Sale of Indosat stake to S’pore firm above board’

Indonesian minister defends the deal and warns that more moves to shoot it down will hurt investor confidence.

The sale of a major stake in Indonesia’s second-biggest telecommunications operator was done ‘above board’, State Enterprises Minister Laksamana Sukardi said here, dismissing accusations that he had a vested interest in the sale to Singapore Technologies Telemedia (STT).

The minister, involved in a war of words with national assembly chairman Amien Rais over the issue, also warned that any further attempts to derail the deal with STT could undermine Indonesia’s investment climate.

Sentiment has already been hit by the pullout of major foreign entities such as Sony, Nike and Reebok.

A more recent spat following the detention of two Indian software executives here also raised fresh concerns about the workings of the country’s legal system.

Speaking to senior Indonesian editors at a closed-door briefing late on Saturday, Mr Laksamana said Jakarta had followed constitutional guidelines and even won parliamentary approval for the privatisation decision.

‘Everything was done in a very transparent fashion,’ he said. ‘We did everything according to the book.’

STT, an unlisted subsidiary of Singapore Technologies, paid 5.6 trillion rupiah (S$1.1 billion) for a 42 per cent stake in PT Indosat, outbidding Malaysia Telekom for control of the firm.

But hundreds of Indosat employees staged a protest on Friday to demand that the government cancel the deal, even as shareholders who met on the same day approved the sale. STT will have four representatives on Indosat’s nine-member board of directors.

Mr Laksamana’s defence of the sale came in the wake of the demonstration and criticism, especially from Dr Amien and his National Mandate Party (PAN), whom sources said backed a losing rival consortium.

PAN legislators A.M. Fatwa and Fuad Bawazier prodded Dr Amien to lobby on behalf of Malaysia Telkom in October. The national assembly chairman broached the idea with Mr Laksamana.

But the minister, a senior member in President Megawati Sukarnoputri’s Indonesia Democratic Party-Struggle party (PDI-P), rejected the proposal given that the bid was way below what STT offered.

The resulting war of words saw Dr Amien accuse Mr Laksamana of being a foreign agent and of having made the mistake of selling state assets ‘cheaply and arbitrarily’.

Dr Amien toned down his comments over the weekend following threats of police action and a lawsuit by Mr Laksamana. He said in Yogyakarta on Saturday: ‘I’ve done my best to protect state assets, but apparently my fight is meaningless. That’s why I won’t comment, should the government decide to sell assets in the future.’

PAN members are, however, trying to get Parliament to act against the deal. But with just 34 seats in the 600-member House, the party faces an uphill task as other major parties will not back PAN.

A senior Golkar MP told The Straits Times yesterday: ‘This is one of the biggest investments into Indonesia this year. Why should we take sides with politicians who are thinking only of their own interests?’

He said the Islamic camp, which suffered from bad press after the Oct 12 Bali bombings, saw the Indosat sale as the ‘perfect opportunity to gain some ground back’ by accusing parties such as Golkar and the PDI-P of ‘not being nationalistic enough’.

While the detractors are unlikely to get their way, observers said that the larger issue now confronting Jakarta was how to repair the country’s image that had been tarnished again by the actions of a few politicians.

NO VESTED INTEREST

Everything was done in a very transparent fashion. We did everything according to the book.’
– State Enterprises Minister Laksamana Sukardi

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