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)