Manulife dispute may affect RI's ties with Canada, others
The Jakarta Post, Jakarta
As Indonesian and Canadian top officials trade barbed comments in the mass media over the Manulife dispute, fears are now growing that the case could cost Indonesia more than just its relations with Canada.
On Friday, Vice President Hamzah Haz said Canada should not "overreact" to the Manulife bankruptcy case, urging the latter to respect the judicial process here.
"I think Canada should not overreact. We, you know, have a legal process which is in effect. And Canada must not try to threaten us," Hamzah told reporters.
He was reacting to a newspaper report that quoted Canada's Foreign Minister Bill Graham as saying his country would look at all options, including sanctions, after Indonesia's Minister of Finance Boediono said his government would not intervene in the Manulife dispute.
"We will be looking at just what international steps are available to us, particularly in terms of international financial instruments," Graham was quoted as saying by Canada's National Post daily.
Visiting Canadian Secretary of State for Asia Pacific David Kilgour declined on Friday to confirm the sanctions threat, but said that his government was not overreacting.
Kilgour is here on a four-day visit until Monday. The visit, planned before the Manulife bankruptcy ruling erupted, was originally aimed at celebrating 50 years of Indonesia-Canada diplomatic relations.
The Canadian government has asked the Indonesian government to get involved in resolving the case. But both Hamzah and Boediono said that the government would not intervene, but allow the legal process to take its course.
Canada is a member of Indonesia's major donor consortium, the Consultative Group on Indonesia (CGI), which, in November last year, pledged some US$3.14 billion in loans to help finance the 2002 state budget. Canada is also a member of the Paris Club of creditors, which earlier agreed to reschedule Indonesia's $5.4 billion in sovereign debts maturing this year and next.
The commercial court declared last week the local insurance unit of Canada's Manulife Financial Corp., PT Asuransi Jiwa Manulife Indonesia (AJMI), bankrupt after a receiver of the now- defunct PT Dharmala Sakti Sejahtera (DSS) filed a bankruptcy petition over failure to pay dividend in 1999. AJMI has insisted that no dividend was authorized by shareholders during that period.
The bankruptcy ruling, which was reached in a two-to-one vote of three judges, has become controversial because AJMI was a solvent company, and there have been reports that the founder of DSS, the former partner of Manulife via AJMI, has been accused of trying to defraud Manulife, as the latter had bought DSS's 40 percent stake in AJMI in 2000 at a government auction.
Manulife has appealed to the Supreme Court.
The Canadian government and the International Finance Corp., the investment arm of the World Bank, have warned the Indonesian government that the Manulife fiasco could discourage badly needed foreign investment from returning to the country as the issue only served to strengthen the perception of legal uncertainty here.
The World Bank is the coordinator of CGI.
Economist Raden Pardede expected the Supreme Court to be able to deliver a "sensible verdict," because otherwise the state budget would be seriously affected and foreign investors would truly stay away from the country.
"Should the CGI and other multinational donors halt their loans, we will face budget problems," he told The Jakarta Post.
Separately, businessman Sofyan Wanandi urged the Supreme Court to immediately deliver its decision so as to avoid any further drop in foreign investor confidence in the country.
Meanwhile, Supreme Court Chief Justice Bagir Manan, quoted by detik.com online news service, said he had ordered prosecutors to investigate allegations that the judges might have been bribed in their two-to-one bankruptcy ruling.