The RI quagmire that hinders investor confidence

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).