The absence of law enforcement

Winahyo Soekanto, Lawyer, Consumer Care Foundation, Jakarta, winahyo@yahoo.com

Among the most cumbersome consequences of the recent passage of the Broadcasting Law is that the existing private television stations, whose coverage is nationwide, will now have to reduce coverage in order to encourage the establishment of local TV stations.

This would mean a massive restructuring that affects the national stations' business plans and return on investments. It would also mean the reduction of some network coverage and the selling of used equipment to a third party -- which would very likely be the prospective local TV operators. Given the possible reluctance of the national stations to sell they would likely set high prices thus threatening negotiations and, ultimately, hampering public access to a greater amount of information and entertainment than the lawmakers wished for.

When it comes to publicly listed TV stations, these policy changes might reduce profitability or even cause losses to the public shareholders. On the other hand, prospective local TV operators would need not only a considerable amount of capital but also the financial strength to provide a service that would match the one previously provided by the national TV stations.

This case of "harmful" regulations harks back to what happened to the provision of Internet telephony licenses. The Internet service providers had previously made good use of the technology development operating in an almost vacuum of regulations. Once the government started to make regulations, however, dozens of operators -- many of whom were small and medium scale entrepreneurs who had invested billions of rupiah into their businesses -- were forced to cease operations. Not only had the government failed to give them a transition period, it immediately branded them illegal and raided their facilities and equipment.

Another example of a case where government regulations have harmed entrepreneurs took place under Soeharto's New Order regime. The government regulated that only large containers were allowed to operate in Tanjung Priok port. Owners of the smaller containers, many of which had not even paid off their bank loans, collapsed.

This is not a question of the size of the businesses affected by harmful regulations. Rather, this showcases how the government or regulators must adhere to the principles of fairness and transparency when applying business regulations. A protection of investment needs to be provided to old business players while opening opportunities for the newcomers. This would ultimately serve the consumers who need competition in order to get better services and goods. The cases above highlight our need for fairness and justice.

Justice, however, has been in absentia for so long here. One needs only to look at how the government has been dealing with bad creditors. We have been forced to watch how various complicated transactions have entrapped the government like the tentacles of a giant octopus in cases of violations of credit limits and the BLBI. The government appears to be afraid to take stern measures against those "big bad wolves" for fear of causing a collapse in the national banking system. Remember how not only the banking system but the New Order regime itself had collapsed.

Now the people are traumatized because the resulting economic crisis has led to the unemployment of 40 million people, rocketing prices and the impoverishment of half of the Indonesian population. Subsidies of public utilities were then cut, saving maybe one or two trillion rupiah but throwing even more people into the depths of despair due to their inability to afford basic commodities. The irony was of course that the government was more than willing to pour trillions of rupiah into recapitalizing bad banks at the expense of the state budget.

Anyone with even a minimum understanding of the law can see how the negotiations between the government and the business violators have been proceeding with no respect for the legal differences between criminal and civil accountabilities. The recent release and discharge for errant entrepreneurs and bankers showcases how kind and gentle the government has been to them, at the expense of due legal process. With noted lawyers standing by them, the errant businessmen were able to cause the government to buckle and bow to their wishes for settlements geared only to save their own hides.

When it comes to applying policies that will immediately affect the community at large, the government can be ruthless indeed. The government has basically ignored the more popular policies (that would actually, eventually, improve the state budget and the government's public image) such as fighting inefficiencies, corruption and leakages of funds. In essence, the government has clearly preferred to apply populist policies for the major businesses but less than popular policies for the people.

The sad thing is that the ordinary people and consumers of those policies do not usually have access to famous lawyers to help them persuade the government to be more generous. Indeed, the value of the reduction of those subsidies is now close to nothing in comparison to the expenses incurred by the government in its transactions with the errant entrepreneurs.

No matter how loud the public screamed, the government decided to proceed with the planned increase in telephone rates -- a sacrifice imposed on the public for the sake of attracting foreign investment. What will happen when the rate has increased and foreign investments remain low due to a host of other factors including high-cost businesses, inefficiency, the absence of transparency, and poor anticorruption campaigns? When will the time come for the government and its officials to make sacrifices?

The recent closure of the Sony electronics plant and its plan to move to Malaysia by March 2002 is an example of the government's reluctance to make sacrifices for the sake of the public. It has been revealed that a lack of transparency in taxation and excise were factors that made Sony take the decision -- which will mean more than 1,000 workers will be jobless.

What has the government done to persuade Sony to change its mind or to persuade other foreign investors to remain here, and provide employment for the Indonesian workers. What will it do? There are at least three months to go for the closure to become effective, and for the government to take action.