Competition policy in Indonesia: Conglomerates versus SMEs

Since the currency crisis, Indonesia has undergone rapid economic and political changes. However, the IMF-directed recovery program, such as decentralization, does not seem successful. Despite the improvised legal system, the implementation of the recovery program is very poor. Lack of consensus on the role of conglomerates and the direction of competition policy, has prevented Indonesia from recovery. Anti-conglomerate sentiment of the post-Suharto times has given rise to unbalanced competition law and inconsistency among related laws. Treatment of the banking sector including ownership is a critical factor in the recapitalization process. Due to the similarity between Indonesia and Korea, Korean experiences would help Indonesia to establish the principles on competition policy. The separation principle is strongly recommended for Indonesia at the current development stage, and it is urgent to establish a rule-based, not a discretion-based, economy. The problems of conglomerates should be resolved through comprehensive competition policies.