Large businesses call for changes to monopoly bill

Large businesses call for changes to monopoly bill

JAKARTA (JP): Major business players in the country called on
the lawmakers on Monday to practice flexibility in deliberating
the anti-monopoly bill.

A major producer of food items in the country, PT Indofood
Sukses Makmur, said that one of the bill's clauses which limits a
product penetration to 30 percent at the maximum was totally
unfair.

"We all must know that a particular product might be able to
dominate 100 percent of the market because it is a new or
unrivaled product," Indofood's director Fransiscus Welirang told
a meeting with the House of Representatives' special committee
dealing with the bill.

"This is clearly not the fault of the company, as long as
there is no limitation or barrier to others entering the market,"
he said.

Indofood itself is a dominant player in the instant noodle
business, controlling some 90 percent of the instant noodle
market in Indonesia with its various product brands like Indomie,
Sarimi, Supermi, Pop Mie and Top Mie.

The market-share limitation would hamper producers and
companies in achieving their optimal targets when they compete in
the international market, Frans said.

It would also open ways to government intervention in market
competition.

And most importantly, it would discourage foreign and local
investors from putting money into Indonesia, he said.

The limitation would also be hard to implement because it
would be next to impossible to measure market shares regularly,
he said.

"We are worried that this kind of regulation would not be
effective and would merely become a toothless tiger," he said.

At the same meeting with the committee, state-owned PT Pupuk
Sriwijaya (Pusri) president Suhadi suggested that the House
revises the clause so that it would allow market control of up to
50 percent as long as the company was not practicing monopoly.

Limiting the market share to 30 percent is very risky because
there would likely be an increase in demand so that production
must be increased, he said.

"It must be noted that there are companies which have been
controlling more than 30 percent of the market without practicing
monopoly," he said, citing his own company Pusri, which produces
fertilizers.

"Currently 100 percent of urea fertilizer in the local market
is produced by Pusri and the group," he said, adding that 100
percent of the company's production were sold on the local market
at prices below the market level, thanks to a government subsidy.

He urged the legislators to add a clause which exempts "state-
owned companies that yield products or services crucial for the
public at large" from being subject to the antimonopoly bill.

Suhadi and Welirang also urged the House to change the six-
month period given before the bill could be enforced to a year.

Small businesses

In the afternoon session with the committee, the Chairman of
the Confederation of Primary Cooperatives Associations (Inkud),
Nurdin Halid, pointed out that the bill does not differentiate
between the middle and upper segments of business sectors and the
small and medium-scale enterprises and cooperatives.

The current bill stipulates that all "players in the economy
are people or a legal body, owned by the state or the private
sector, or cooperatives which conduct business in their role as
producers or traders".

"Under this definition, the status of cooperatives is made
equal with that of other business players in the bill," he said.

He said the bill did not side with small firms or
cooperatives, thus it did not follow a decree recently passed by
the People's Consultative Assembly which stipulates that the
government should prioritize the development of the small-scale
businesses.

A consultant on small-scale economics, Rino A. Sa'danoer, said
in the same meeting that the antimonopoly law would encourage
business competition as well as open up the market entry for new
players in Indonesia.

"With the existence of competition, only the strong can
survive in the market," he said.

The small firms and cooperatives in the country would have a
hard time participating in any competition because they were not
equipped with adequate capital, technology and efficiency as
their larger-scale competitors were, he said. (das)