Jakarta (12/11) – Indonesia Competition Commission (ICC) disclosed the results of its supervision of the issues of PCR (Polymerase Chain Reaction) and nickel grade verification coming to the fore in the public in the last few weeks during a virtual meeting with the media today in Jakarta. The said two issues have recently become the limelight, thus, it is important for ICC to convey the developments of the supervision of the said two issues. The developments were set out by the Deputy for Research and Advocacy, Taufik Ariyanto, Director of Economy, Mulyawan Renamanggala, and Director of Investigation, Gopprera Panggabean.

ICC explained in its presentation that it had assessed PCR industry, including holding discussions with various parties (such as BPKP [Finance and Development Supervisory Board], Persi [Indonesian Hospital Association], Gakeslab [Association of Entrepreneurs for Laboratory and Health Equipment], ILKI [Association of Indonesian Medical Laboratories], ICW, and the like), monitoring/surveying tariffs in the entire areas of ICC's regional offices, national and ASEAN data analysts, and provide policy recommendations for the Ministry of Health. Based on the said assessment, ICC is of the view that government policy through the highest retail price (HET) instrument can constitute the best policy at the moment because the PCR test services are inelastic in nature and cannot be left fully to the market mechanism.

ICC found that some of the PCR test prices were close to or exactly the same as the set highest retail price, while at the same time, the record of the assessment showed that the PCR test formation price components, especially the cost of reagents highly varied. At the moment (as of September 2021), the reagent cost component reaches 49.27% - 55.15% of the cost of the PCR test. The components reached 50.79% - 51.86% before September 2021. This means that the reagent price component is still a determining factor for the cost of the PCR test. Since the reduction of the highest retail price (HET), we have seen that the price of reagents has decreased following the HET reduction policy of the RT-PCR Test. The laboratory side co-adjusts the test price by making the overhead components, consumables and administration costs efficient.

At the moment, there are 60 brands of reagents that have obained circulation permits from the Ministry of Health. Most of the reagent imports as of 2020 were conducted by the private sector (85.07%) as well as the government and other institutions (14.92%). The proportion of imports by the private sector until September 2021 increased to 93.84%, meanwhile the imports by the Government and other institutions decreased to 6.15%. In terms of the market concentration, the four private importers (concentration ratio/CR4) reached 29.17% (2020) and 18.90% (2021). The above condition can still be deemed competitive, if based on the said CR4. With such market conditions, there should have been efficiency that can still be made.

ICC also sees that during the pandemic, the Government has granted facilities to import medical devices including PCR reagents, hence, there are many reagent importing companies. However, the assumption of the reagent price constituting the government benchmark in calculating the HET is not known yet at the moment. In practice, the reagent prices can be adjusted by suppliers to 37.29% on average post the PCR tariff determination in August 2021. This may indicate the existence of the role of reagent importers and distributors in exerting influence on the PCR rates. With due observance of the said findings, ICC will deeply delve into the reagent importers and the potential existence of business groups within the laboratory business actors in the future. On the other hand, ICC calls on the Government so as to be more overt in calculating the highest retail price so that the supervision of the PCR test price with regard to the HET policy made by the Government can be more effective.

With regard to nickel, ICC explains that it has observed the nickel industry for a long enough period, especially concerning the industrial structure and existing policies. The issue that has come to the fore in the public at present is the difference in the results of the verification of the nickel grade which is significantly different between the surveyors of the mining companies and the surveyors of the smelters. This has become the focus of attention of ICC and is still in the process of sudying such initiative case so as to identify the focus of its competition violation. During the process of the study, ICC has summoned and held discussions with various parties, such as Association of Indonesian Nickel Miners (APNI) and the Ministry of Industry as well as other related parties.