Ruling on industry expansion needed

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)