Indonesia to stand firm by international contracts

Indonesia to stand firm by international contracts

JAKARTA (JP): President Abdurrahman Wahid reassured investors
on Monday of Indonesia's firm commitment to honor all of its
international contracts, but reiterated the need for
renegotiating some that were made in the past.

The President told a news conference that Indonesia would
stand firm by its international contracts, including those with
independent power producers.

"We want to stand by our international commitments, and this
is one of the things I discussed with Malaysian Prime Minister
Mahathir Mohamad (last week)," Abdurrahman added.

Abdurrahman commented on a wide variety of issues raised by
reporters during the news conference, ranging from former
president Soeharto's health, to questions concerning corruption,
and the legal quagmire involving the Roche pharmaceutical
company.

The President implicitly rejected a recent comment made by
finance minister Bambang Sudibyo who said the government would
not recompense the Overseas Private Investment Corp's claim of
roughly US$290 million.

The claim, paid by OPIC, a U.S. government insurance agency,
was made after state electricity company PT PLN failed to pay
Calenergy a sum awarded it by an independent arbitration panel.

Last week Abdurrahman endorsed a statement by Minister of
Investment and State Enterprises Development Laksamana Sukardi
asserting that negotiations with independent power contractors is
the official Indonesian government policy.

In response to another question, the President said that Roche
pharmaceuticals, a subsidiary of Switzerland's Roche Holding AG,
should not be prohibited from producing drugs pending the
resolution of its dispute with former distributor, PT Perusahaan
Dagang Tempo.

He added that he might, if necessary, intervene by imposing
international law on the case, but only if Roche Indonesia
continues to be barred from normal production operations.

The South Jakarta District Court ruled late last year in favor
of Dagang Tempo and decided to freeze Roche Indonesia's assets,
including its factory near Bogor, east of the capital. This
despite the fact that Dagang Tempo and Roche had agreed in their
contract to settle whatever disputes they might have by means of
an arbitration tribunal.

Roche and its lawyers insisted that the district court had no
jurisdiction over the case, as it fell under Indonesia's law on
arbitration and alternative dispute settlement.

Dagang Tempo filed a lawsuit against Roche last October for
annulling a contract appointing the plaintiff as a major
distributor of its over-the-counter drugs in Indonesia.

The President also was briefed early last week by Roche's
president, Dieter Garbede, and Swiss ambassador, Gerard
Fonjallaz, on what Roche's lawyer Todung Mulya Lubis considers a
bizarre case, not to mention an unlawful verdict handed down by
South Jakarta's District Court.

Abdurrahman told reporters on Monday that he expressed his
wish to Swiss Ambassador Fonjallaz that Roche should continue to
manufacture all over-the-counter products affected by the
dispute.

Mulya ridiculed the court's unlawful handling of the case as
more evidence that at present there is a real lack of legal
consistency and stability in the nation.

Mulya's concern is that as long as there is such a rampant
misuse of Indonesia's legal system, foreign investors will stay
away.

Asked about the latest developments in the case of alleged
malfeasance regarding the extension of Rp 9 trillion ($1.2
billion) in loans by the state Bank Negara Indonesia (BNI) to the
Texmaco Group, the President reaffirmed that individuals (owners
and directors) should be separated from institutions
(businesses).

"I made it clear from the beginning that Texmaco factories
should continue to operate while individuals in the group
implicated in the alleged corruption should be prosecuted," he
added.

"It is most important that businesses remain protected but
that individuals are fairly prosecuted," the President said,
adding that he was aware of rumors alleging his own involvement
with the group.

Answering another question, Abdurrahman said he no longer had
anything to do with the Harawi holding company, which he set up
while chairman of the Nahdatul Ulama Islamic organization.

"I no longer own shares in Harawi and am no longer involved in
its day-to-day business dealings," the President said.

Abdurrahman also mentioned that Edward Soeryadjaya (his former
business partner in the early 1990s) might still use his name in
relations with Harawi. "But I must make it fully clear that I am
no longer in any way associated with the company."