A lesson from the LoI

A lesson from the LoI

In scrutinizing the distinctive features of the Letter of
Intent (LoI) recently concluded between the government of
Indonesia and the IMF, particularly as far as its being a legal
instrument is concerned, the following characteristics should be
noted by a student of law.

First, regarding the signatory parties, they are not only the
Indonesian government and the IMF, but Bank Indonesia (BI) also
constitutes a party in itself. However, although the signatory
parties are evident as comprising the government and BI on the
one side and IMF on the other, thus signifying a bilateral
relationship between them, nevertheless this image of the
bilateral nature of the undertaking has been impaired.

Suddenly we face phrases in paragraph 4 of the LoI referring
to the use of the personal pronoun "we". For instance, phrases
like "we have sought the views of an independent panel of
experts" and "we are developing a set of amendments to the
central bank law" are cases in point. Obviously, the reference to
the personal pronoun "we" belies the bilateral nature of the
memorandum, a term representing the LoI as stated in paragraph 1.

So, instead of supposedly reflecting the bilateral nature of
commitments being exchanged between the government and BI on one
side and IMF on the other, the use of personal pronoun "we"
suggests a unilateral pledge being made by the Indonesian
signatory parties, the government and BI, vis-a-vis the IMF. This
is an interesting point to note.

Another interesting feature is the reference to the House of
Representatives, as stated in some paragraphs of the LoI to be
made subject to the qualification of "consultation with the
House".

It must be clear that as far as the IMF is concerned, such
consultative status being accorded to the House will have neither
legal effect nor impairment to the binding nature of the LoI as
such. The consultative status of the House being specifically
asserted in the LoI is meant to meet domestic political purposes
at best.

However, the House in some instances can also exercise the
role of approving the measures or modalities adopted by the
government as exemplified by the provisions of paragraph 5 and 11
of the LoI. In this regard, the law says that the role of the
House in such an instance shares the constitutive capacity in the
creation of international agreements.

Now the purpose of this letter is to draw a lesson from an
international agreement, in this case the LoI. The electorate in
the general elections of 2004 must be aware that Indonesia needs
good legislators, as the House is accorded both consultative
status and constitutive (legal) capacity with respect to the
government's undertakings with international organizations, as
demonstrated by the LoI with the IMF.

S. SUHAEDI

Jakarta