Temasek call confusing, says IBC

The Jakarta Post, Jakarta

The decision by the country's anti-monopoly watchdog in the high-profile Temasek Holdings case is at the very least confusing, and sends "unfortunate impressions" and "negative messages" to members of the business community, says the International Business Chamber.

"It's very hard to understand, and for that reason itself it creates an unfortunate impression and negative message. The law seems clear enough, but the application of the law by the KPPU to this particular situation is very confusing," chairman Peter G. Fanning told The Jakarta Post on Thursday.

Fanning chairs the IBC, which groups together 17 international chambers of commerce operating in the country.

The Business Competition Supervisory Agency (KPPU) found Monday that Temasek Holdings and eight other companies, including Temasek's subsidiaries, Singapore Technologies Telemedia (STT) and Singapore Telecommunications (SingTel), were guilty of breaching the Monopolies Law, which prohibits a company or a business group from owning a two or more companies with a market share of more than 50 percent.

Temasek controls 54.15 percent of SingTel, which in turn owns a 35 percent stake in Indonesia's largest cellular phone operator, PT Telkomsel. Temasek also wholly owns STT, which controls a 75 percent stake in Asia Mobile Holdings, which in turn owns a 41.9 percent stake in PT Indosat.

Telkomsel and Indosat have a market share of about 80 percent in the mobile telephone industry.

In addition to imposing hefty fines, the anti-monopoly agency ordered the Singaporean state holding firm to relinquish its indirect stake in either Telkomsel or Indosat.

Temasek, which has denied any wrongdoing throughout the investigation, has made it clear that it will challenge the KPPU decision in the district court.

Since it was announced Monday, the decision has drawn much public comment, some in favor but most against.

State Minister for State Enterprises Sofyan Djalil deplored the decision, especially the KPPU's ruling that Telkomsel, the market leader, was guilty of price fixing.

He said the decision could have a huge impact on the performance of state-owned telecoms firm PT Telkom, the majority shareholder of Telkomsel. Vice President Jusuf Kalla, however, has told Temasek to respect and abide by Indonesian law.

Sofyan Wanandi, chairman of the Indonesia's Employers Association (Apindo), slammed the ruling as lacking a legal basis, adding that SingTel's and STT's entry to the local market was legitimate as it had been approved by the government.

Fanning shared Sofyan's concerns, saying that it was an "apparent setback" to the effort to create a more favorable business climate.

"I'm not commenting on the content (of the ruling), but more on the impression it creates. What everybody wants is court and tribunal proceedings that are clear and transparent so as to generate confidence," he said, adding that reform of the judicial system and bureaucracy were what the country most needed to succeed.

"Investors, unfortunately, have experience a number of strange court decisions, tribunal decisions over the years, It's not ideal that there are such decisions, which make it difficult for investors, especially the financiers, to commit."

However, perhaps diplomatically, Fanning said he believed Indonesia still had much to offer investors.

"There are, in spite of this apparent setback, significant pluses in Indonesia, so much so that investors will never dry up. Investors who are already here are not going to go away because of decisions like this, while new investors are not necessarily not going to come to Indonesia because of this.

"But the point is that, in terms of investment attractiveness, we could actually be so much better off."
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