Soeharto asks large businesses to end monopolies

Soeharto asks large businesses to end monopolies

JAKARTA (JP): President Soeharto yesterday called on large
businesses to stop their monopolistic practices as they are at
odds with the country's constitution.

"Bapak President said large businesses may not monopolize any
sector as monopolies contradict the Constitution of 1945," the
chairman of the Association of Indonesian Indigenous
Entrepreneurs, Iman Taufik, said after meeting with Soeharto.

The President, according to Taufik, quoted article 33 of the
constitution, which stipulates that Indonesia's economy shall be
organized on the common principle of the family system.

Therefore, Soeharto continued, there should be partnerships
among state firms, cooperatives, as well as large, medium and
small businesses.

"Now, we should look for ways to ensure these large
entrepreneurs do not lose direction in developing their
companies," Soeharto was quoted by Taufik as saying.

Soeharto, when launching a national business partnership drive
on Wednesday, said that it is expected to reduce business
concentration, which, if not reduced, could widen the existing
gaps between large and small businesses.

According to the Central Bureau of Statistics' latest annual
manufacturing survey of medium and large industries, the
percentage of total industries with a four-firm concentration
ratio (combined output share of the four largest firms) above 70
percent declined from 38.2 percent in 1975 to 23.6 percent in
1990, but increased again to 30 percent in 1993.

Soeharto, however, warned yesterday that when analyzing the
current gaps between large and small businesses, people should
not put all the blame on large businesses as business
opportunities have been given to everyone according to their
capacity.

He suggested that the partnership between large and small
businesses be based on clear rules, so that it would not burden
the people.

"Therefore, such a partnership must be based on mutual
benefits, not pities, as the government does not force the large
ones to cooperate," Soeharto said.

He added that the partnership should help small enterprises
and cooperatives improve their business capability in terms of
prices, quality and delivery of products.

Taufik noted that his association, which groups merely small-
and medium-scaled businesses, hailed the partnership drive,
saying that "it deals with national interests."

Soft loans

Meanwhile, tycoon Eka Tjipta Widjaja, chairman of the Sinar
Mas Group, suggested yesterday that the government seek soft
loans abroad to help accelerate the development of small and
medium sized businesses in the country.

Speaking to reporters at a gathering organized by the Forum
for Inter-Associations of Indonesian Companies yesterday, Eka
said the interest rates on the loans for small businesses should
be set at under 10 percent per annum.

"We can get cheap foreign loans at annual interest rates of
between 6 and 7 percent. This will precipitate the development of
our small businesses," he noted.

Eka is a member of the so-called Jimbaran forum, which groups
most of the country's prominent tycoons who pledged in Jimbaran,
Bali, last year to help the government eradicate poverty by
forging partnerships with smaller businesses.

Concurring with him was I Njoman Moena, an economic analyst,
who noted yesterday that procuring soft loans from abroad could
an alternative way to speed up the development of small and
medium-scale businesses in the country.

Asked by reporters what could be the impact on the current
account deficit if such loans are allowed, Moena said that it
would only slightly affect the balance of the country's current
accounts if they are provided carefully.

"If we use such foreign loans to finance small businesses to
make goods for exports, there will be no problem," he said.

He acknowledged that the current interest rates in Indonesia
are too high compared to those in foreign countries.

"The high interest rates have already dented our competitive
edge in the international market," he said, adding that currently
the lending rates in Indonesia are already over 20 percent per
annum, while Indonesian competitors abroad have only to pay the
rates of between 7 and 8 percent.

"We're facing a dilemma. If we lowered the rates now, it could
worsen our overheated economy, but if we don't, it will blunt our
competitive edge," he noted.

He stressed that if the economic growth requires deregulation,
the equal distribution of wealth requires protection and subsidy.

"But we should make sure that only small businesses shall get
such protection and subsidies," he said, adding that according to
past experience many non-small businesses got protection and
subsidies. (13/rid)