Temasek accused of unfair business practices

Ridwan Max Sijabat
Jakarta Post
21 Oct 06

Chairman of Workers Unions demands government to take action against Singapore company Temasek, accused of fixing high phone rates

The government has been asked to take action against Singapore’s Temasek Holdings, which has been accused of unhealthy business practices in Indonesia’s telecommunications sector.

Temasek owns a combined 76 percent share of PT Telkomsel and Indosat, Indonesia’s two main cellular phone operators.

“The government and the Business Competition Supervisory Commission (KPPU) should take prompt and harsh action against Temasek for fixing unfairly high phone rates,” the chairman of the Federation of United State-Owned Enterprises Workers Unions, Arief Poyuono, said Wednesday after filing a complaint with the commission.

Arief said the federation had found ample evidence of serious violations of the 1999 Antimonopoly Law, adding that all of the evidence had been handed over to the Business Competition Supervisory Commission.

The federation had found consistent patterns in the pricing policies adopted by both PT Indosat and PT Telkomsel, Arief said.

Arief said both Telkomsel and Indosat’s shareholders and managements were affiliated with Temasek.

“We are suspicious that Indosat and Telkomsel have been conspiring to fix prices since the two companies’ managements are affiliated with Temasek,” he said.

He added that there had been numerous complaints from consumers about unhealthy business competition and overly high prices, but all of the complaints had been ignored by the two companies.

Temasek Holdings, through its business unit Singapore Telemedia Technologies Pte (STT), holds a 41 percent share of Indosat, and a 35 percent share of Telkomsel through Singapore Telecommunication (SingTel). The two state-owned companies dominate 80 percent of the GSM cellular phone market in Indonesia.

Temasek Holdings, the investment arm of the Singapore government, also partly owns Bank Central Asia (BCA), Bank Danamon and Bank International Indonesia (BII).

The secretary-general of the federation, Harry Rusli, said consumers were being denied access to inexpensive telephone tariffs because of the “unfair business practices” of Temasek.

“The monopoly is also preventing other cellular phone operators from competing in a healthy manner in the telecommunications sector,” he said.

He claimed Temasek had suspended the signing of a mobile virtual network agreement with Bakrie Group, which has launched the Esia product with lower pulse tariffs in 15 major cities, in an apparent attempt to prevent the latter from entering the CDMA market.

Harry called on the government to buy back Temasek’s shares in the two state-owned companies, or face charges of violating the Constitution and its requirement that the government manage all sectors that benefit a majority of the people.

He said Telkom and Indosat should not only focus on the cellular phone business, but also on cheap fixed-line telephone networks across the country.

Indosat spokeswoman Adita Irawati said Indosat and Telkomsel were separate business entities and that their cellular phone rates were regulated by the Directorate General for Post and Telecommunications.

“Indosat has never conspired with Telkomsel in setting prices and there is no cartel in the cellular phone operator business, which is regulated by the government,” she said.

Suryanda Stefanus, a spokesman for Telkomsel, declined to comment, saying the company was looking into customer complaints.

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