Legislator says new bill contrary to 1945 Constitution

JAKARTA (JP): A legislator is charging that a bill on limited companies, to be reviewed soon by the House of Representatives, does little to address the ascendancy of laissez faire capitalism in Indonesia, which has spurred the growth of conglomerates and monopolies.

Representative Aberson Marle Sihaloho told The Jakarta Post yesterday that the bill also contradicts the 1945 Constitution, which stipulates that society must be constructed to protect the welfare of all.

"Even the Commercial Code of 1938 which will be replaced by the new legislation ... stipulates some articles to protect minority shareholders," Sihaloho said, referring to the 1938 Dutch legislation.

He stressed the importance of limiting the votes of powerful private shareholders in listed companies.

The bill, on limited-liability companies (Perseroan Terbatas) which contains 128 articles, was finally submitted to the House last month after 20 years of revisions.

The Ministry of Justice initially proposed the bill in 1974 to the State Secretariat, but changes in the business world required revisions.

According to Sihaloho, a representative from the Indonesian Democratic Party, the bill should adhere to Article 33 of the 1945 Constitution which stipulates that the economy be managed for the public interest.

Family system

The first paragraph of Article 33 states: "The economy shall be organized as a common endeavor based upon the principle of the family system."

"One-share-one-vote is the basic principle of capitalism," Sihaloho said, as if to remind the public that the independence of Indonesia was pursued to fight against capitalism.

Meanwhile, Soedargo Gautama, a lawyer who helped write the bill, said that the long delay in the completion of the bill was caused by the demand from foreign investors for the one-share-one-vote principle.

Soedargo was quoted by Tempo weekly as saying, "We could understand the demand, as major shareholders they surely do not want to be treated equitably with the minority ones."

Another noted lawyer, Komar Kantaatmadja, however, sees remarkable progress in the bill in that it stipulates the protection of minority shareholders.

The bill, for example, rules that decisions on mergers, acquisitions and liquidation shall be taken at a meeting which is attended by at least 75 percent of the shareholders and shall be adopted by at least 75 percent of the quorum.

Closed firm

Sihaloho also noted that the bill allows for large firms to obtain a monopoly in a strategic industry even though they are privately-owned, usually by members of one family.

He called this a "closed company" to differentiate it from a listed company or public firm.

"It's unfair. It means that the bill tolerates the accumulation of capital by a certain group just like in the present situation," Sihaloho said.

He pointed to the privately-owned PT Bogasari Flour Mills as an example. This firm has gained abundant benefit from its monopoly in the production and distribution of wheat flour in Indonesia since the 1970s, at the expense of society at large.

The legislator said that a large corporation such as Bogasari, should be forced to go public because to redress the injustice and redistribute at least some of the capital.

The majority shareholder of the Jakarta-based Bogasari is PT Indocement Tunggal Perkasa, which is controlled by Indonesia's number one tycoon, Liem Sioe Liong and Sudwikatmono, a politically connected entertainment mogul.

Sihaloho said that the bill on limited companies should be delivered to the House in a package with other bills on trusts, small businesses, capital markets and balancing the money allocated to the central government and provincial administrations.(09/vin)