Study Shows Indonesia Rife With Unfair Trade Practices

Jakarta Globe, December 21, 2012

Unfair trade practices in Indonesia are highly prevalent and burdensome to the relevant national stakeholders, according to the Center for Indonesian Law and Policy Studies (PSHK).

“Unfair trade practices [UTPs] such as unfair pricing, misleading advertisements, undue use of bargaining power by big businesses, et cetera, are thought to be extreme and highly prevalent in Indonesia by 90 percent of representatives of relevant national stakeholder groups,” researcher Ningrum Sirait said in a statement on Friday.

Ningrum, PSHK’s lead researcher on competition issues and a vocal advocate for fair competition in Indonesia, identified those stakeholders as consumers, businesses and government officials.

She spoke at a one-day Policy Dialogue organized as part of a two-year regional research project implemented by the Consumer Unity & Trust Society (CUTS International). The international NGO conducts research and advocacy on various issues related to international trade, competition law and policy, economic regulation and consumer protection, in collaboration with PSHK.

The research was conducted across five member states of the Association of Southeast Asian Nations (Asean) — Indonesia, Malaysia, the Philippines, Thailand and Vietnam — with support from the International Development Research Center, an organ of the Canadian government.

“These very same stakeholders think that, even though the legitimate rights and interests of small businesses and consumers in the country are being negatively affected by these unfair practices, they are not receiving sufficient protection due to the ineffectiveness of regulatory and institutional frameworks,” Ningrum said.

Ahmad Junaidi, head of the public relations and legal bureau at the Business Competition Supervisory Commission (KPPU), called for harmonization of Indonesia’s legal and institutional frameworks and a reduction of uncoordinated policies across the various agencies that deal with unfair trade practices, with a focus on the welfare of consumers.

Junaidi affirmed KPPU’s support for the CUTS International project, and its findings and recommendations.

Udai S. Mehta, associate director of CUTS International, emphasized that the project, a pilot initiative, had been successful in pointing out and highlighting the problems and challenges within as well as across Asean countries related to unfair trade practices.

Providing an overview of the situation across Asean countries, Deunden Nikomborirak, director of the Thailand Development Research Institute, pointed out that unfair trade practices were highly prevalent in various sectors such as the retail trade, franchising, contract farming, and multilevel marketing, harming Asean consumers and small businesses.

However, the legal and institutional frameworks dealing with these practices remain very much inadequate across these countries, Nikomborirak said. Making matters worse, the frameworks are extremely different among nations, putting the issue of competition laws’ harmonization in Asean under the spotlight, Nikomborirak said.

The prospect of an Asean Economic Community by the year 2015, in which all member states share a unified competition law, is attractive to all stakeholders involved, Nikomborirak said. However, skepticism about the feasibility of that achievement has led some to urge a more realistic and cautious working agenda on the issue.

Friday’s meeting brought together more than 40 experts and academics within and beyond the Asean region.

Organizers also invited partners, advisors and select local government officials working in the field to discuss and exchange views on the nature and prevalence of unfair trade practices in the region, their impact on business growth and consumer welfare, and the legal and regulatory frameworks as well as institutions assigned and yet needed to deal with them.

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