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)