KPPU asked to look into Temasek’s monopoly

March 23, 2007
Singapore Democrats

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Ridwan Max Sijabat
The Jakarta Post
22 Mar 07

The House of Representatives commission overseeing state enterprises has called on the Business Competition Supervisory Commission (KPPU) to assess Indonesia’s national interests in the divestment of two telecommunication firms to a Singaporean holding company.

In a hearing with the KPPU on Tuesday, lawmakers questioned the divestment of 49 percent of the government’s shares in state-owned PT Indosat and PT Telkomsel, a subsidiary of another state-owned telco firm, PT Telkom.

The divestment is alleged to have granted Singaporean firm Temasek a monopoly in the Indonesian telecommunications sector.

Nusron Wahid of the Golkar Party and Fachry Hamzah Sangaji of the Prosperous Justice Party said the KPPU should conduct a comprehensive assessment of the divestment to evaluate whether the country’s interests were protected in the deal.

“The KPPU should carry out a thorough investigation into the alleged monopoly, a violation which not only lashes out at the government as a majority share holder but also affects Indonesia’s national interests,” said Nusron.

Referring to the ongoing divestment of state-owned companies to multinational corporations, Fachry said the House did not oppose the government’s move but that divestments should be conducted with caution in order to maintain Indonesia’s sovereignty over its assets.

“The government should give more chances to domestic investors, though with their foreign partners, to invest in state enterprises that are to be divested,” he said.

“The government should be selective in divestments to prevent vital assets from being controlled by foreign companies.”

KPPU Chairman Muhammad Iqbal said his office would conduct an assessment of the government’s divestment of Indosat and Telkomsel and investigate Temasek’s alleged monopoly.

“We have received many complaints from civil groups on the divestment of Indosat to Temasek and its subsidiaries in the state-owned companies. Besides looking into the alleged double ownership of Temasek in the two companies we will also probe the unhealthy competition in the cellular phone business,” he said.

Iqbal also expressed objections to the government’s decision to divest Indosat as it was one of the country’s vital assets, saying developed countries only allowed the government to divest up to 30 percent of their shares in such vital companies in order to protect national interests.