Economist calls for effective competition policy
Economist calls for effective competition policy
JAKARTA (JP): The government should complement the success of
its deregulation measures with an effective competition policy to
further reduce irrelevant business practices, economist Mari E.
Pangestu believes.
Mari, head of the economic department at the Centre for
Strategic and International Studies (CSIS), said at a seminar
yesterday that although deregulation and privatization have
caused favorable competition to develop in some areas,
superfluous business practices are still rampant.
"Oligopolies and monopolies in many of our industrial
structures, a high industrial concentration in a number of
sectors, inefficiency in our economy, rigid prices and low
quality products are the results of these irrelevant practices."
She noted that restrictions on domestic competition are still
prevalent, and most of them are created by the government or with
its consent.
They include cartel-like practices in the cement, glass,
plywood and paper industries; the pricing of cement, sugar and
rice; entry controls on the automotive and plywood sectors;
exclusive licensing in the clove and wheat businesses; the
domination of state-owned firms in the steel and fertilizer
industries and the government's ad-hoc policies which benefit
certain companies.
In addition, some products, such as cars, are still protected
by high tariffs and others, such as rice, cloves, wheat, flour,
milk, milk-products and sugar are safeguarded by trade
regulations.
"There are also inconsistencies in giving industries
protection and a tendency to introduce non-transparent measures,"
Mari told the seminar, hosted by the CSIS to coincide with its
25th anniversary.
Yesterday's seminar also featured Djisman S. Simandjuntak,
executive director of the Prasetiya Mulya School of Management
and Kelly Bird, a doctoral student at the Australian National
University, Canberra.
Mari stressed that to eradicate the irrelevant practices, an
efficient competition policy is needed in Indonesia.
Competition policy usually encompasses three areas, namely
anti-trust regulations, consumer protection and controls on
business practices, and should be part and parcel of the whole
economic reform process that Indonesia is undergoing, she
continued.
"Such competition policy should also address foreign companies
as they are participating in local markets. Besides, foreign
firms are often the biggest practitioners of anti-competitive
behavior."
Mari also said a competition policy should not be burdened
with multiple objectives such as controlling large businesses, or
protecting small and medium enterprises from the onslaught of
large businesses.
"Such multiple objectives will deviate competition policy from
its original objectives and make the policy ineffective," Mari
said, pointing to the poor performance of state-owned companies
caused by their multiple objectives as evidence to support her
case.
The main reasons for adopting competition policy, Mari said,
are to develop national economic efficiency and the optimum
welfare of the customers, improve productivity and stimulate
entrepreneurship among business people.
To ensure that such competition policy would be able to meet
its objectives, Mari suggested that an independent watchdog on
competition be established to monitor the implementation of
policy on business practices.
Then the government should consider drafting a competition
bill to provide a strong legal basis for upholding fair
competition among businesses.
"As we have no competition law right now, what we should do is
urge the government to continue its deregulation measures and
prevent non-transparent measures as well as ad-hoc policies which
benefit only certain people," Mari suggested. (rid)
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