The RI quagmire that hinders investor confidence

President Abdurrahman Wahid ordered on Monday a halt to the legal proceedings of the Dharmala-Manulife insurance business dispute. Corporate legal expert Amir Syamsuddin, an arbiter at the Indonesian Agency of National Arbitration (BANI), shares his views with The Jakarta Post:

Question: Since December the handling of the Dharmala-Manulife case has attracted international attention and the proceedings have not been entirely clear despite the detention of two executives. What are your comments on this matter?

Answer: The Dharmala-Manulife case shows the country's National Police and legal system to be in a real mess. How could the police set up two different investigating teams based on contradicting reports? There have also been further attempts to halt the case.

This is evidence that suggests that even the police can be controlled and that their poor knowledge about the case and the legal system are susceptible to being used by certain parties.

What about the Jakarta Commercial Court?

The Jakarta Commercial Court has been torn apart as there were reportedly too many irregularities in the testimonies heard during the hearings.

Since the case has become the subject of international interest, the question is how the Commercial Court, in its current condition, affects potential foreign investors.

Independent ad hoc judges were expected to enhance the image of the Jakarta Commercial Court. Yet the judges were never given significant roles ... and dissenting opinion still depends upon the chairing judge.

How can the government improve the judicial system?

It isn't related as much to human resources as it is to facilities. The government has boasted that the basic monthly salaries for a judge now ranges from between Rp 1.75 million and Rp 3.5 million (between US$153 and $305). Do these figures make sense? I wonder why the government is so stingy in improving human resources while it can extend trillions of rupiah to save ailing banks.

What can we expect from judges with such salaries? Judges in Singapore are paid between S$100,000 and S$200,000 (between US$55,300 and $110,500) per year. In the U.S. the figures range between US$200,000 and $600,000 annually.

The IMF has approved the recapitalization plan in Indonesia. It should have also asked the government to improve the welfare of its human resources.

How far has this condition hindered foreign investment?

In the long run, if the judiciary system remains poor, potential foreign investors will not be interested in investing in Indonesia. There are several foreign investors still eying Indonesia, but most are dealing with "trivial" sectors such as the pharmaceutical industry which can still control local prices of medicines due to their patents. But the "real" investors who are expected to transfer technology and improve human resources are still afraid of the high risk of dispute.

What happens when there were disputes?

Many of the parties involved in disputes prefer to go to international arbitration to file their claims. But it would not be of much use because any verdict made by international arbitration can be appealed in Indonesia.

They should go to the Indonesian Agency of National Arbitration (BANI). The agency is good, independent and professional.

Why would disputing parties in Indonesia go to BANI instead of going to international arbitration?

With regard to commercial disputes, BANI is accredited with absolute authority in issuing a binding decision, as stipulated by our Arbitration Law. Therefore conflicting parties won't waste time by appealing the case to a higher court and so on. The case is then closed, and publication can be avoided.

The arbiters are independent and professional. They are selected from various backgrounds. They are professional judges and lawyers with qualifications, credibility and reputation.

A decision made by international arbitration will not have any executorial effect in Indonesia, though the government has signed the pact on international arbitration ...

So you think the dispute between PT AriaWest International and PT Telkom won't end soon even after a decision is issued through international arbitration?

Yes, because the related parties could appeal not only in Indonesia but also in the country where the arbitration claim had been filed. To enable the resolution to have an executorial effect in Indonesia, there should be a kind of ruling from the Supreme Court. So it will be time-consuming.

There will probably be many barriers to make the verdict (by international arbitration) effective in Indonesia. It will be an easy target for appeals. Especially when there is a huge amount of money involved in the case.

How do you view the arbitration claim filed by AriaWest against Telkom?

I think the cause of the dispute may also relate to their different points of view in running their businesses. One party may have been preoccupied with the social aspect, as telecommunications is a public utility, while the other was more concerned with the commercial aspect. What I am afraid of is the possible impact of the case, that there will be intergovernmental pressure if the case continues to drags on. (I. Christianto).