Singapore state investment firm Temasek Holdings said yesterday it had paid a 15 billion rupiah (US$1.7 million) fine imposed for breaching anti-competition laws in Indonesia’s telecoms sector.
In a statement, Temasek confirmed paying the fine imposed by Indonesia’s Business Competition Supervisory Commission, or KPPU.
The commission ruled in November 2007 that Temasek was guilty of anti-competitive behavior through its stakes in Indonesia’s two biggest domestic mobile phone operators, PT Telkomsel and PT Indosat.
Temasek said it made the payment in compliance with an Indonesian Supreme Court ruling that upheld the commission’s decision, but maintained it has “never been involved” in any irregularity.
Analysts said Temasek decided to pay the fine to avoid damaging further investment in Indonesia.
“I think that they clearly are looking to Indonesia as a potentially lucrative market for their investments,” said David Cohen, director of Asian economic forecasting at Action Economics.
He said it was easier for Temasek to pay the fine and “get on with things.”
Indonesia, a resource-rich country that is Southeast Asia’s biggest economy, is seen as a key emerging market by investors.
The Indonesian economy grew 6.1 percent last year, making it among the best performers in the G20 rich and developing countries.
The fine on Temasek is part of a total of 150 billion rupiah in penalties imposed on the Singapore state-linked investment firm and related companies by Indonesian authorities.
Temasek and nine other companies affected by the KPPU ruling, including Telkomsel, were each fined 15 billion rupiah.
In addition to the fine, the KPPU ordered Temasek to divest its holdings in either PT Telkomsel or PT Indosat.
Singapore Technologies Telemedia, a wholly owned unit of Temasek, sold off its interest in PT Indosat to business partner Qatar Telecom in June 2009.
Temasek indirectly holds 35 percent of Telkomsel through its 56 percent holding in Singapore Telecommunications Ltd (SingTel).
One of the world’s largest sovereign wealth funds, the collective value of Temasek’s global investments reached S$186 billion (US$145 billion) as of end March last year.
It also holds stakes in many of Singapore’s leading companies, including Singapore Airlines and Singapore Telecom.
In yesterday’s statement, Temasek senior managing director for strategic relations Goh Yong Siang said the company decided to pay the fine because it is a “long-term investor with a policy of complying with laws and regulations in all relevant jurisdictions”.
However, he said that Temasek “has never been involved in the operational or pricing decisions of PT Telkomsel or PT Indosat, and has not contravened Indonesia’s anti-monopoly laws.”