Govt policies support unfair competition

Fitri Wulandari, The Jakarta Post, Jakarta

Antimonopoly watchdog KPPU said on Thursday that monopolistic practices are still flourishing, as the government often issues policies that create monopolies, and businessmen are still inclined to collude with policy makers.

"A number of the government's policies have hindered efforts to introduce healthy business competition. Deregulation and attempts to reduce state intervention in the economy and market are not yet apparent," chairman of KPPU Syamsul Maarif told a media briefing on Thursday.

KPPU cited trade regulations for several commodities, such as fertilizers and sugars, as examples of policies that promoted monopolistic practices.

"The trade regulations essentially go against the principles of healthy business competition," Syamsul stated.

Last year, in a bid to protect the local sugar industry from cheap sugar imports, the Ministry of Industry and Trade issued a decree stipulating that only companies that met the government's requirements would be allowed to import sugar. The requirements included that the companies would have to buy 75 percent of their raw materials from farmers.

Only state plantation companies PTPN IX, X, XI and PT Rajawali Nusantara Indonesia met such a requirement.

However, in practice, as the four had neither the experience nor funding to import sugar, the task fell to the State Logistics Agency (Bulog). Bulog has now become not only the sole sugar importer but also the sole distributor for the local market, too.

In the case of fertilizers, the ministry issued a decree that limited the market area for fertilizers. For example, fertilizer companies from Sumatra are not allowed to sell their products to Java, and vice versa.

"This is an indication of monopolistic tendencies," said KPPU.

Apart from government policies, KPPU noted the existence of "rent-seeking businessmen", who have a dominant position in the market, gained not through competition but from their proximity to policy makers.

"In reality, they control the economy and therefore have the ability to influence the decision-making process so that the government issues rules favorable to their businesses," Syamsul remarked.

Regional autonomy has also contributed to monopolistic, discriminatory business practices.

KPPU noted regional autonomy had prompted many regions to establish their own trade regime by applying discriminatory measures that favored local businesses as opposed to those from outside the region.

"The regions' unpreparedness to exercise autonomy has caused unfairness to flourish at the expense of healthy business competition," Syamsul said.

To overcome the problem, Syamsul said KPPU would intensify its advocacy to urge the government to produce policies that lent more support to healthy business competition.

Monitoring of the private sector, particularly businesses in a dominant position, would also be intensified.

Established in June 7, 2000, based on Law No.5/1999 on monopolies and unfair competition, KPPU has the right to investigate businesses suspected of involvement in unfair business practices and to impose sanctions on them.

In its report, KPPU said it had received 86 reports from the public on alleged violations of the law. The reports mostly concerned collusion in tendering, anticompetition policies issued by the government, plus alleged cartelization and monopolistic practices.