Urip Hudiono, Jakarta – If a market becomes blighted by monopolistic, price-fixing or other uncompetitive practices at the expense of consumers, the only one to blame is the market regulator – which in the case of the economy is the government, a discussion has been told.

During Monday's discussion, University of Indonesia economist Faisal Basri said that a "market referee" – such as the Business Competition Supervisory Commission (KPPU) in the Indonesian context – will be of no use in improving market competition if the market regulator itself is inconsistent in doing so, a discussion has been told.

"The KPPU only plays a small part in the process of establishing a healthy and competitive market," he pointed out. "Most of the problems with market competition are due to the fact that the government has failed to perform its crucial roles."

The discussion, organized by the Center for Strategic and International Studies (CSIS) in cooperation with Germany's GTZ development agency, is the most recent edition of the annual reviews of the 1999 Monopolies Law and the KPPU's performance that have been held since the competition watchdog's establishment in 2000.

This year's review has been held against the backdrop of the KPPU's ruling that the Singapore state holding firm, Temasek Holdings, along with eight other firms, mostly linked to Temasek, had violated the Monopolies Law through its cross-ownership of Indonesia's two largest mobile phone operators, PT Telekomunikasi Selular (Telkomsel) and PT Indosat.

The ruling, which kicked up a storm, also ordered Temasek to sell its stake in one of the operators, and each defendant to pay Rp 25 billion in fines. In addition, Telkomsel, the market leader, was ordered to lower its tariffs to compensate domestic cell-phone users.

Faisal, who once served as a KPPU member, said that it was the government that was responsible for "creating, regulating, stabilizing and legitimizing" a market, with market "monitoring" being the responsibility of the KPPU.

"The government should not think about creating a market if it is not fully prepared to carry out its four duties. But that is what has happened most of the time," Faisal said.

"It's like telling boxers to go fight in a ring that has not been properly set up, with the rules of the fight still being drafted, and the jury not really caring about how the referee applies the rules. The outcome will obviously be messy."

He said that this might have been what happened in the Temasek case, with the government content to acquiesce in Temasek's cross-ownership and alleged price-fixing as it was itself enjoying ever larger dividends from both Telkomsel and Indosat.

The government also owns stakes in the two operators, although the Monopolies Law expressly exempts it from the ambit of the legislation, unlike the other defendants.

Ningrum Natsya Sirait, from North Sumatra University, concurred with Faisal in urging better regulation by the government, as well as improving the KPPU's human resources.

She said the KPPU urgently needed to equip itself with credible lawyers and economists who were knowledgeable about market competition, and not hesitate to become involved in a public debate if this would be helpful for improving the antitrust legislation.