Business & political cartels the greatest scourge of the nation

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Anthony Budiawan Managing Director of Political Economy and Policy Studies (PEPS)

IO – Almost all countries in the world, including Indonesia, prohibit unfair competition practices. The ban is stipulated in Law No. 5/1999 on the Prohibition of Monopolistic Practices and Unfair Business Competition. 

Unfair business competition is broadly defined to mean the dominant position of business actors achieved either through natural monopoly and oligopoly, or through business agreements to dominate the market (cartels), or through price-fixing agreements. 

Because these practices are detrimental to the public, they are strictly forbidden. Unfair business competition results in prices being unreasonably higher than what they would normally be when there is a healthy business competition. 

Unfair business competition will eventually crush smaller companies who are often disadvantaged. As a result, big companies will get bigger and have a dominant position in the economy, generating abnormally high profit margins. 

Despite the Anti-Monopoly Law, it has been indicated that much business competition in Indonesia is unhealthy. Violations are rampant. On the other hand, law enforcement is mostly illusionary. 

This can be clearly seen in the oil sector. Pertamina, itself or together with other business entities, has a dominant position in the RON 89 and higher product segment. This dominant position explains why the retail price of fuel did not descend some time ago, even though the global price of crude oil plunged. The fuel prices also remain stubbornly high at the gas stations. Therefore, the public should be suspicious that violation of the Anti-Monopoly Law has occurred. 

Monopoly, or dominant position, can occur if several or all companies in a certain industrial sector collude to dominate the market. This is what is known as a cartel. And cartels can also occur in Indonesian politics. Even recently political cartels thrive prolifically like mushrooms growing in the rainy season. 

While business cartels are economic parasites detrimental to society at large and so must be eradicated, political cartels are far more dangerous because they can destroy the nation and state. 

Political cartel is cooperation between political parties in regional or presidential elections, achieved through two maneuvers. 

First, determining the threshold in the nomination of a candidates in the regional or presidential election. The current threshold is 20 percent of the total number of seats in the House of Representatives (DPR)/Regional Legislative Councils (DPRD), or 25 percent of the aggregate valid votes in the selection of DPR/DPRD members. 

Second, major political parties enter into an agreement or form a cartel to determine candidates for regional or presidential election. They can easily carve out power turfs among themselves in various local elections. Even worse, this political cartel will destroy democracy because it can result in single-ticket candidate pairs for regional head or president, leaving the public with no alternative. 

Even though there are two pairs of candidates, a political cartel controlling potential vote of up to 75 percent can easily win a regional or presidential election. This is pathetic, and also embarrassing. Indonesia as a large country can be held hostage by a political system controlled by only a few party officials. 

Even more concerning, this political cartel is carried out in the open, without guilt, without shame. The impact of this political cartel is highly destructive, as it can destroy the nation and lead Indonesia down the path of a failed state. 

This is because the political cartel can extend their influence in the parliament, resulting in executive-legislative collusion, thus weakening the check and balance system or even making oversight nonexistent. 

The political cartel and collaboration between the government and parliament will eventually make business cartel thrive. The economy will be controlled by conglomerates and a small clique of party officials. The law will be harsh on critics but lenient on the elites, social inequality will increase, and Indonesia will be at risk of becoming a failed state. 

Therefore, the people must reject political cartels outright. The threshold for regional and and presidential nomination must be removed. Collusion among political parties must be limited, not exceeding 40 percent of the number of seats or valid votes, so that every regional or presidential election can be contested by at least three pairs of candidates. This is how democracy can be saved.