New reform package criticized

New reform package criticized

JAKARTA (JP): The Indonesian Chamber of Commerce and Industry
(Kadin) criticized yesterday the May 23, 1995, package of
economic reform measures for not significantly reducing trade
barriers which have been hurting consumers.

"We don't think the non-tariff import barriers on soymeal,
wheat flour, sugar, clove and salt are justifiable," the
chamber's vice chairman, Iman Taufik, said.

Taufik noted that the non-tariff barriers on those commodities
have been imposed, supposedly, in the interests of consumers.

"But in the end consumers and industrial users have been hurt
by those trade barriers because they have been forced to pay
higher prices for those commodities," he said in a statement
reflecting the chamber's comments on the latest package of
deregulation measures.

The package reduced tariffs on more than 6,000 items, opened
several new business areas to foreign investors and removed non-
tariff barriers to imports of 81 items.

But the measures have not touched upon those commodities as
referred to by the chamber and they remain under the monopolies
of the National Logistics Agency (Bulog) and several private
companies owned by politically well-connected businessmen.

"The chamber actually is not objecting to trade barriers or
monopolies as those held by Bulog, if they are truly aimed at
protecting consumer interests," Taufik said.

"But what we cannot understand is why Bulog's monopolies on
wheat flour and soymeal have been granted to private companies
without clear-cut, transparent procedures," he added.

Therefore, the chamber urges the government to abolish those
trade barriers (monopolies) because they have become the main
components of the high cost economy.

Competitive bids

"If the government wants to grant such monopolies to private
companies, that should be done openly, through competitive bids,"
Taufik said as quoted by the Antara news agency.

The wheat grain milling monopoly held by PT Bogasari Flour
Mills, which is controlled by Sudono Salim, and the soybean
crushing monopoly held by PT Sarpindo, which is owned by
politically well-connected businessmen, have often been attacked
as rent seeking businesses at the expense of consumers.

The World Bank's 1994 Report on the Indonesian economy also
contained a special analysis on the negative impact of the
soybean crushing monopoly and soybean trade monopoly.

Last month, a World Bank-sponsored seminar on the Indonesian
economy also presented a special paper by Jacqueline L. Pomeroy,
a consultant to the trade ministry who criticized the monopolies
as quite detrimental to the development of livestock and poultry
in Indonesia.

Pomeroy observed that the soybean crushing fee set for the
private company had been unusually high.

Moreover, she added, the private monopoly had gained
additional profits from the crushing because it always retained
the cooking oil as a byproduct of the processing.

In a related development, Adi Putra Tahir, former chairman of
the Association of Young Businessmen, stressed the crucial
importance of implementing all those reform measures.

"Those reform measures would be rendered useless if their
implementation increased, instead of reduced, the costs of doing
business," Tahir argued. (vin)