'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)