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