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JAKARTA: Members of Indonesia's business community said the country's anti-monopoly watchdog has damaged the investment climate after it ruled that Singapore investment firm Temasek Holdings and its units had violated Indonesia's anti-monopoly law.
The country's legislators have urged the government to intervene to salvage the situation before it becomes worse.
Under President Susilo Bambang Yudhoyono, the Indonesian government has been rolling out the red carpet to woo foreign investors to boost economic growth. Several laws were amended and business processes were simplified.
But the business community said recent decisions by the country's anti-monopoly agency KPPU have undone the government's good work.
In its latest ruling, Singapore's Temasek Holdings and its units were fined US$2.8 million each for violating the country's competition law.
Temasek's units – SingTel and Singapore Technologies Telemedia – own shares in two of Indonesia's largest mobile phone operators, Telkomsel and Indosat.
The KPPU has also ordered Temasek to sell its stakes in either of the two telecom firms within two years.
Indonesia's International Business Chamber chairman, Peter Fanning, said: "Cases such as these, which leave us shaking our heads in bewilderment, have the effect of slowing down investment, turning away investment.
"It's not that investors are going to necessarily sit here and tell you, ‘We're going’. They simply won't come. They will vote with their feet as it were. That's the issue."
Indonesia's Member of Parliament Alvin Lie pointed out: "I don't think we need to go to international arbitration to wait for the damage. The damage has been done. So it's up to the Indonesian government to go into damage control mode and... solve this problem now."
The problem for foreign companies appears to be Indonesia's lack of legal certainty. And while such concerns have been expressed to the government, reforms have been slow in coming.
"It's far from the first case and unfortunately it probably won't be the last, and I'm sure it won't be the last," Mr Fanning commented.
And many, including Mr Lie, believes there is more to the case.
"I suspect there's a hidden agenda behind this - could be political, could be business interest. It remains to be seen," said Mr Lie.
The Indonesian government has so far refrained from commenting on the case.
But many experts said the administration cannot continue to remain silent on the questionable processes and flawed application of the law by the anti-monopoly watchdog. - CNA/ac
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