'Anti-competitive' policies cause market distortions
'Anti-competitive' policies cause market distortions
JAKARTA (JP): Emil Salim, a former cabinet minister, yesterday
criticized the government's "uncompetitive" economic policies
which help create market distortions.
Speaking at a two-day workshop, hosted by the Investment
Coordinating Board, Emil noted that such uncompetitive policies
conflict with the country's commitment to free trade arrangements
in the Southeast Asian and Asia-Pacific regions.
Such uncompetitive policies, Emil said, include pricing
policies on a number of commodities, tolerance toward cartel-like
institutions, barriers of entry into a number of businesses and
exclusive licensing.
"In Indonesia, cartels are not regulated but tolerated," Emil
said. "The government even lets some associations help regulate
businesses."
Because of the privileges, becoming executives at a number of
associations, including the Indonesian Chamber of Commerce and
Industry (Kadin) and the Associations of Indonesian Young
Businesspeople (Hipmi), is the best deal to do business, Emil
said.
"Therefore, it's not surprising many people compete for the
chairmanship of Kadin or Hipmi. There is something behind it," he
said.
He suggested that the involvement of associations in
regulating business life be abolished because this can create
barriers to entry into business.
He also questioned "obligatory" fees imposed by associations
on their members.
Such levies, combined with various levies imposed by the
government and local administrations, reduce the competitiveness
of Indonesia's products both in local and international markets.
Emil questioned the need for such uncompetitive policies which
help discourage exports at a time when the competitiveness of
Indonesia's exports is weakening.
The policies include the banning of exports on certain
commodities, supervision on the exportation of certain
commodities, licensing of exporters and export taxation.
These uncompetitive policies, which are essentially
protectionist, should be abandoned in the current era of economic
liberalization, Emil said.
"Such policies were valid for the last 25 years, but not
anymore, not for now and the coming years. Particularly since we
will have free trade in Southeast Asia by 2003. Those policies
are just irrelevant," Emil said.
In addition to the uncompetitive policies, Emil said
Indonesia's economy is also plagued by the ineffectiveness of the
law enforcement, which results in uncertainty.
In terms of "predictability in business", Indonesia is placed
at the lowest among the seven members of the Association of
Southeast Asian Nations (ASEAN), just above Vietnam, Emil said.
Besides Indonesia and Vietnam, ASEAN also groups Brunei,
Malaysia, the Philippines, Singapore and Thailand.
To make doing businesses in Indonesia more predictable, the
government should launch more reforms on its economic
legislations, some of which are still based on colonial rules.
"Our legal infrastructure for the economy, especially for the
services sector, is still inadequate. We should floor the gas
pedal, and reform it," he said.
Emil served as state minister of administrative reforms from
1971 to 1973, as minister of transportation from 1973 to 1978, as
state minister of development supervision and environment from
1978 to 1983 and state minister of population and environment
from 1983 to 1993. (rid)