Jakarta's verdict on Temasek case

The Straits Times, October 26, 2007
The Straits Times, November 19, 2007


WHAT IT IS

INDONESIA'S anti-monopoly watchdog is set to issue a verdict today in the anti-monopoly case against Singapore's Temasek Holdings.

Indonesia's Business Competition Supervisory Commission (KPPU) has charged that Temasek's stakes in the country's top two cellphone operators, Telkomsel and Indosat, are in breach of anti-trust laws.

Temasek's wholly owned subsidiary, ST Telemedia, controls 75 per cent of Asia Mobile Holdings, a company which owns 40 per cent of Indosat. It also has a stake in Telkomsel through SingTel's 35 per cent share in the telco.


WHY IT MATTERS

The judgment on the case will be watched by other foreign investors in the country and those planning to enter Indonesia's markets by picking up shares in divested local companies.

ST Telemedia bought almost 42 per cent of Indosat shares at 50 per cent above market price when it was invited by the Indonesian government to participate in its privatisation of the telco in 2002.

SingTel had bought a 35 per cent stake in Telkomsel in 2001. Both purchases had been cleared by the government.

The case raises questions about legal certainty of investments by foreigners in Indonesian firms and the influence of political sentiments on such investments.


SALIM OSMAN