Protection never benefits people

Protection never benefits people

JAKARTA (JP): Protected industries never help the people and
never become competitive, said noted Japanese business and
political expert Kenichi Ohmae.

When speaking to local journalists here yesterday, the
visiting expert pointed out that the protection given to
Indonesia's automotive industry and Japan's rice business serve
as good examples.

"The protection of the automobile industry here is very
strange because the price of automobiles is very high here. Who
are you protecting, auto importers or auto companies?" Ohmae
asked.

In Japan, he said, protection was given to the automobile
industry until the industry was competitive. Domestic automobile
firms are now forced to compete and consequently automobile
prices are very low and not subsidized by tariff barriers.

"You see, here it is very strange because the tariff barrier
is very high and everyone raises the prices of automobiles to
that level and enjoys it. This way, you give the privilege to the
licensed companies only," Ohmae contended.

Under last May's deregulatory measures, tariff barriers on
sedans and station wagons, which are assembled domestically, were
reduced to the current level of 125 percent. Import tariffs on
pickups and minibuses were cut to 50 percent and 75 percent
respectively.

He noted that such protection is often given in the name of
national sovereignty and based on political consideration, not
business sense.

Rice

"We have the rice policy in Japan, that is the worse example.
It was given in the name of sovereignty. What is the benefit of
growing rice in Japan? Nobody asks. They just said that we have
to have food independence. That's bull," Ohmae remarked, adding
that Japan has to earmark US$60 billion a year in subsidies for
its rice farmers.

"Do they become competitive as a result of the protection? No,
they have become less and less competitive in the world market,"
Ohmae said, adding that the production cost of a kilo rice in
Japan currently stands at 350 Japanese yen (US$3.50), compared to
25 yen in Australia.

Known as "Mr. Strategy" in his native Japan, Ohmae is a well-
known public speaker and the author of over fifty books on
business and politics, including The Mind of the Strategist
(McGraw-Hill, 1982), Triad Power (Free Press, 1985), Beyond
National Borders (Dow Jones Irwin, 1987), The Borderless World
(Harper Business, 1990) and The End of the Nation State: The Rise
of Regional Economies (Free Press, 1995).

He was in the city to give a series of speeches, including one
at the two-day seminar entitled "Asia Pacific Exchanges in the
Borderless World," organized by the Jakarta Stock Exchange and
another at the Center for Strategic and International Studies.

Ohmae suggested that given its large size and diversity,
Indonesia needs to consider giving more regional autonomy and
freedom to its regions and provinces in order for them to
prosper.

"I think regional autonomy is a very crucial element for large
countries like Indonesia because you cannot lift up everything
from the central government," Ohmae said, adding that such a size
is the main barrier to an equitable distribution of wealth.

Like a company, he said, a country has its optimal size. If a
country has grown to be so large, it needs to reorganize itself
by attaining more regional autonomy. A small company with better
management is better than large but unmanageable one, he added.

"Optimum size is when people get excited about the vision,
meaning that the vision is shared within the community. Optimum
size is when you don't sacrifice one group of people over
another," Ohmae said.

He explained that Japan had its optimal size for the entire
country until about 20 years ago, when the population stood at
100 million people.

Now Japan has its problem because it is no longer has an
optimal size. Today in the information era, it is no longer
possible to centrally manage the country.

"That's why I'm proposing to the government to decompose Japan
into 11 autonomous republics," Ohmae said. "Therefore, instead of
Tokyo defining a single solution for the entire Japan, let each
autonomous region define its own solution."

He said the standard was changing, but that 10 million to 11
million people per autonomous region was an optimal size. (rid)