Indonesia Consumer Association

  A group of legal and economic experts slammed Friday the Business Competition Supervisory Commission’s (KPPU) ruling against Temasek Holdings, saying it was flawed and damaged the country’s investment climate. The Examination Council, as the group calls itself, said in a report that Temasek’s cross-ownership in PT Telekomunikasi Selular (Telkomsel) and PT Indosat did not lead to a monopoly as Temasek did not own majority stakes in the two mobile telecommunications companies. Temasek owns a 54.15 percent stake in SingTel Group, which holds a 35 percent stake in Telkomsel, while Singapore Technologies Telemedia (STT) — entirely owned by Temasek — owns a 75 percent share of Asia Mobile Holdings, which holds a 41.9 percent stake in Indosat. Meanwhile, state-owned telecommunications operator PT Telkom owns a 65 percent stake in Telkomsel and a 14.5 percent stake in Indosat. “Therefore, Temasek couldn’t control Telkomsel and Indosat. It is the government that heads those companies,” the council said. The council was established on Nov. 22, three days after the KPPU’s ruling, through an initiative of a local non-governmental organization called Indonesia Development Monitoring (IDM), which was formed in 2005.

 The IDM has appointed 10 legal and economic practitioners as members of the council. IDM director Dwi Mardianto said the council scrutinized the KPPU’s ruling for two weeks to see whether the anti-monopoly watchdog had made the right decision. “It turns out that the KPPU’s ruling is weak as it is not in line with the legal grounds adduced in its own arguments,” he said. For example, the council pointed to the KPPU’s statement that customers of Telkomsel and Indosat had been prejudiced to the tune of between Rp 14.7 trillion (US$1.58 billion) and Rp 30.8 trillion between 2003 and 2006, when, in fact, tariffs of all the country’s mobile communications providers had been falling for the past five years. In its ruling, the KPPU ordered Telkomsel to lower its average tariffs by up to 15 percent and pay a Rp 25 billion fine for having breached the Monopolies Law. It also ordered Temasek to relinquish its entire indirect stake in either Telkomsel or Indosat within two years. The KPPU’s statement that it had not agreed to the divestment of Indosat shares in 2002 was also unreasonable, the council said. The tender for the sale of the Indosat shares was won by STT. “In 2002, the KPPU had already been established as the business competition watchdog. It should have been aware at that time,” the council said. Responding to the KPPU’s ruling that Temasek had breached the Monopolies Law, the chairman of the Federation of State Enterprise Labor Unions, Arief Poyuono, said the country currently had perfect business competition as consumers could choose between the eight existing cellular providers

The Business Competition Supervisory Commission (KPPU), the country’s antimonopoly watchdog, said Wednesday it had uncovered prima facie evidence of monopoly practices by Singapore’s Temasek Holdings in Indonesia’s telecoms industry.

KPPU chairman Muhammad Iqbal told The Jakarta Post that the findings marked the end of the preliminary examination of the case, and the beginning of a more detailed investigation.

“We will start summoning witnesses some time next week, including from Temasek,” Iqbal said.

Iqbal said the evidence that had been uncovered included the fact that there was cross-ownership by Temasek in Indosat and Telkomsel, which violated article 27 of the 1999 Antimonopoly Law.

Temasek owns a 56 percent stake in the SingTel Group, which in turn holds a 35 percent stake in Indonesia’s largest mobile telecoms firm, Telkomsel.

 The Indonesian government will appreciate whatever decision the Anti Monopoly Commission (KPPU) will take on Temasek Group`s problematic stake in state telecommunication operators Indosat and Telkomsel, a minister said.

“We will appreciate what the KPPU decides. Of course, the conflicting parties still have the chance to appeal against the KPPU`s decision,” Communications and Information Minister Muhammad Nuh said here Monday.

“The government will not interfere in the Temasek case because it is the KPPU`s authority to settle.” he said.

“The government does not have the authority to decide whether or not a company has violated a regulation. This is not the government`s domain. Everything related to monopoly and so on is the KPPU`s authority to decide,” he said.

The government would take a stand only after a binding decision has been made on the case, he said.

He said the government would also allow the conflicting parties to appeal against the KPPU`s decision if they were not satisfied about it.

“Everybody is allowed to pursue legal channels until a binding decision has been made. Shortly after a binding decision has been annoucned, we will take further steps,” he added.

Temasek Group, through its subsidiaries Singapore Telecommunications Ltd (SingTel) and Singapore Technologies Telemedia Pte. Ltd. (STT), is controlling shares in Telkomsel and Indosat.

In its investigation document, the KPPU had concluded that Temasek may have violated the anti monopoly law.

If found guilty, Temasek must stop its cartel-like practices by disposing of its stake in Indosat or Telkomsel, and pay a fine of Rp1 billion to Rp25 billion and compensation to the state.(*)

Copyright © 2008 ANTARA

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