Business climate in Indonesia
Business climate in Indonesia
It was really surprising to read the statement by Coordinating
Minister for Industry and Trade Hartarto a few days ago. The
minister said before more than 200 economic students in
Yogyakarta, that protection, monopoly and oligopoly should be
stopped, as these contradict the principles of fair competition.
The statement came as a surprise, especially to the business
world, because it was expressed by a senior government official.
The business world, as a matter of fact, presumes that the
minister, being a member of the ruling government, supposedly
belongs to the policy making group. When monopoly and oligopoly
and other kinds of protection started to be enjoyed by certain
groups of companies, it should have undoubtedly been through a
certain process of negotiations between the companies concerned
and policy makers in the government.
The question now rises: Was Minister Hartarto, as Coordinating
Minister for Industry and Trade, then excluded from the decision
making process? Is this what the press and the man on the street
call collusion? It would be more logical if such criticism was
made by the private or business sector, as they are the ones who
have to endure the hard and unfair competition.
The latest regulation package which was announced on May 23,
1995, is aimed at improving efficiency in industrial structure.
Monopoly and oligopoly only hamper the development of the related
businesses whenever they enter competition, especially in facing
free trade in 2020, as decided upon at the APEC forum.
Another point of importance that deserves the government's
attention is the following matter. In a seminar organized by the
Jakarta Center for Strategic and International Studies, an
American academician by the name of Huge Patrick, an expert on
the Japanese economy from Columbia University said that Indonesia
needs to reduce both corruption and bureaucratic red tape in
order to create "a long term investment climate," which is
attractive to Japanese industries seeking to relocate to the
region. It as most saddening to learn from Patrick's warning,
that according to a survey conducted by the Hong Kong based
Political and Economic Risk Consultancy, Indonesia rated the
third-most-corrupt country in Asia after China and India.
The rise of the yen against the U.S. dollar would encourage
Japanese manufactures to relocate their industrial activities to
South Asia and other countries to cut costs. That is why
Indonesia must be ready to anticipate this trend. If this
happens, it would create more employment opportunities and other
benefits to the economy of Indonesia. Our government has to be
more realistic in continuing the deregulation process for the
sake of the nation's businesses.
ALOYSIUS HARYONO
Jakarta