Ruling on industry expansion needed
JAKARTA (JP): A member of the House of Representatives suggested that the government introduce regulations restricting companies which operate in the upstream industry from expanding activities into the downstream.
Erie Soekardja of the House's Commission VI, which is in charge of the manufacturing and energy industries, told The Jakarta Post on Saturday that such restrictions are necessary to prevent further concentration of industrial chains, ranging from upstream to downstream activities, into a limited group of companies.
A number of major business groups control certain industries, from upstream to downstream, giving them a strong hold in certain industrial sectors. The Salim Group, for example, controls the production of flour and related products, including noodles, while the Sinar Mas Group has a strong hold in the production of logs for note books.
State Minister of Investment Sanyoto Sastrowardoyo said last week that President Soeharto verbally instructed him to avoid giving licenses for downstream industrial production to investors who have operations in the upstream industry.
"We received the instruction verbally and we will implement it beginning today, even though there are no written regulations on the matter," Sanyoto said. "We don't have to wait for the introduction of an anti-trust law for its implementation."
However, he acknowledged that the government cannot ask business groups which have control in industrial productions ranging from the upstream to the downstream to abandon part of their operations.
Erie Soekardja said on Saturday that it is also impossible to stop such business groups from expanding their operations in downstream activities.
Power
"But the government must provide certain rulings which have the legal power to regulate it properly, so that business groups which already have a tight grip on upstream industries will not dominate it all the way to the downstream," he said.
"What people are worried about now is that certain groups will dominate not only upstream industries but also intermediate and downstream industries which, in turn, will burden the consumers," he said.
He warned that the government would be wise to introduce such a restriction. Otherwise, it could give a bad picture to the world in that Indonesia is not committed to its campaign of liberalization and privatization.
Soetrisno Bachir of The Indonesian Association of Young Businessmen said on Friday that licensing investors, who have a grip on the upstream industries, to be able to expand activities in the downstream will only legitimate their monopolistic practices.
Erie called on the government to find ways on how to give equal chances to all members of society to reap the benefits of development.
Sharing Erie's view, Adi Putra Taher said the government should give financial support to small and medium businesses which have acquired government permits to work on downstream industries.
"Such supports will stimulate the emergence of newcomers and nourish them to be strong and solid businessmen," Adi Putra told journalists. (rid)