Indonesian business groups denounce verdict

By Salim Osman, Indonesia Correspondent
The Straits Times, November 21, 2007


JAKARTA - THE Indonesian competition watchdog's verdict that Temasek Holdings' stakes in the country's two largest mobile telcos broke anti-monopoly laws has been branded a 'death knell' for foreign investment.

Business-oriented Indonesian NGOs joined forces with the Federation of State Enterprises Employees Union to level the charge, adding that the ruling robs investors of the certainty that any money they put into the country is safe.

At the same time, a former watchdog member said the verdict had 'killed competition'.

Indonesian presidential spokesman Dino Pati Djalal yesterday told The Straits Times that he hoped the ruling would not affect continuing Singaporean investment in his country.

But foreign investors now fear that they cannot expect fair treatment from Indonesian government agencies and the judiciary.

Reacting to the KPPU verdict, Mr Peter Fanning, chairman of the International Business Chamber in Jakarta, said investors expect competition to be regulated 'under rules which are easily understood, and which are applied consistently and impartially'.

He added: 'That fairness must include its treatment of foreign investors.'

Otherwise, he said, investors would not be able to act with the confidence that their commitments will be honoured and protected.

Also yesterday, economist Pande Raja Silalahi said the verdict appeared strange because 'the KPPU's function is to maintain business competition, but through its decision it has killed competition'.

'I can't see what the reason is for any of its decisions against Temasek,' said Dr Pande, a senior economist at the Centre for Strategic and International Studies and a KPPU commissioner until January.

Meanwhile, three non-governmental organisations yesterday held a joint press conference denouncing the verdict.

They were the Indonesia Development Monitoring Group, the Business Competition Monitoring Group and the Federation of State Enterprises Employees Union.

The union had triggered the original investigation by lodging a complaint against Temasek in October last year, but later reversed its stance after realising it was 'being made use of' by 'certain parties' against the Singapore company.

Yesterday, a spokesman for the trio said the verdict was a 'death knell' for foreign investment.

'There is no legal certainty for investment. Temasek was invited to buy shares in Indosat some years ago but is now being accused of holding a monopoly,' Mr Habiburrahman said.

The Jakarta Post also joined in the chorus of criticism of the KPPU yesterday.

In an editorial, the paper said the 'questionable' ruling has just added 'more evidence of the legal uncertainty that has kept most foreign investors away from Indonesia'.