OTTAWA'S WARNING
'Be wary of buying Indonesian assets'

Following conflicting claims to the purchase of a stake in an insurance firm, Canada tells investors to think twice before buying into ailing firms

By R. Senthilnathan
IN GENEVA

CANADA'S trade ties with its largest Asean partner Indonesia have suffered a blow as Ottawa has asked local companies to think twice before buying up assets of their troubled business partners in Indonesia.

'Although we are not discouraging Canadian companies from investing in Indonesia, we want them to use caution when purchasing assets that are put up for sale under the Ibra and the Ministry of Finance,' said Mr Reynold Moiron, a spokesman for the Canadian Department of Foreign Affairs and International Trade.

Ibra stands for the Indonesian Bank Restructuring Agency.

Canadian officials have been irritated recently over what Mr Moiron called as 'unacceptable harassment' of the employees of the PT Asuransi Jiwa Manulife Indonesia, a Canadian-Indonesian joint venture that has run into trouble after a British Virgin Islands-based firm complained of a share certificate forgery.

When Jakarta did not respond to Ottawa's attempts to get the issue settled, Canada intervened at the highest level.

Prime Minister Jean Chretien sent a letter to Indonesian President Abdurrahman Wahid, but Mr Moiron said he was unaware of any reply from Jakarta.

The issue in question is whether the 40 per cent stake in PT Manulife Indonesia, that was bought recently by the Canadian insurance giant, Manulife Financial Corporation (MFC) for US$20 million (S$35 million) from the now-bankrupt PT Dharmala Sakti Sejahtera insurance firm, is legal.

The late October purchase, through a government-sanctioned auction, increased MFC's stake in the Manulife Indonesia to 91 per cent.

However, soon after the MFC purchase, Roman Gold Assets of British Virgin Islands claimed it had bought the same stake a week earlier from a Samoa-based company for US$50 million. It also complained that share certificates had been forged.

The complaint landed Adi Purnomo, senior vice-president of Manulife Indonesia, in jail, where he was held without charges for three weeks before being released recently.

However, Mr Moiron said it was too early to say if Canadian investors would see the Manulife crisis as a sign of poor investor security in Indonesia.