Wed, 27 May 2009
A consortium of local small and medium internet service providers are questioning government bidding rules that allow a foreigncontrolled publicly listed fi rm to bid for Wimax licences, despite the Negative Investment List

The SMEs, grouped in a consortium participating in the bidding, said the participation of telecommunications company PT Indosat in the bidding should be scrutinized because the company is 65 percent owned by Middle East-based Qatar Telecommunications (Q-Tel).

"Indosat should not be allowed to participate in the tender process because 65 percent of its shares are owned by QTel, a foreign company," the consortium spokesman Heru Nugroho said on Monday.

The consortium groups 30 ISPs.

The Communication and Information Ministry is organizing the bidding for Wimax, an acronym for Worldwide Interoperability for Microwave Access. Wimax is an advanced technology that provides high-throughput broadband connections over long distances at far cheaper investment costs.

Heru explained that the government negative investment list (NIL) says companies with more than 49 percent foreign ownership were not allowed to manage packet switched technology services, including Wimax. The NIL list was revised in 2007 by presidential decree.

The NIL sets out restrictions on investment by foreign-controlled companies.

Indosat said, however, that it had the right to take part in the Wimax tender as it was permitted to do so by the ministry. Head of Indosat's public relation Adita Irawati explained the company had asked the ministry about the NIL rule in March, and it recently received a formal positive answer regarding its participation in the tender.

"The Ministry said that our company participation does not violate any law," she said.

The ministry's spokesman, Gatot S. Dewa Broto, confi rmed Indosat's eligibility to join the bidding.

"It is true that the Wimax tender is subject to the NIL. But a foreigncontrolled company can join the bidding if it is publicly listed one," he said. He said that to ensure that such companies could participate, the ministry had received a confi rmation from the Offi ce of the Coordinating Minister for the Economy.

"The ministry had received a formal answer from the acting Coordinating Minister for the Economy Sri Mulyani Indrawati in the middle of May explaining that the NIL rule does not apply to listed companies," said Gatot, adding the letter did not specifi cally mention Indosat nor the Wimax tender.

Mulyani sent the letter in her capacity as chief of the nation's export and investment promotion working group (PEPI ), according to Gatot.

The NIL rule has long raised controversy. In March 2008, the Communcation and Telecommunication Ministry made a decree that foreign investors were not allowed to own, build, and manage telecommunication towers. Foreign companies widely protested the decree.

During the acquisition process of Indosat by QTel, the Capital Market and Financial Institution Supervisory Agency (Bapepam-LK) insisted that Qtel could only own a maximum 49 percent stake in Indosat because of the NIL rule.

However, the Investment Coordinating Board (BKPM) eventually overruled the decision, allowing Qtel to extend its ownership.(mrs)



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