ICC Held A Competition Outlook For 2022.

Wednesday, February 23, 2022

Jakarta (31/1), The projection of business competition in 2022 is considered to be getting healthier, this is in line with the increasing projection of Indonesia’s economic growth, from 3.7% to 5.2%. The industrial structure is still oligopoly and vertically integrated, more acquisitions has increased market concentration, and the digital economy ecosystem is becoming increasingly dominant. This was conveyed by Commissioner Ukay Karyadi in the Competition Outlook 2022 event held in Jakarta. This activity was opened by Vice Chairman Guntur S. Saragih and Indonesian Minister of Investment, Bahlil Lahadalia, and joined by Member of the Board of Commissioners for Supervision of Bank Indonesia, M. Nawir Messi and Vice Chairman of the Standing Committee for Business Competition at the Indonesian Chamber of Commerce and Industry, Kamser Lumbanradja, as the Speakers.

The presented projection for 2022 was in the cellular telecommunications industry, chicken broiler industry, cooking oil industry, cement industry, and mining industry. Meanwhile, in the M&A trend, it was projected that there will be many M&A transactions carried out by business actors in 2022, with the aim of increasing efficiency, increasing market share, or entering new industries. The rise of business actors in the digital economy who acquire banks to become digital banks can also form a digital economy ecosystem that increasingly binds consumers to certain platforms.

The projection of competition is also seen in the sectors that will continue to grow in 2022, namely trade, processing, health, agriculture, and mining. This can be seen from the economic growth in the 3rd quarter of 2021 and the results of the business competition index in 2021. The behavior of dominant and integrated business actors is also projected to still occur in 2022. This is due to the ongoing COVID-19 pandemic and the emergence of new innovative business actors who can compete with very small incumbent business actors. This is in accordance with the World Bank statement that 97% of large business actors will receive assistance during the pandemic compared to MSMEs which is only 57%, and this situation will further strengthen the dominant position of the incumbent business actors.

Seeing the value of the Incremental Capital Output Ratio (ICOR) which is quite high in 2020-2021, ICC predicts that this value will be reduced, this indicates a fairly large performance inefficiency. Along with the economic recovery in 2022, demand will continue to increase, so that business actors will increase production which resulted in increased productivity. Likewise, the profit levels of dominant companies in several industries will be even greater, due to the high barriers to entry. As a result, the profit rate will be higher as the economy recovers.

In terms of regulation, the Government policies on handling the impact of pandemic will affect business competition in a number of industries. With the Government policy of prioritizing environmental sustainability, it will change the company’s strategy which will ultimately affect business competition. In addition, the Government policy of price stabilization and the regulation of the new State Capital Law, will affect business competition.

Global economic developments in 2022 are starting to gain momentum but are still constrained by the presence of a new variant of COVID-19 and the slowdown in the Chinese economy. Nawir estimates that economic growth will reach 4.9% in 2022, and the trade sector is also expected to slow down by growing only by 6.7%. In the trade sector, supply chain activities will also have an impact on developing countries that affect the flow of goods and services in particular, and affect commodity prices which are still high.

During the pandemic, many businesses went bankrupt which forced them to sell their assets at auction or to restructure. In restructuring, ICC can cooperate with the government to monitor the company’s auction assets and supervise that the purchase of auction assets is not carried out by one actor, this can prevent the growth of assets that are becoming increasingly concentrated.

Meanwhile, the Indonesian Chamber of Commerce and Industry (KADIN) believes that the Indonesian economy will rise, supported by two main industries, namely the digital technology sector and the manufacturing sector.