KPPU vs Temasek: GoI should be punished as well

In the previous short article I wrote that the GoI shoud be punished as well. I received some private messages from friends asking why. Here I will describe what my though is.

As we can see that the ownership of the GOI (via PT. Telkom) on Telkomsel is 65% and 14.5% on Indosat. It means that the GoI (via PT. Telkom) has the largest owner of Telkomsel and second largest owner of Indosat. It is all the way around with Temasek Hodlings which has the largest owner on Indosat (40.77%) and the second largest owner on Telkomsel (35%). So, why KPPU does not punish GoI?

It is simply because the Law Number 5/1999 (Article 50) give an exception to the government by assumption that the corporate implements government’s mission on behalf the law and, of course to maximize consumer welfare. However, can the GoI ensure that the companies well perform to achieve the goals? It is clearly NO. The evidence provided by the KPPU is pretty good to show that the Telkomsel and Indisat are not maximizing welfare.

Telkom as the owner of Telkomsel also has similar behaviors. Its services on fixed line telephony, international connection and internet connection are very awful. In short, I think the law should be reformed, barriers to entry should be eliminated and invite new players. After that, we can hope that the market could be more competitive, and result low prices and good quality of services.

Note: This article was written by assumption that price fixing is the main problem of Temasek case. After full report of KPPU decision launched, according to KPPU the problem is price leadership. You can find more detail my analysis in bahasa here.