'Create more firms to limit monopoly'

'Create more firms to limit monopoly'

JAKARTA (JP): The country needs a national consensus to
restrict monopolistic practices by limiting the expansion of
companies with more than 50 percent of local market share, says
State Minister of Research and Technology B. J. Habibie.

Speaking at a seminar organized by the committee of the 1995
Indonesian Product Exhibition at the Jakarta Fairground
yesterday, Habibie said that if such a consensus is reached, more
enterprises will be created to help ensure fairer competition
and, at the same time, reduce the concentration of businesses in
the hands of certain companies or conglomerates.

He said that, for instance, if a company already controls 90
percent of market share for a certain product, it could reduce
its standing by expanding into other sectors in which it has
little or even no control.

"In this way, more companies can be created," Habibie said.
"No need for an anti-trust law to break down a monopoly. It is
enough to create more companies in the monopolized sector," he
said.

The government is currently drafting regulations on the
expansion of large businesses with domestic market shares of more
than 50 percent, following public debate on the issue.

The issue broke early last month when State Minister of
Investment Sanyoto Sastrowardoyo said in a hearing with the House
of Representatives' manufacturing and investment commission that
he would no longer issue expansion licenses to companies which
controlled more than 50 percent of the domestic market in
relation to a particular good or service.

While Sanyoto's statement was welcomed by legislators, it was
criticized by large business groups, who claimed that such
restrictions would reduce their competitive edge in the
international market.

Habibie said yesterday that creating more and more companies
was also important in increasing national productivity and
efficiency in the era of globalization.

"Even a company needs sparring partners to increase its
productivity and efficiency as well as to prepare itself to enter
global competition. In a monopoly, however, there are no sparring
partners as there is only one performing company," he said.

"I'm not anti-monopoly. As long as the monopoly can create
productivity and efficiency just go ahead," Habibie said.
"However, monopolistic companies usually exist only in communist
countries and most of them have collapsed."

Habibie said that Indonesian companies had to develop value-
added and cost-efficient strategies to enter global competition.

To win in competition, Habibie said, a company needs to focus
on increasing the quality of its products and on reducing costs.

"Productivity, efficiency, value-added and cost-added...
that's the real language.... Don't rely too much on statistics.
Statistics are interesting but mean nothing," he said.

Other speakers at yesterday's seminar included Coordinating
Minister for Industry and Trade Hartarto and State Minister of
National Development Planning Ginandjar Kartasasmita.

Hartarto said small and medium-sized enterprises need to be
developed to reduce the domination of large enterprises so that,
in the long run, they will become the basis of Indonesia's
economy.

"The role of small and medium-sized enterprises is very
strategic, especially for the country's economic growth as well
as the distribution of wealth," Hartarto said.

Small and medium-sized firms are particularly in need of the
government's assistance when it comes to acquiring bank loans and
improving their human resources, Hartarto said.

Ginandjar, who presented a paper on efforts to develop
traditional products, said small and medium-sized enterprises
which make traditional products also need help in acquiring
market niches and technology.

"Traditional technologies reflect traditional culture....
However, traditional products can be produced using modern
technology in a modern society," he said. (rid)