Jakarta stalls once again in dispute resolution

Jakarta stalls once again in dispute resolution
Published: 01 April 2005

Soon after it took office last October the government of President Susilo Bambang Yudhoyono pledged to move quickly to resolve three high-profile disputes with foreign investors that for years had proved poisonous to Indonesia’s investment climate.  "Indonesia now is a new Indonesia," the incoming chief economics minister, Aburizal Bakrie, declared after a few weeks on the job. "We are not going to make policies which are anti-business." 

A long-running fight with Cemex, the Mexican cement group, over control of Indonesia’s largest cement maker would be settled peacefully. So too would a legal battle with American power investor Karaha Bodas, which five years on is struggling to get Indonesia to honour a US$261m arbitration ruling related to an abandoned geothermal project.  

Government advisers insist they are still trying to resolve the disputes, and that responsibility for delays rests elsewhere. Uncooperative regional officials and unions, they add, are blocking a compromise that in January was "within minutes" of ending Cemex’s battle for control of Semen Gresik. The Mexican company last month said it would proceed with international arbitration.  

In a recent interview, Jusuf Kalla, vice-president, argued foreign investors were wrong to grumble.  "Many companies protest if (Indonesian) courts implement the law. Indonesia, Mr Kalla insisted, was within its rights not to honour an agreement to grant Cemex majority control of Semen Gresik.