Govt asked to give equal right to market entry

Govt asked to give equal right to market entry

JAKARTA (JP): Experts suggested yesterday that the government
open up Indonesia's market to all companies since protectionist
policies have only concentrated the country's wealth into the
hands of a few conglomerates.

Didik J. Rachbini of the Institute of Economic and Social
Education, Research and Information said that the government has
not taken any systematic measures in the last 20 years to prevent
conglomeration and to give equal opportunity to all business
entities.

The gap between big and small businesses has widened and can
no longer be hidden behind figures from the Central Bureau of
Statistics, he said.

"President Soeharto acknowledges this condition and has called
on conglomerate owners to share their wealth with cooperatives,"
he said.

He suggested that the government take further deregulatory
measures to directly reach grass-root levels and that existing
deregulations only benefit certain people.

Sharing Rachbini's argument, Jochen Roepke, a professor at the
University of Marburg in Germany, said that what makes
deregulation difficult in Indonesia are market forces, pressure
from specific individuals, groups and industries, self-enrichment
and infant-industry protection. All of these elements, he
concluded, inhibit market entry in Indonesia.

Protection

Roepke said that restricted market entry, which is regulated
through licenses, protection, provision of monopoly rights and so
on, is indirectly related to the current market position of
Indonesian conglomerates.

According to 1994 data, the share of the 10 biggest private
conglomerates accounted for 18.3 percent of the country's Gross
National Product (GNP). The shares of the 20 biggest accounted
for 25.2 percent and the 30 biggest accounted for 29.4 percent.

However, aggregate concentration in Indonesia does not differ
substantially from other countries, such as Germany, Roepke said.

Indonesia's concentration of wealth is also still below South
Korea, where the biggest conglomerate, Samsung, has a share of
16.6 percent of the country's GNP, which is nearly equal to the
10 top Indonesian conglomerates.

"But has the acquisition of wealth and power by Indonesian
conglomerates been legitimate?" Roepke asked. "A closer
examination would demonstrate that in Indonesia substantial
wealth was amassed via privileged access to government-related
strategic assets."

While many small and medium firms are mostly self-financed,
big concerns have ample access to financial capital and are often
able to finance more than 100 percent of projects by credit due
to mark-up practices, closed relationships to banks and
government officials.

Access to commercial banks remains difficult for many small
firms due high intermediation costs, information asymmetries and
moral hazard, all resulting in low-trust relationships between
lenders and borrowers.(rid)