Actions speak louder than words<\/p>\n
Ong Hock Chuan, Jakarta<\/p>\n
The Susilo Bambang Yudhoyono Government has an excellent
\nopportunity to convince the international financial community
\nthat it means business in the two-day Infrastructure Summit that
\nbegun yesterday. Virtually the Who's Who of the financial world
\nare in town and there is no better audience to propagate the news
\nthat Indonesia is back in business.<\/p>\n
Some of them have even been persuaded before hand to commit
\nmillions of dollars to invest in infrastructure projects here.
\nTheir investments will definitely be showcased during the summit
\nas an example of returning confidence.<\/p>\n
That is good theatre.<\/p>\n
It will, however, take more than just theatre to convince
\ninvestors to put their money here in the long run. The
\nparticipants at the Infrastructure Summit may make token
\ncommitments, sign MoUs and make some pledges but rest assured
\nthat behind it all is a shrewd business mind adopting a wait-and-
\nsee attitude.<\/p>\n
The skepticism is justified because past administrations have
\nmade them grandiose promises that fell flat as soon as the
\ntalkfest was over. The trouble with skeptical audiences is that
\nthe not only scrutinize everything you say; they also pay the
\nsame level of attention to your every action as well.<\/p>\n
While there is little to fault in the promises of a young
\ngovernment, the actions it has taken -- or not taken -- since it
\ncame to power becomes an indicator of its ability to follow
\nthrough. Understandably, foreign investors pay most attention
\nwhen other foreign investors are involved.<\/p>\n
Although Indonesia has had many controversial cases over the
\npast year, such as Manulife and Prudential, most of them peaked
\nand were resolved by the time the Susilo government came to
\npower.<\/p>\n
There are, however, three high profile cases involving foreign
\ninvestors that the Susilo government has been in a position to
\nresolve since it came to power. How the government has handled
\nthem can tell us a lot about whether this government is different
\nfrom the others in its ability to deliver the goods to foreign
\ninvestors.<\/p>\n
The first case involves Mexican cement giant Cemex which
\nwanted to buy up PT Semen Gresik. The central government is the
\ncontrolling shareholder of Semen Gresik and had agreed to sell it
\nto Cemex when it backed down on opposition from local
\npoliticians. Cemex is now preparing to take the Indonesian
\nGovernment to international arbitration.<\/p>\n
But even if it wins in an international court it has no
\nguarantee that the government or its institutions would honor
\nthat decision, as Karaha Bodas found out the hard way.<\/p>\n
Karaha Bodas took the state-run Pertamina to international
\narbitration for breached of contract. The court ordered Pertamina
\nto pay US$299 million to Karaha Bodas.<\/p>\n
The victory was pyrrhic because the Indonesian Police started
\ninvestigating the company for alleged corruption. The government
\nis using this as an excuse for not honoring the international
\ncourt's decision and refusing to pay the $299 million.<\/p>\n
The third case, involving gold company Newmont, is even more
\nbizarre. It is, for starters, the first case in Indonesia where
\nexecutives are liable for criminal prosecution for something the
\ncompany is alleged to have done. Newmont's executives took the
\npolice to a Jakarta court that declared the police investigations
\nand their detention of 32 days illegal. Nonetheless, the police
\nare still trying to arrest these employees so that they could be
\nindicted on the findings of the court-declared illegal
\ninvestigation.<\/p>\n
The government is also divided on whether Newmont's mine in
\nMinahasa is guilty of polluting Buyat Bay. The Minister of Mines
\nand Energy has come out saying that there is definitely no
\npollution but the Minister for the Environment maintains
\notherwise and is threatening to take the company to court. And to
\ntop it off the Ministry of Environment release two findings about
\npollution in Buyat Bay from the same set of data. One said there
\nwas pollution while the other said there wasn't.<\/p>\n
Taken together these three cases raise serious questions about
\nthe seriousness or the ability of the government to create an
\nenvironment that provides legal certainty to investors.<\/p>\n
The Justice Minister is scheduled to speak on Legal Certainty
\nand Predictability at the Infrastructure Summit today. Let's hope
\nhe provides a compelling explanation for the government's
\nhandling of these cases and follows up on them with concrete
\nactions.<\/p>\n
Anything less and the skeptics will have their day and, for
\nthe rest of us, five more years of the same old, same old.<\/p>\n
The writer is a Partner at PT Maverick Solusi Komunikasi, a PR
\nconsultancy specializing in crisis\/issue management as well as
\nbrand communications. He can be reached at ong@maverick.co.id<\/p>",
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