Cartel-like associations to be scrapped

JAKARTA (JP): Minister of Forestry Djamaludin Suryohadikusumo said here yesterday that he was ready to dissolve all cartel-like associations under his ministry as part of the government's commitment to abolish all monopolistic practices in the country.

The minister said associations like the Association of Indonesian Forest Concessionaires (APHI) and the Association of Indonesian Wood Panel Producers (Apkindo) would be allowed to exist but would no longer be allowed to operate as business cartels.

"I think we don't need to dissolve the associations if they have been established, not merely as a price-fixing cartel, but also as a forum for businesspeople," he said.

President Soeharto announced massive economic reforms Thursday, which were approved by managing director of the International Monetary Fund Michel Camdessus, designed to lift the nation out of its economic predicament.

Under structural reforms, the government will abolish all restrictive marketing arrangements starting Feb. 1, leaving firms free to produce and export their products as they wish and as the market determines. Specifically, cement, paper and plywood cartels will be dissolved.

Soeharto said the move was aimed at promoting domestic competition and expanding the scope of the private sector.

The reforms specifically stipulate that "no firm will be forced to sell its products through a joint marketing organization (such as Apkindo), nor be required to pay fees or commissions to it."

Djamaludin said forestry companies originally established associations and joint-marketing organizations to prevent a price war between exporters of similar products.

"APHI, Apkindo and other forest-related companies do not just fix prices and collect fees from members. They also enhance cooperation between member companies," he said.

However, most association members, notably those of Apkindo, have long complained about rent-seeking practices as the association has been dominated by several vested-interest businesspeople.

"The associations are still waiting for further details of the reforms regarding their specific parameters," he said.

Djamaludin said the reduction of export taxes on logs, sawn timber and rattan to a maximum of 10 percent as stipulated in the reform measures would encourage timber companies to export their products.

The government currently imposes export taxes on logs and wood.

He said with the tax reduction, Indonesian logs, sawn timber and rattan would be more competitive in overseas markets. (gis)