State firms could be exempted from antimonopoly law

State firms could be exempted from antimonopoly law

JAKARTA (JP): State-owned firms which control certain goods
and services could be exempted from the newly approved
antimonopoly law, a senior official at the Ministry of Industry
and Trade said on Tuesday.

The ministry's secretary-general, Muchtar, said exemptions
would, however, be given only on the condition that the goods or
services provided by the state firms were vital to the public.

"BUMNs (state-owned firms) and other government-owned
institutions will not be exempted from the antimonopoly law
unless they provide goods and services which benefit the public,"
he said.

The government currently is identifying which goods and
services could receive the exemption, he said, adding that the
good and services which would be excluded from the new law would
be regulated by another law.

Muchtar said Minister of Trade and Industry Rahardi Ramelan
sent letters to all ministries and government institutions to
list which goods and services under their supervision affected
the lives of the people.

"But so far only the Ministry of Manpower has sent back its
list to us," he said.

He acknowledged, however, the government still had to find a
set of appropriate criteria to determine which goods and services
could be categorized as vital to the public.

Cooperatives, he said, also would be excluded from the new
antimonopoly law if they produced and distributed goods for
consumption by its own members, not the general public.

The antimonopoly and unfair competition law, passed by the
House of Representatives in February and ratified by President
B.J. Habibie on March 5, prohibits companies from holding more
than a 50 percent share of the domestic market.

Companies breaching the law are liable to a maximum fine of Rp
100 billion (US$11.76 million) and six-month jail terms for
company executives.

However, the law stipulates that a company will not be
penalized if an independent commission finds the company's market
share was gained through efficiency and the company does not use
its dominant position to restrict new entrants to the market.

The independent commission -- the Business Competition
Supervisory Commission -- will oversee the implementation of the
law. Its members will be appointed by the President with the
House's approval.

Many observers, however, are pessimistic about the
independence of the commission because the appointment and
retirement of its members largely is decided by the President.

They also said that article no. 50 in the new law, which
stipulates exemptions from various government regulations,
increased the likelihood of collusion between officials and
businesspeople.

Muchtar blasted the skeptics, saying the independence of the
commission was not determined by the person who appointed its
members but by the commission itself.

"Even though its members are appointed by the President, that
does not mean the commission is not independent .... "

He said the government had not yet named the members of the
commission, but all members would be "clean" and not affiliated
with any corporation.

He said the government also would review some of its existing
regulations which do not conform with the antimonopoly law.

Muchtar also said the antimonopoly law prohibits vertical
integration if it leads to monopolistic practices and inflicts
losses on consumers.

"We admit that the antimonopoly law is not perfect because it
was made by humans. It has many loopholes and it will take years
to perfect the law."

"But Indonesia needs to implement such a law, especially ahead
of globalization and the free market era. We're already late in
implementing such a law...," he said. (gis)