IFC warns RI courts are scaring investors away
IFC warns RI courts are scaring investors away
The Jakarta Post
Jakarta
The International Financial Corporation (IFC), the investment
arm of the World Bank, warned on Friday that the country's weak
legal system was scaring away badly needed foreign investors,
after the Central Jakarta Commercial Court declared Canada's
Manulife Financial Corp's local insurance unit bankrupt.
IFC regional representative Amitava Banerjee said he was
"extremely concerned" at the effect on potential and existing
investors.
It showed that, "a well-capitalized and professionally run
company can be brought down by the machinations of malicious
interested parties and there is no protection under a court of
law".
"Indonesia has to be a nation based on law," Banerjee was
quoted by AFP as saying.
He said the unpredictable legal system was holding the IFC
back from extending a greater level of support to Indonesia.
The IFC, a World Bank subsidiary, lends to and invests in
private companies in developing countries.
The Commercial Court on Thursday ruled PT Asuransi Jiwa
Manulife Indonesia (AJMI) bankrupt after a receiver of the now
defunct PT Dharmala Sakti Sejahtera (DSS) filed a bankruptcy
petition over an unpaid dividend in 1999.
DSS, which was owned by the Dharmala Group, was a one-time
partner of Manulife in AJMI.
The court ruling was the latest round in a two-year legal
battle between Manulife and Dharmala.
Manulife Indonesia, which has temporarily suspended business
following the judgment, reacted angrily to what it called an
"outrageous" ruling.
AJMI said only the shareholders and not the company had the
right to declare or withhold dividends and the annual
shareholders meeting in 2002 decided not to declare dividends for
1999.
"In our view this is a completely absurd and ridiculous
decision," Philip Hampden-Smith, president of AJMI told AFP.
"We firmly believe this court decision ... is tied to our
legal struggle with our ex-partner the Dharmala organization and
the Gondokusumo family (which controlled Dharmala before the
1997/98 financial crisis)."
Meanwhile, Manulife was quoted by Dow Jones as saying Jakarta
Commercial Court judge Hasan Basri, "received significant
financial enticement to make this ruling". It said the DSS
receiver, Paul Sukran, was closely associated with the
Gondokusumo family.
Manulife said AJMI "is not insolvent". It noted that it has
more than a 10 percent share of Indonesia's life insurance
market, with over Rp 3.1 trillion in assets.
"Manulife remains proud and committed to our business in
Indonesia," it said. "We are doing everything we can to ensure
that our 320,000 customers and 3,500 employees in Indonesia will
not be negatively impacted by these criminal acts."
It added that, "Manulife has no intention of leaving Indonesia
now or in the future".
The life insurance company said it will protest the ruling,
"to the highest levels available".