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A group of legal and economic experts slammed Friday the
Business Competition Supervisory Commission's (KPPU) ruling against
Temasek Holdings, saying it was flawed and damaged the country's
investment climate. The Examination Council, as the group calls itself,
said in a report that Temasek's cross-ownership in PT Telekomunikasi
Selular (Telkomsel) and PT Indosat did not lead to a monopoly as
Temasek did not own majority stakes in the two mobile
telecommunications companies.
Temasek owns a 54.15 percent stake in SingTel Group, which holds a 35
percent stake in Telkomsel, while Singapore Technologies Telemedia
(STT) -- entirely owned by Temasek -- owns a 75 percent share of Asia
Mobile Holdings, which holds a 41.9 percent stake in Indosat.
Meanwhile, state-owned telecommunications operator PT Telkom owns a 65
percent stake in Telkomsel and a 14.5 percent stake in Indosat.
"Therefore, Temasek couldn't control Telkomsel and Indosat. It is the
government that heads those companies," the council said.
The council was established on Nov. 22, three days after the KPPU's
ruling, through an initiative of a local non-governmental organization
called Indonesia Development Monitoring (IDM), which was formed in
2005. The IDM has appointed 10 legal and economic practitioners as
members of the council. IDM director Dwi Mardianto said the council
scrutinized the KPPU's ruling for two weeks to see whether the
anti-monopoly watchdog had made the right decision.
"It turns out that the KPPU's ruling is weak as it is not in line with
the legal grounds adduced in its own arguments," he said. For example,
the council pointed to the KPPU's statement that customers of Telkomsel
and Indosat had been prejudiced to the tune of between Rp 14.7 trillion
(US$1.58 billion) and Rp 30.8 trillion between 2003 and 2006, when, in
fact, tariffs of all the country's mobile communications providers had
been falling for the past five years. In its ruling, the KPPU ordered
Telkomsel to lower its average tariffs by up to 15 percent and pay a Rp
25 billion fine for having breached the Monopolies Law. It also ordered
Temasek to relinquish its entire indirect stake in either Telkomsel or
Indosat within two years. The KPPU's statement that it had not agreed
to the divestment of Indosat shares in 2002 was also unreasonable, the
council said. The tender for the sale of the Indosat shares was won by
STT.
"In 2002, the KPPU had already been established as the business
competition watchdog. It should have been aware at that time," the
council said. Responding to the KPPU's ruling that Temasek had breached
the Monopolies Law, the chairman of the Federation of State Enterprise
Labor Unions, Arief Poyuono, said the country currently had perfect
business competition as consumers could choose between the eight
existing cellular providers.
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