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Selling Indosat = selling Indonesia's security to the Sings

1605 Views 4 Replies 2 Participants Last post by  MARINHO
Researcher condemns Indosat divestment
The Jakarta Post, Jakarta April 16, 2007

A senior researcher has condemned the divestment of state-owned PT Indosat to Singapore, saying the transaction has not only caused billions of dollars in losses to the state but has also placed the country's sovereignty at risk.

Mochtar Pabottingi, a political analyst for the Indonesian Institute of Sciences (LIPI), said that with the controversial divestment, Indonesia has jeopardized the secrecy of its defense and security sectors.

"All secret things in the defense and security sector have been left open not only to Singapore as a shareholder, but also to the world. We can no longer conduct secret investigations, missions and research because all our communications through the Indosat satellite can now be intercepted by Singapore and other countries," he told The Jakarta Post over the weekend.

Mochtar launched Thursday a 29-page book titled, Risiko Politik Divestasi Indosat (Political Risks of the Indosat Divestment).

The cash-strapped Indonesian government sold 42 percent of its share in Indosat to Singapore Technologies Telemedia Pte (STT) for Rp 5.1 trillion in 2002.

The Singaporean company is a private investment firm that is under the wing of Temasek Holdings, the investment arm of Singapore's government. It is owned wholly by the Singaporean Finance Ministry.

Mochtar warned that because of Singapore's dominance of the Indonesian telecommunications industry, Indonesia would be at risk of suffering losses if the two countries became involved in armed conflict.

The sale of Indosat shares to Singapore was foolish, he said, and undertaken by officials he alleged were corrupt.

Mochtar said that following the "up-for-grabs" divestment, the Singaporean company would be unaccountable as a shareholder and would benefit enormously from the deal.

"Indonesia has no choice but to buy back the Singapore stake because Indosat is a very strategic asset for the country. (The company's) ownership has to be fully in Indonesian hands," he said.

Amien Rais, former speaker of the People's Consultative Assembly, concurred and said that because of the new capital invest law, Indonesia was now offering its territory and rich resources to foreign countries.

"Indosat is controlled by Singapore and giant American mining companies ExxonMobil Inc., Chevron Pacific Inc, Newmont and Freeport McMoran Inc. have secured a lengthy concession to mine our oil, gas and gold deposits in Sumatra, Java, West Nusa Tenggara and Papua," he said Friday in a political discussion.

"With the new investment law, we are offering 95-year leases for ownership of land. We are turning into a nation of slaves. Most people will become watchers and slaves in their own homeland."

Amien acknowledged that Indonesia has offered Rp 15 trillion to the Singaporean government to reacquire STT's stake in Indosat, but said the deal would unlikely be secured.
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this is new but old story...

They did too with Thailand telecom.

did the government added a buy back option when negotiating the contract with Temasek?
this is new but old story...

They did too with Thailand telecom.

did the government added a buy back option when negotiating the contract with Temasek?
What I understanded that in the case of Thailand it was not taken into negotiations. In the case of Indosat I remember that Laksamana Sukardi had made some changes which were not in favour of the Indonesian government.

The Indonesian government should create a new company which is free from foreign interference and which should own all fysical facilities, like the earth station in Jatiluhur.

It's strange that with the ongoing discussion of how to build a stronger defense force such a critical asset like Indosat, was sold to the Singaporeans.

It's better for the government to cease privatisation and to bring all companies in which it's has a stake into a holding company.
Pressure mounts for Temasek to divest stake in Indosat

Vincent Lingga, The Jakarta Post, Jakarta

Remember Mexico's Cemex, the world's third largest cement group, which sold its 25 percent equity stake in PT Semen Gresik, Indonesia's largest cement company, to local conglomerate Rajawali in mid-2006 when Indonesia's cement market was enjoying robust growth?

Cemex, a financially strong company with operations in almost 50 countries, felt compelled to divest itself of Semen Gresik after suffering through more than five years of smear campaigns, a string of lawsuits and worker demonstrations orchestrated by renegade management at Semen Gresik's units, in collusion with politicians and senior officials.

The whole experience was quite disheartening for Cemex because it acquired, through an international competitive bid, the Semen Gresik shares by paying a premium price of more than 125 percent in October 1998, when Indonesia was still mired in political and economic crisis and shunned by most foreign investors.

A similar campaign seems to have been mounted over the last few months to discredit Singapore's government-owned Temasek, which acquired, through its subsidiary ST Telemedia, 42 percent of PT Indosat, Indonesia's second largest mobile phone operator.

Temasek won that stake through an international competitive bid in late 2002 by paying a premium price of more than 50 percent.

No one is sure who is behind the escalation of the negative information campaign against Temasek, but the bad publicity has increased, especially since October 2006, a few weeks before Russia's Altimo telecommunications investment company opened an office in Jakarta.

Altimo's representative in Jakarta, Soeharto, has repeatedly denied his company would resort to such dirty tactics, but he did confirm Altimo's commitment to investing up to US$2 billion in Indonesia's mobile telephone market.

Last October, the federation of trade unions at Indonesia's state companies lodged a complaint against Temasek with the Business Competition Supervisory Commission, accusing the Singapore company of violating the anti-trust law by dominating the market and engaging in price-fixing practices in collusion with PT Telkomsel.

Temasek also owns 35 percent of state-controlled Telkomsel, the largest mobile phone operator in Indonesia, through its subsidiary Singapore Telecommunications Ltd.

Copies of confidential documents profiling Temasek, its operations and investment strategy overseas, and providing technical briefings on the alleged monopolistic practices by Indosat, were circulated to trade union leaders and several analysts and newspaper editors critical of the Singapore firm.

Several local media ran news stories quoting analysts and politicians denouncing what they called Temasek's control of Indonesia's mobile phone market. In essence, they argued that foreign ownership of such a strategic company as Indosat was a threat to Indonesia's security and defense and the safety of databases.

Political analyst Mochtar Pabottingi came out with a 29-page analysis last month concluding that Temasek's acquisition of Indosat's shares caused the government billions of dollars in losses and jeopardized the country's defense and security sectors.

Pabottingi urged the government to buy back the Indosat shares from Temasek.

However, only one week after the release of his analysis, the country's largest telecom company -- state-controlled PT Telkom -- disclosed that its subsidiary, Telkom International, would team up with Singapore Telecommunication Ltd. (Singtel) to expand operations overseas, notably in data communications in Asia.

Metro TV ran a discussion program with three observers, all critical of Temasek's shareholding in Indosat, on Tuesday evening. Their message was similar to Pabottingi's views.

Curiously though, a counter-campaign suddenly sprang up against Altimo. Copies of documents allegedly linked to Altimo and reprints of Russian Tribuna newspaper stories circulated in Jakarta last month. They revealed what was alleged to have been a conspiracy involving Indonesian senior officials and politicians, public relations consultants and several senior editors to discredit Temasek and force it to sell its Indosat shares.

Then in early April, in a new twist in favor of Temasek, the federation of unions at state companies withdrew its complaint against Temasek over the alleged monopoly and abuse of market power, due to what federation chairman Arief Poyuono called a lack of legal evidence.

"In addition, we felt that some people had taken advantage of the issue to make Temasek ... uncomfortable and sell its shares," Arief told weekly news magazine Tempo.

The complaint by the trade unions did seem weak, given the wide range of technology available and the number of players in Indonesia's cellular market. Besides Indosat and Telkomsel, there are a number of other mobile and fixed wireless, 3G and CDMA operators, including Telkom, Bakrie Telecom, Excelcomindo, Mobile 8, Lippo Telecom, Mobisel, Primasel, Mandara, Hutchison CP, Bimantara Citra and Batam Bintan Telecom.

And there is still room for more players because Indonesia's cellular phone market, though the fastest growing segment of the telecommunications industry, is still very young. Only about 25 percent of the country's 230 million population have cell phones.

The Business Competition Supervisory Commission, however, should go ahead with an investigation of the federation's allegation of a monopoly and abuse of market dominance to resolve once and for all the controversy.

The smear campaign is not likely to prompt Temasek to follow Cemex's exit from the country, as long as it remains clean with regard to all the allegations used by the "conspirators" as ammunition to attack it. After all, telecommunications is one of the most promising industries in the country.

However, if such public-opinion "harassment" continues, the Singapore company may eventually get tired and call it a day.

Such subterfuge to discredit foreign investors may be deployed again in the future by vested interests conspiring to buy corporate shares below market price. There are still many politicians in the country who tend to exploit nationalist sentiments as a means to advance their hidden agendas.
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