TEMASEK TO CHALLENGE JAKARTA COURT`S VERDICT

By Andi Abdussalam 

        Jakarta, May 13 (ANTARA) - Singapore's state-owned investment firm Temasek Holdings Pte. Ltd is planning to file an appeal with Indonesia's Supreme Court after its objections against the country's anti-trust body ruling that it had violated Indonesia's anti-monopoly law were rejected by the Central Jakarta District Court last week.

        Temasek had previously filed an appeal with the Central Jakarta district court over a ruling in November last year by the Business Competition Supervisory Committee (KPPU) that it and its subsidiaries had violated Indonesia's anti-monopoly law, particularly the law's articles on cross-ownership.

        Lukas, a lawyer for Singapore Technologies Telemedia (STT), one of Temasek's subsidiaries, said his client would appeal the Central Jakarta district's verdict, which he said was far from being just and had weakened legal certainty for investment, particularly foreign investment, in Indonesia.

        "The verdict is not in line with the basis of cooperation in the protection of investors who have been invited by the Indonesian government," he said.

        Lukas said there was a very basic problem as there was no proof that his client controlled majority stakes in Indonesia's Telkomsel and Indosat. This was clearly stated in the notarial deeds on the Singaporean companies participation in the Indonesian firms.

        "The charges against STT must fulfill two aspects, namely control of the majority stake and occupying a dominant position in the market, before STT can be declared a violator of Article 27, Law No. 5 / 1999," he said.

        The Central Jakarta District Court found on Friday last week that Temasek had violated Article 27 of Law No. 5 /1999 on Monopolistic and Unsound Business Competition Practices.

        "Temasek Holdings violated Article 27 point (1), Law No. 5 / 1999," Presiding Judge Andriani Nurdin said.

        The court ordered the Singaporean state-owned investment firm to sell or reduce its stakes in the two Indonesian mobile-phone-service providers, Telkomsel and Indosat, bringing forward a deadline.

        The court also fined Temasek, Telkomsel, Indosat and each of its subsidiaries Rp15 billion (US$1.6 million) and gave Temasek a choice of relinquishing at least 50 percent of its shares in both Telkomsel and Indosat or letting go of all shares in either company within a year.

        The KPPU in November last year found Temasek Holdings guilty of cross-ownership in the two domestic mobile telecommunication companies leading it to abuse its dominant position in the market and to practice monopoly.

        The business competition law bars a company from having a controlling stake in another company in the same business sector with a market share of 50 percent or more.

        The KPPU said last year Temasek had to let go all indirect shares either in PT Telkomsel or in PT Indosat, and to pay a fine of Rp25 billion for breaching the anti-monopoly law.

        Temasek owns a 54.15 percent stake in SingTel Group which holds a 35 percent stake in Telkomsel, while Singapore Technologies Telemedia (STT) which is wholly owned by Temasek controls 75 percent of Asia Mobile Holdings which in turn has a 41.9 stake in Indosat.

        The largest market shareholder in Telkomsel was found guilty of violating article 17 of the law, particularly of abusing its dominant power to determine the interconnection tariffs among operators.

        The Central Jakarta District Court's ruling last week was welcomed by the KPPU. Litigation Affairs chief of the KPPU Muhammad Reza said his side was satisfied with the court ruling.

        "We are satisfied with the court's verdict," he said.

        In the meantime, Temasek's subsidiary SingTel said it was disappointed by the court's verdict to reject Temasek's appeal.

        "SingTel is deeply disappointed with the Central Jakarta District Court's ruling to uphold the KPPU decision. The court's ruling is without any basis and we object strongly to it. SingTel and SingTel Mobile do not own majority shares in any Indonesian company. Further, neither SingTel Mobile nor SingTel controls Telkomsel. Telkomsel is majority-owned and controlled by PT Telkom," SingTel said in a statement on Friday.

        "The facts are Temasek has no shares in Indosat and Telkomsel, and plays no role in their business decisions and operations,' Temasek managing director for strategic relations Goh Yong Siang was quoted as saying by the Strait Times in its website.

        According to KPPU chairman Syamsul Maarif, consumers had suffered a loss of between Rp14 trillion and Rp31 trillion over the past three years due to the high cellular phone tariffs determined by the two cellular phone service providers.

        "The cellular phone tariff is 40 percent higher than that in neighboring countries," Maarif told MetroTV in a dialog on The Economic Challenge on Monday evening.

        But Goh said both Telkomsel and Indosat were regulated businesses, operating within the guidelines of the Indonesian Telecommunications Regulatory Authority (BRTI).

        Therefore, Temask would file an appeal with the Supreme Court as soon as possible, he said, adding the Central Jakarta District Court had ignored the government's decision to privatize Indosat.

        "The divestment in Indosat was done at the government's request because it needed revenue. The court should have respected the government," Temasek lawyer Todung Mulya Lubis was quoted as saying by the Jakarta Post. (T.A014/A/HAJM/A/O001) 13:00/... ) (T.A014/A/A014/A/O001) 13-05-2008 13:13:00