Strength from competition

Strength from competition

The storm is still blowing through our economy. I do not
intend to forecast the future for our economy but I want remind
everyone that the era of fortress Indonesia must end.

Turning our country into a stronghold by using policies such
as non-tariff barriers to foreign entry and controlling domestic
distribution systems has not succeeded in helping local firms
hold onto the lions share of the domestic market and has not put
our country's comparative advantages, such as low cost labor, to
the best of use.

Japanese automobile manufacturers dominated our car market,
and indeed European and North American markets. Microsoft
dominates our computer software market. These companies have
risen to preeminence by concentrating on single markets. They do
not attempt to move beyond their field of expertise and, for
example, produce cement or do other business.

In this light it is interesting to note the announcement of
the top 200 tax payers in Indonesia. PT H.M. Sampoerna, a private
Indonesian company, was ranked fourth behind foreign-owned PT
Freeport Indonesia and two state-owned companies, PT
Telekomunikasi Indonesia and PT Indosat.

PT H.M. Sampoerna has risen to success by producing
cigarettes. Only cigarettes. By concentrating on one market in
which it has expertise, Sampoerna has risen to a position from
which it can compete with cigarette industry giants.

Honda, Microsoft and Sampoerna know their markets in great
detail and develop their products using this knowledge. They
compete in their respective markets on a level playing field,
without undue government assistance or protection. This open
competition has honed them into robust entities, capable of
weathering difficult times and reacting to changing circumstances
without depending upon help from the government.

There is a lesson in this for all Indonesian business.

MUHAMMAD SJAHRUDDIN

Jakarta