Govt policies support unfair competition

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.