The Temasek fights back!

Singapore November 21st, 2007

Is there political agenda behind the Indonesian KPPU decision? Apparently Temasek has listed its holdings in whatever stakes it has and is claiming that Indonesia is not making any sense in the claims since the Indonesia government apparently approved the arrangements.

Then again, it doesn’t help that people have the impression that Temasek is a government entity (I’m not sure if it is), and having Ho Ching up there isn’t going to help debunk that image at all – not that it matters, but it’s just an observation.

Hmm… By the way, I thought Singapore signed some agreement with Indonesia earlier on? What happened?

TEMASEK Holdings said yesterday it is not guilty of breaking competition laws or price-fixing in Indonesia and vowed to fight the ruling by the country’s anti-monopoly watchdog.

‘We are not guilty. The decision makes no sense. It ignores the facts,’ said Temasek executive director Simon Israel in a tersely worded statement.

Indonesia’s Commission for the Supervision of Business Competition, known also as KPPU, yesterday ruled that Temasek must sell one of its two indirect stakes in the country’s top two mobile phone operators within the next two years.

One Temasek subsidiary, SingTel, owns a 35 per cent stake in market leader Telkomsel while another unit, Singapore Technologies (ST) Telemedia, owns an effective 30 per cent interest in Indosat.

The allegation is that Temasek abused its indirect ownership of both operators to fix phone tariffs high.

Mr Israel said yesterday this charge is groundless. ‘Temasek has no shares in Indosat and Telkomsel and we play no role in their business decisions and operations.

‘Telkomsel is controlled by the Indonesian government, which also has a golden share in Indosat,’ he added, referring to veto rights that protect the Indonesian government’s interest in Indosat.

Mr Israel also noted that Indonesia’s telecoms sector is regulated. So it is inconceivable that the Indonesian government or the regulator would allow prices to be fixed at the expense of consumers.

‘Temasek will fight this decision,’ he declared.

SingTel and ST Telemedia also issued strong statements expressing disappointment at the ruling and denying any wrongdoing.

SingTel said SingTel Mobile is only a minority shareholder in Telkomsel and does not control Telkomsel.

In any case, SingTel has an independent board of directors and as a shareholder, Temasek does not control its operations.

‘In addition, the commission failed to accord fundamental due process rights to SingTel and SingTel Mobile,’ it added.

ST Telemedia chief executive Lee Theng Kiat said: ‘The KPPU decision calls into serious questions the application of the rule of law and whether foreign investors can safely invest in Indonesia.’

Citibank economist Chua Hak Bin said the ruling seems to go against Asean integration: ‘There seems to be a lot of obstacles and suspicion with regard to investments from neighbouring countries.

‘Onlookers will regard this verdict with some cynicism about whether it is objective or if there could be political considerations behind it.’


Article obtained from on 21st November 2007

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