertamina, cement
\ndistribution is not like that,\" Soepardjo said.<\/p>\n
Concurring with Soepardjo, Daddy Hariadi, a director of
\nIndonesia's largest cement producer, PT Indocement Tunggal
\nPrakarsa, said his company did not monopolize the country's
\ncement market because its market share was less than 40 percent.<\/p>\n
Indocement's current annual production capacity stands at 9.2
\nmillion tons of cement, or 35 percent of Indonesia's total annual
\nproduction capacity of 25.62 million tons. By 1997, Indocement,
\nwhich is in the process of expanding production plant in Cirebon,
\nWest Java, will have a total annual output capacity of 11.3
\nmillion tons.<\/p>\n
Oligopoly<\/p>\n
However, Soepardjo did not explicitly deny the accusation of
\noligopoly in the cement industry, which has been made by a number
\nof observers, including economist Rizal Ramli of the Econit think
\ntank.<\/p>\n
By definition, a monopoly exists when one firm has exclusive
\ncontrol of the supply of a product or service in a particular
\nmarket. An oligopoly exists when a market is controlled by a few
\nproducers.<\/p>\n
Soepardjo rejected the argument that the cement trade in
\nIndonesia was cartel-like, saying that it was the government that
\nset reference prices for cement, while the cement association
\nonly helped enforce the reference system.<\/p>\n
Asked about the agreement among cement producers regarding
\ncement distribution zoning, Soepardjo said it was designed to
\nensure evenness of the cement price throughout Indonesia.<\/p>\n
\"Imagine if there was no zoning policy: people living far away
\nfrom a cement factory would have to pay more money for a sack of
\ncement, compared with those living close to a cement plant,\"
\nSoepardjo said.<\/p>\n
He rejected the suggestion that the Indonesian Cement
\nAssociation was a cartel of cement producers, which could control
\nproduction, distribution and prices.<\/p>\n
According to the World Bank's annual report on Indonesia,
\nwhich has not yet been officially released, Indonesia's cement
\nindustry is run like a cartel.<\/p>\n
And no less than Sudwikatmono, chief commissioner of
\nIndocement, acknowledged last month that the cement association
\nwas, indeed, run like a cartel.<\/p>\n
\"It's true, it's like cartel. However, as long as the cartel
\nis good, it doesn't matter,\" he said.<\/p>\n
By definition, a cartel is an institution in which several
\nfirms agree on joint action in relation to matters such as the
\nrestriction of production and competition, the joint purchase of
\nraw materials, the joint distribution of products and prices.
\n(rid)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/no-monopoly-cartel-in-cement-trading-association-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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