Antimonopoly law on the cards for next year

JAKARTA (JP): A bill on fair business competition is expected to be submitted to the legislature before the end of December and become law early next year, in accordance with the schedule of the bailout agreement with the International Monetary Fund (IMF).

Secretary-general of the Ministry of Trade and Industry Aidil Yuzar said yesterday introduction of the bill -- also known as the antimonopoly bill -- was part of the effort to create fair competition in all business activities.

"The drafting team will meet a team from the DPR (House of Representatives) before the end of this year," he told reporters at a seminar.

He explained the bill was designed to create an efficient market economy, consumer protection and prevent economic concentration among certain business groups.

"The bill will also prohibit collusive agreements, like price fixing between businesses." He added the provision would help prepare the country's business sector for the implementation of the Asian Free Trade Area by 2003.

He conceded the definition of monopoly was still a major issue in designing the competition policy.

"Should 40 percent market domination be considered a monopoly or should the limit be 75 percent," he said of the quandary.

He added that another major issue was whether to allow a monopoly for certain economic sectors as long as it was intended for the welfare of the people.

"The Constitution allows a monopoly on production sectors that control the needs of many people, like water." He said the state- owned fertilizer makers, water supply company and train operator would retain their monopoly status.

The government received technical assistance from the USAID, Asian Development Bank and the World Bank in drafting the competition bill, he said.

An independent Fair Trade Commission would be established to ensure the law is implemented, he added.

"The members of the commission will be selected by the DPR and report directly to the President."

Concentration of the economy in the hands of a few businesspeople, especially those who were close to former president Soeharto, is widely cited by analysts as a major cause of the country's unprecedented economic crisis.

Concentration of ownership in the banking sector, for instance, allowed between 70 percent and 100 percent of bank loans to be channeled to affiliated business groups, a violation of the sound lending policy.

The banking sector is saddled with a massive amount of nonperforming loans, constituting about 50 percent of those still outstanding. (rei)