Temasek must follow Indonesian laws, says Indonesian V-P Jusuf

Ruling also sparks private plan to buy back foreign stakes in Indonesian telcos

By Salim Osman, Indonesia Correspondent The Straits Times, November 22, 2007

'Whoever wants to do business in Indonesia, he or she must abide by Indonesia's laws... They should not get angry when they are given sanctions, and say the investment climate in Indonesia is bad.'
INDONESIAN VICE-PRESIDENT JUSUF KALLA











JAKARTA - INDONESIA'S Vice-President Jusuf Kalla says Singapore's Temasek Holdings should respect Jakarta's competition watchdog's verdict that its stakes in the two biggest Indonesian mobile telcos broke anti-monopoly laws.

The watchdog on Monday ordered Temasek to sell its stakes in either Telkomsel or Indosat.

And in his first comments on the case, Mr Jusuf yesterday said the investment company must abide by laws designed to prevent monopolistic practices and promote healthy business competition in Indonesia.

'Whoever wants to do business in Indonesia, he or she must abide by Indonesia's laws. They often ask us to abide by their laws, and so they must also abide by our laws. They should not get angry when they are given sanctions, and say the investment climate in Indonesia is bad,' said Mr Jusuf at a business function in the Indonesian capital.

He also said the Business Competition Supervisory Commission, or KPPU, was a legal institution operating like a court of law.

'So, it's not a question of whether the government supports the decision of the KPPU or not. It's more a question of law enforcement, so that business competition in Indonesia remains sound and proper,' he added.

But he stopped short of directly criticising Temasek's plan to fight the ruling, saying any aggrieved parties were entitled to appeal against the decision.

His remarks were echoed by an Indonesian presidential spokesman in Singapore for the Asean summit.

Temasek issued statements in Singapore on Tuesday, saying that it will go all the way to international arbitration, if need be, to contest the verdict.

Mr Jusuf's interest in the case is well known, as he was among the politicians who last year urged the government to buy back Indosat shares sold to Temasek subsidiary ST Telemedia, under a 2002 privatisation programme.

The KPPU verdict has also given fresh life to the movement to buy back the shares.

A member of the parliamentary commission on foreign affairs, Mr Effendy Choirie, welcomed what he said were the first signs of resistance to the 'onslaught of capitalist alliances', which he said were trying to monopolise strategic sectors of the Indonesian economy.

He also said it was time to take things further, by investigating those behind the 'questionable' Indosat sale.

'Now we should go on and take the next step: all those who sold Indosat and also Telkomsel must be legally investigated, including Laksamana Sukardi,' the National Awakening Party politician added.

Mr Laksamana was the state enterprises minister at the time.

Also yesterday, a group of Indonesian professionals, calling itself Masyarakat Profesional Madani (MPM), announced a drive to buy back shares held by foreign companies in Indosat and Telkomsel.

MPM chairman Ismed Hasan Putro said his group, which includes the Vice-President's daughter Ira Jusuf Kalla, had already raised 300 billion rupiah (S$47 million). It plans to set up a consortium with local businessmen to raise enough money to acquire the shares.

The group says the buy-back plan is a response to remarks by State Enterprises Minister Sofyan Djalil that the government has no plans to buy back Indosat shares from ST Telemedia.

Mr Ismed told reporters at a press conference: 'We have to build up the means to free our economy from foreign domination.'

Meanwhile, Mr Sofyan also said yesterday that the KPPU's ruling that Telkomsel had imposed excessive tariffs and should reduce them by 15 per cent was groundless.

He said such a move would kill small-time operators, and added: 'I have instructed Telkomsel to appeal against the verdict.'