POLITICS, REGULATION AND ANTI-TRUST ENFORCEMENT IN INDONESIA. By Didik Rachbini Commissioner, KPPU, Indonesia

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Christina Chambers
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1 POLITICS, REGULATION AND ANTI-TRUST ENFORCEMENT IN INDONESIA By Didik Rachbini Commissioner, KPPU, Indonesia 1

2 I. Political Challenges If you want to know our economy you have to understand our politics If you want to know our politics you have to know our culture 2

3 1.1. Politics & Culture Politics is influenced by culture and norms which is existing in the society Indonesian politics has been much influenced by feudalistic culture, especially since last three decades Feudalistic culture influence politics during New Order Regime (less transparancy, authoritarian, crony capitalism, monolitic) 3

4 In the feudalistic government, there is no clearcut between state-public domain and business-private domain There was only dominant power under the president The only power, the president office, influenced large business which were regulated 4

5 Existing unfair business competition due to state regulation State created corporatism Rent seeking motives was related to the state power Politics with feudalistic culture create corner of previledge, regulated sector with intention of rent seeking, and unfair business competition 5

6 1.2. Present: Herritage of the Previous Order : New Order Government (the most influential regime in the modern Indonesian Economy) State power too strong under authoritarian regime Its characteristic feudalism As a results many regulated sectors with high concentration ratio 6

7 Strong and closed relationship between state (power in the president office) and the businessmen Politics produced legal system, including economic regulation which tends to serve rent seekers Many regulated sectors were in line with the interest of closed businessmen near the state (president) 7

8 Legal rules which affect business conduct: rent seeking, special license that create monopolistic structure, corner of previledge, businesses serve the power Legal rules related with politics: regulation was coopted for only small group of businessmen near the state power (president) Regulated sectors were derivative of rent seeking activities 8

9 Many regulation has been atached to specific sector through state owned companies and private companies Many regulated sectors has been existing since 1970 s High concentration ratio in many industries 9

10 1.3. Present Competition Competition law has been launched since 1999 after fall of Soeharto regime Still there are many existing indutries with high concentration ratio which make difficult to implement competition policy (wheat flour, glass, palm oil, noodle, etc) Competition authority is being developed institutionally to meet the objective of the law 10

11 II. Enforcement & Challenges in Institutional Level 2.1. Handling Cases Obstacles in obtaining public trust and confidence since KPPU is new institution The initial cases was handled carefully from the choice of cases to the final stage of process Cases selected was considering the direct benefit for the public 11

12 Legal proces in court was misunderstood Many strategic cases were mishandled by the court Major challenge is in the court system KPPU started to have cooperation with supreme court to train judge in competition law to minimize such obstacles 12

13 2.2. Policy Advice/Advocacy KPPU is an independent institution outside the excecutive body (government) To promote economic development in line with competition policy, KPPU has a policy instrument, i.e. policy advice (formal) The obstacles are many diferent perception as well as misunderstanding in promoting competition policy 13

14 There are many policy launched by the covernment in contradictory with competition policy Previous government was initiator of anticompetitive policy Many sector in the economic system has still under monopolistic and oligopolistic structure 14

15 2.3. Bureaucratic Culture The culture of the organization in the government as a whole in one of obstacles in promoting competition policy Team work is weak, too much bureaucratization, as well as problem of leadership in the government 15

16 2.4. Institutional Development KPPU is a new institution with some weaknesses (human resources, organization, system, etc) This obstacle is tried to be solved with capitalization of the office, development of protocols and procedures, flow of information, recruitment and To stregth the standard process, training, career planning, development of further legislation required, and operationalization 16 guidelines

17 2.5. Obstacles in Strategic Alliance This is handled through Communication Program in order to get support of the public and to develop alliances with potential strategic allies It is important be able to alleviate the monopoly and unfair business practices issues in competition with current main issues such as macroeconomic restoration and political issues both in media and at decision-making level 17

18 The main obstacles are level of consciousness of the media and journalists Competition policy is a new issue in the country that is frequently misunderstood by the public For instance, the existing dominance position is directly recognized as guilty whics is then forced by the press to be punished by KPPU 18

International Competition Network Unilateral Conduct Working Group Questionnaire

International Competition Network Unilateral Conduct Working Group Questionnaire Agency Name: Commission for the Supervision of Business Competition Date: October 2009 Refusal to Deal This questionnaire