Tue, 20 May 2008
Jakarta (ANTARA News) - Indonesia's investment agency chief on Monday rejected suggestions that a court ruling against Singapore's Temasek Holdings for alleged breach of anti-monopoly laws would deter foreign investors.

Investment Coordinating Agency chief Muhammad Lutfi said the government had no power to influence the judicial process and expressed confidence the ruling would not damage Indonesia's investment credentials.

A state appeal court earlier this month upheld a ruling by the competition watchdog ordering Temasek to divest its stake in one of two of Indonesia's largest telecom operators, and gave it only 12 months to comply.

The decision has been heavily criticised by business circles in Singapore as well as in Indonesia, which is desperately trying to attract foreign investment.

But Lutfi said the criticism was unjustified.

"Decisions were made by two different institutions and both found Temasek guilty," he told AFP.

He said the competition watchdog, the Commission for the Supervision of Business Competition (KPPU), was established to improve the investment climate in Indonesia and was only doing its job.

"I don't think that this will affect investment," Lutfi said.

The KPPU said in November that Temasek, a state-linked Singaporean investment giant, was guilty of engaging in monopolistic practices and anti-competitive behaviour in Indonesia 's cellular market through its stakes in two Indonesian telephone operators -- PT Telkomsel or PT Indosat.

Indosat is 41-percent owned by Asia Mobile Holdings (AMH), which is a 75 percent-held subsidiary of ST Telemedia. ST Telemedia is fully owned by Temasek.

Temasek indirectly holds 35 percent of PT Telkomsel via its 56-percent owned unit Singapore Telecommunications Ltd. (SingTel).

A 1.9-billion-dollar, tax-free investment by Temasek Holdings in Thai telecom giant Shin Corp. in 2006 sparked protests that culminated in a military takeover and the ouster of Shin founder Thaksin Shinawatra as prime minister.

The Shin Corp. deal became the subject of a slate of criminal probes under the previous military government and led to tensions in relations between Thailand and Singapore.

Temasek has said it complied with all laws and regulations in Thailand when it took over the firm. (*)



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