Bapepam defends Indosat divestment as `transparent'

The Jakarta Post, Jakarta

The recent sale of the government's shares in publicly listed telecommunications company PT Indosat was carried out in a transparent manner, the Capital Market Supervisory Agency (Bapepam) said.

"Based on the capital market ruling, the divestment (process) of Indosat is transparent," Bapepam Chairman Herwidayatmo said as quoted by detik.com over the weekend.

The statement came amid strong protests from top politicians and some Indosat employees over the privatization deal of the state-owned company. The protesters have even asked the government to annul the transaction.

Herwidayatmo questioned why the protest was staged after the transaction had been closed.

He feared that such protests could send a bad signal to foreign investors, which in turn would negatively affect the domestic capital market.

Singapore Technologies Telemedia (STT) won the government's 41.9 percent stake in Indosat in the middle of this month by paying Rp 5.6 trillion (about US$634 million). It beat Telekom Malaysia in the final round. The transaction is the government's largest privatization deal this year, providing the bulk of the Rp 6.5 privatization proceeds target crucial to help plug the 2002 state budget deficit.

One of the most criticized parts of the Indosat privatization deal was the lack of transparency in the process. In the past, the sale of state assets has often been tainted with corrupt and collusive practices, benefiting certain powerful people.

Speaker of the People's Consultative Assembly (MPR) Amien Rais has been the leading critic of the Indosat privatization deal. The House of Representatives (DPR) sent a letter late last week to the government, demanding the cancellation of the Indosat transaction. The letter was signed by House Deputy Speaker AM Fatwa, a senior member of Amien's Reform Faction at the House.

Following Amien's lead, surprisingly, is former president Abdurrahman Wahid, who said on Saturday that a state company as vital as Indosat should not fall into the hands of foreigners. Abdurrahman and Amien have often been in sharp disagreement over a range of issues. In fact, the latter had played a major role in the unseating Abdurrahman from the presidency last year.

Noted economist Sjahrir also raised doubts over the credibility of the Indosat transaction, citing a lack of transparency.

Sjahrir took issue with the shady background of the special purpose vehicle (SPV) through which STT acquired Indosat's stakes.

"Why is this based in Mauritius?" he asked and explained that slack regulations on the island state allowed companies to avoid disclosure. "They won't have to name the people behind the SPV."

He also questioned why the government had chosen Sunday to conclude the transaction. This uncommon practice unnecessarily added to suspicions, he said.

But University of Indonesia economist M. Ikhsan criticized the protesting legislators, saying the government and House should have agreed from the onset the mechanism for selling state companies.

"Legislators have actually been part of the sale process from the beginning, so why did they start protesting at the end of it?" he asked.