RI privatization too slow: Economist

JAKARTA (JP): Privatization in Indonesia is very slow, leaving most of the country's state-owned companies far from being market oriented, a noted economist said yesterday.

"While the global privatization process has been proceeding very quickly, privatization here is very slow," Djisman S. Simandjuntak, the director of the Prasetia Mulya School of Management, told a seminar on "Seeking a New Paradigm in Indonesian Development".

The Indonesian government has frequently stated that it will privatize several state-owned companies. But only four -- PT Telkom, PT Indosat, PT Tambang Timah and PT Semen Gresik -- of the more than 200 state-owned companies in Indonesia have been privatized.

And despite the privatization of the four firms, the government still holds the majority their shares.

"It means that the government still considers the existence of the state-run companies as very important," he said at the one- day seminar, which was organized by the Center for Strategic and International Studies.

He said that the economy in Indonesia is still marked by many anti-market forces. "The government, for example, controls the prices of a number of commodities and services, such as fuel, rice, cement, transportation fares and labor wages," he noted.

The government, Djisman said, should be friendly to the market, which is an important element of good governance.

"And good governance is a must if we are to win against the competition on the world market," he added.

According to the economist, companies will find it difficult to win against the world competition if there is no good governance in their own countries.

"We're still not good in governance. Problems concerning human rights, labor rights and democratization are still concealed rather than solved," he said.

Djisman said that it is companies which will compete in the world market and it is the role of governments to create conditions conducive for them to do business.

He noted that global comparative advantage is the ability of companies to fulfill the demand of consumers all over the world.

"In this case many companies consider their local markets as the 'area for training' to fulfill consumers' demands before entering the international market," he said.

He said, however, that the very permissive attitude on the part of Indonesian consumers is the weak point in trying to improve many domestic firm's competitive edge.

He therefore suggested that Indonesian companies try to follow the standards set by the International Standard Organization as a way to prepare themselves for the increasingly tougher global competition.

He said that any policy enabling Indonesian companies to generate profit from lower-standard products and services should be terminated. (13)