Indonesia committed to upholding legal certainty, says Kwik

JAKARTA (JP): Coordinating Minister for Economy, Finance and Industry Kwik Kian Gie reiterated on Wednesday that the government was committed to ensuring legal certainty in the country despite the clamor from some camps in the bureaucracy for revising or terminating business contracts made in the past.

Kwik said that enforcing laws and regulations was part of the governments efforts to create a better investment climate to woo more foreign investors.

"We know that investors will come to Indonesia only if there is a legal certainty that will protect their contracts," he told a group of German businessmen at a gathering.

"We therefore ensure that laws and regulations of business contracts, including the bankruptcy law, will be enforced consistently."

Kwik made the statement amid increasing concern among foreign investors over strong pressures from certain groups for unilateral termination or revision of business contracts made with the previous government.

One of the latest cases includes calls from legislators for the government to revise its contract with the giant gold mining firm PT Freeport Indonesia copper and gold mining company on grounds that the contract was allegedly made through corruption and collusive practices.

Another gold mining firm in North Sulawesi, PT Newmont Minahasa Raya, was shocked recently by what the company saw as a questionable verdict issued by the Tondano district court. The decision required the company to shut down the operation on grounds that it had failed to pay a local mineral tax.

The company denied the allegations, and Jakarta has also said that Newmont has not violated any tax regulation.

Kwik said that Indonesia needed foreign investors' money to help revive the ailing economy.

Asked by reporters whether the dismissal of Gen. Wiranto from the cabinet would discourage foreign inventors, Kwik said: "There is neither a negative nor positive impact on the economy from the (Wiranto's) suspension.

"Investors are more fixed on the economic fundamentals of the country, which look okay for 2000."

President Abdurrahman Wahid made a surprise move late on Sunday, suspending the former armed forces commander from the cabinet following weeks of stand-off and rumors of a possible military coup.

Wiranto has been implicated by a human rights investigation in the mass destruction and bloody massacres in the former East Timor province after the August referendum.

Many analysts welcome Abdurrahman's move, pointing out that this proves the government's commitment to justice and democracy.

Kwik also said that the government would press ahead with its bank and corporate restructuring programs.

He pointed out that the recent establishment of the Financial Sector Policy Committee (FSPC), whose members include four senior economic ministers under his coordination, would help accelerate the banking and corporate restructuring programs.

"This committee is now actively overseeing the process of banking reform and corporate restructuring," he said.

Kwik said that the FSPC was helping the Indonesian Bank Restructuring Agency (IBRA) to be more flexible and active in the corporate restructuring process.

He didn't provide details, but said that the government had issued a ruling that would protect IBRA staffs and FSPC members from costly litigation as they exercise their authority.

IBRA staff reportedly have been scared of possible litigation following revelation of the high profile Bank Bali scandal last year, from which several senior government officials, including IBRA staff emerged as suspects.

This has been one of the factors causing delays in the government bank and corporate restructuring programs.

Kwik reaffirmed that the government would accelerate the disposal of various bank assets held by IBRA.

"The government has proven that it is not a competent banker or businessman. Therefore we want to return the assets held by IBRA to the private sector as quickly as possible while collecting a fair value for the assets," he said.

IBRA currently controls around Rp 600 trillion worth of various assets surrendered by former bank owners, closed banks, nationalized banks or recapitalized banks.

"If you combine the assets held by IBRA with state enterprises, then government now controls 70 percent of Indonesia's productive business ... this means that we're like a Communist country," Kwik said.

IBRA is currently planning to immediately sell its 45 percent stake in auto giant PT Astra International and to launch an initial public offering of Bank Central Asia (BCA) in a bid to meet the target of raising Rp 17 trillion for the current state budget ending in March. The agency has so far collected around Rp 12 trillion.

The agency is also tasked with raising approximately Rp 16 trillion to help finance the upcoming April-December 2000 state budget. (rei)