20 January 2020 (closed)
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Indonesia's Business Competition Supervisory Commission (KPPU) penalized 32 Indonesian cattle importer and beef feedlot companies with a combined IDR 107 billion (approx. USD $8.1 million) in fines on grounds of the practice of unfair competition. These 32 companies have been found guilty of forming a cartel with the aim of controlling local beef prices, curtailing beef imports, and curtailing the distribution of beef at the expense of the Indonesian consumer, particularly in the Greater Jakarta area.
The decision was read by KPPU Commissioner Chandra Setiawan on Friday (22/04). The companies, which includes the local unit of Australia-based agribusiness giant Elders, have been given 14 days to make an appeal. KPPU Commissioner Tresna Soemardi added that the institution found evidence - including statements from witnesses - that these 32 companies have been manipulating beef prices by curtailing the distribution of beef products on the domestic market as well as curbing imports of beef (hence causing inflationary pressures) by not making full use of their allowed import quota. This caused an "unnatural" price rise that benefits the earnings of the companies involved but comes at the expense of the Indonesian consumer.
Muhammad Syarkawi, Chairman of the KPPU, said these illegal actions of Indonesian beef importers are actually the result of weak government policy. The Indonesian government provides import quotas to a selection of companies that therefore are in a position to more-or-less determine the prices (because in terms of beef, Indonesia is still highly dependent on imports). In this situation it is very tempting for these companies to take advantage and curb the amount of imported beef in order to let prices soar. The beef price went as high as IDR 130,000 (approx. USD $9.85) per kilo in mid-2015, reason for the KPPU to start an investigation. Since 2010 - when the Indonesian government announced its "beef self-sufficiency program" - the government has been curtailing the beef import quota, hence undermining earnings of these beef importers in order to boost domestic beef production. This thus provided another incentive for these companies to engage in actions that would secure quick earnings.
Projection of Indonesia's Local Beef Production and Imports:
in thousand tons
Source: Investor Daily
Indonesia's Chamber of Commerce and Industry (Kadin Indonesia) did not agree with the decision of the KPPU as it is considered to undermine legal certainty in the beef sector and results in the loss of jobs. One the companies that is fined, Agro Giri Perkasa, has already stopped operations, resulting in the sending home of about 100 employees.
Besides beef, there are also recurring stories of cartels in other sectors (such as rice and soybean) where alleged unethical actions of companies result in price swings at the expense of the consumer. The KPPU is currently investigating unusual fluctuations in the supply and price of rice.
32 Companies Fined by the KPPU:
|Agrisatwa Jaya Kencana||Catur Mitra Taruma||Karya Anugerah Rumpin||Rumpinary Agro Industry|
|Agro Giri Perkasa||Citra Agro Buana Semesta||Legok Makmur Lestari||Sadajiwa Niaga Indonesia|
|Andini Agro Loka||Elders Indonesia||Lemang Mesuji Lestary||Santosa Agrindo|
|Andini Karya Makmur||Fortuna Megah Perkasa||Lembu Jantan Perkasa||Septia Anugerah|
|Andini Persada Sejahtera||Great Giant Livestock||Mitra Agro Sampurna||Sukses Ganda Lestari|
|Austasia Stockfeed||Kadila Lestari Jaya||Mitra Agro Sangkuriang||Sumber Cipta Kencana|
|Bina Mentari Tunggal||Kariyana Gita Utama||Nusantara Tropical Fruit||Tanjung Unggul Mandiri|
|Brahman Perkasa Sentosa||Karunia Alam Sentosa Abadi||Pasir Tengah||Widodo Makmur Perkasa|
Source: Investor Daily
What about the education cartel that charges 500,000,000 to 1,000,000,000 Rp to get into government medical schools to become a doctor (none of the money goes to the government all is corruption) or the money to get into school to become a policeman (the second most expensive school in Indonesia). Why can't KPK get them because all the government schools are involved?