Business expansion to be regulated

JAKARTA (JP): The government is processing a regulation on the expansion of large businesses with domestic market shares of more than 50 percent amid public debate on the same issue.

Coordinating Minister for Trade and Industry Hartarto said yesterday that he and a number of related ministers are preparing a government regulation on business expansions.

The other ministers include Minister of Industry Tunky Ariwibowo, Minister of Trade Satrio B. Joedono, Minister of Finance Mar'ie Muhammad, Minister of Agriculture Sjarifudin Baharsjah and Minister of Cooperatives and Small Enterprises Subiakto Tjakrawerdaya.

Without the regulation, the government refers to the negative list of investment, which closes certain sectors to large business groups as well as foreign investment, when dealing with large business proposals, Hartarto said.

Hartarto, who chairs the ministerial team, declined to explain the possible contents of the regulation, revealing only that it would contain many aspects related to business expansion, including the ownership of the business groups intending to expand their businesses.

"Just wait, I cannot yet speak more on this matter," Hartarto was quoted by Antara as saying.

He said earlier that large business groups were still allowed to expand their production capacities despite their leading position in the local market. He stressed that the most important thing was not market shares but company ownership.

Sanyoto

The issue of business expansion broke out when State Minister of Investment Sanyoto Sastrowardoyo refused to extend an expansion license to the publicly-listed PT Indofood Sukses Makmur, which already controlled 90 percent of the domestic instant noodle market.

Sanyoto said in a hearing with the Manufacturing and Energy Commission of the House of Representatives early last month that the government would not issue expansion licenses for companies which already held a share of more than 50 percent of the market.

Such a move was welcomed by the House's members but was criticized severely by large business groups, which claimed that the restriction would erode their competitive edge on the international market.

After meeting with President Soeharto -- the same day Sudwikatmono of Indofood met with Soeharto -- Sanyoto said companies with a market share of more than 50 percent were allowed to expand their production capacities as long as the expansion was aimed for exports.

I Nyoman Moena, former chairman of PT Surveyor Indonesia, applauded the government's move to issue a new ruling on business expansion.

He warned, however, that economic stability would collapse if the government gave expansion chances to large companies without forging more partnership between large and small companies.

"If partnership between small and large companies can work well, the government's expansion policy for large entities will not serve a boomerang for small businesses," Moena said. (rid)