Subject: ST: SingTel firm told to quit E. Timor project

The Straits Times (Singapore) December 25, 2000

SingTel firm told to quit E. Timor project Susan Sim

JAKARTA - In what appears to be a case of asset nationalisation by a United Nations body, a SingTel joint venture here is being asked to relinquish control over its telephone network in East Timor.

The company, Bukaka-SingTel International, has some US$ 6 million (S$ 10.4 million) worth of fibre-optic cables buried in formerly Indonesian East Timor, much of which was laid barely six months before pro-Jakarta militias laid waste to the land.

Under a 'build, operate and transfer' contract it had with Indonesia's Telkom, the company was supposed to have up till 2010 to recoup its investment and turn a profit.

But its Indonesian workers fled as international peacekeepers moved in last September after a bloody independent ballot.

Now, as Indonesian authorities engage in painfully slow negotiations with the United Nations Transitional Administration in East Timor (Untaet) over the fate of Indonesian assets there, among other things, companies like Bukaka-SingTel are caught in the interstices while the UN pushes ahead with reconstruction.

In a letter to the joint-venture - which is 40 per cent owned by SingTel - sent earlier this month, an Untaet deputy director for Information Technology, Post and Telecommunications asked that it provide the blueprints for the 15,000 phone lines it laid.

'They want all the installation drawings for the cables we laid from city to city so that they can call for a tender and allow the bidder to take into account the possibility of using the existing infrastructure,' Bukaka-SingTel president director Ho Seow Hong told The Straits Times.

There was no mention of ownership rights or compensation, he said, noting: 'I can't just write the assets off because they're still there and we're supposed to operate them under Telkom's licence. The assets revert to Telkom in 2010.'

In a tender notice posted on Aug 24 calling for companies to register their interest in building, operating and transfer of a complete telecommunication system in East Timor, Untaet said it would make available to bidders existing assets.

The assests include copper and fibre-optic cables, whose replacement value it estimated at some US$ 10 million, as well as a central electronic switch.

Bidders would also be able to use 23 steel towers already located in the territory, whose building costs it estimated at US$ 35 million, as well as some existing properties.

Mr Ho said that while the cables and the switch referred to were likely those installed by his company, the towers belonged to Telkom.

A new operator would be able to hold costs down substantially if he used this infrastructure.

Ideally, he would like to negotiate the issue of compensation with Untaet in conjunction with Telkom.

Industry sources say that Telkom has already been approached by other interested parties to jointly develop East Timor's telephone network using its existing equipment.

But the official watchword in Jakarta was to exercise caution.

Indonesian Foreign Ministry political affairs chief Hassan Wirajuda told The Straits Times on Friday that assets were 'a major area of negotiations between Indonesia and Untaet, but we have not reached that far to conclude who owes the assets'.

The official added: 'This has to be looked at as a succession issue. What are the legal obligations and liabilities of a succeeding government?'

In the meantime, Untaet, anxious to rebuild the territory, has frozen all land transactions by Indonesian citizens and companies and appears to be moving towards stripping foreigners of any land bought before the Aug 1999 ballot since that was forbidden under Indonesian law.

Attempts by The Straits Times to contact Untaet telecommunications officials for comments last week were not successful because the listed phone numbers were 'temporarily disconnected'.

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