Surely, China has based her decision
not to allow its China Investment Corporation to be involve in
''sovereign owned Telcos''
must be due to the disastrous Shin Corp fiasco experienced by
Temasek.
Jakarta's decision to fine Temasek will certainly reinforce onto
China the high price lessons that Temasek is repeatedly
paying.
This time US$2.8 MIILLION for breaching Indonesia's - {fair} -
competition law.
Indonesia's KPPU fines Temasek US$2.8m
for competition law breach
By Channel NewsAsia's Indonesia Bureau Chief
Sujadi Siswo
Posted: 19 November 2007 2155 hrs
JAKARTA: Indonesia's anti-trust agency, KPPU, has fined Singapore's
Temasek Holdings 25 billion rupiah (US$2.8 million) or some S$4
million for breaching Indonesia's competition law.
The watchdog has also ordered Temasek to sell its stakes in either
PT Indosat or PT Telkomsel two major Indonesian mobile phone
companies within two years.
And potential buyers can only buy up to 5 percent of the shares and
must not have any links to Temasek Holdings.
Eight other Singapore companies linked to Temasek have also been
fined S$4 million. The Singapore companies plan to appeal the
decision in Indonesia's district court.
The five-member panel from Indonesia's anti-monopoly agency took
more than three hours to read out its verdict on a case closely
watched by foreign investors in the country.
The panel said Singapore investment firm Temasek Holdings and its
subsidiaries were guilty of monopoly practices through their cross
ownership of two of Indonesia's largest mobile phone companies
Telkomsel and Indosat.
Temasek owns 56 percent of SingTel, which has a 35 percent stake in
Telkomsel.
And Singapore Technologies Telemedia, which Temasek fully owns,
controls 75 percent of Asia Mobile Holdings (AMH). AMH, in turn,
owns 40 percent of Indosat.
Indonesia's competition law stipulates that a foreign company or
business group cannot have more than a 50 percent share in an
Indonesian business outfit.
Temasek has argued that it does not directly hold majority shares
in each of the Indonesian mobile phone companies.
But the panel is maintaining that Temasek had violated
cross-ownership regulations and, as a result, dominates 80 percent
of the market.
According to the panel, Temasek and its units have control over
appointments of key posts and have access to sensitive information
from the two companies. Therefore, they are able to dictate the
market.
Temasek has maintained that the Indonesian government actually
holds majority stakes in Telkomsel and a golden share in
Indosat.
But the panel rejected this notion, saying the government is not a
business entity and its shareholding is in the national
interest.
Temaseks lawyer said the decision has plunged Indonesia into a
crisis of confidence in the country's legal system.
Lawyers from Temasek and ST Telemedia said the watchdog's decision
is not final and they plan to file an appeal to the country's
district court within two weeks.
In a statement, Temasek's executive director Simon Israel said the
decision "makes no sense" and "ignored the facts".
He added that the charge is groundless because Temasek has no
shares in Indosat and Telkomsel, and has played no role in business
decisions and operations of both companies.
And as the Indonesian government controls Telkomsel and has a
golden share in Indosat, Mr Israel said it is inconceivable that
the government and telecomm regulator would allow prices to be
fixed.
Channel NewsAsia spoke to a political analyst who believes the
ruling sends caution and concern for all investors.
Simon Tay, Chairman of the Singapore Institute of International
Affairs, said: "This kind of signal can be badly read by the
international community.
"I think companies need to invest in political risk, invest in
goodwill so it really benefits the Indonesian people or whichever
country you're investing in, as well as the shareholders."
