Local And International Investors Are Worried About ASDP's Potential For Criminalization Of Nusantara Bridge Acquisition

JAKARTA The potential for criminalization of the acquisition of PT Jembatan Nusantara (JN) by PT ASDP Indonesia Ferry raises concerns for local and international investors. The government and stakeholders must ensure that law enforcement, especially eradicating corruption, is carried out in a transparent and evidence-based manner.

"The problem is that when ASDP has followed the principles of Good Corporate Governance (GCG), which is strict, in accordance with standards and transparency, it is still accused of being corrupt, it becomes one variable inconsistency and also unclear in interpreting regulations and standards. That then becomes a ghost for investors to enter Indonesia.," said Dr. Fithra Faisal Hastiadi, economist and lecturer at the Faculty of Economics and Business, University of Indonesia (FEB UI) in a limited discussion at the University of Indonesia on Thursday, September 12.

Dr. Fithra added, Acquisition of private JN companies to strengthen the valuation of ASDP SOEs during the IPO. This step is quite strategic. If the goal of his business strategy is to get direct funding from the market through the IPO, then this should be done.

"It should be noted when BUMN acquires JN through a strict due diligence process and involvement from international institutions and obtains approval from shareholders and Minister of SOEs. This is in accordance with the transparency and governance package when it wants to be listed on the Indonesia Stock Exchange (IDX). The process is in accordance with the standard so it must be transparent. If it is not appropriate, it will definitely be rejected on the IDX.," said Dr. Fithra.

Although the Corruption Eradication Commission (KPK) previously confirmed that the acquisition of 100% of JN's shares by ASDP on February 22, 2022 was legal and showed no indication of bribery, the KPK is currently investigating allegations of corruption related to "state losses". This investigation involved three ASDP directors, including President Director Ira Puspadewi, and former JN owners who had been named suspects, causing tension in the Indonesian sea transportation sector. The KPK is considered invalid in determining suspects. They have sued the KPK at the South Jakarta District Court at the end of August 2024. The KPK has not yet attended the trial of the pretrial lawsuit. There has been no detailed explanation regarding the basis of the KPK's calculations in mentioning state losses, especially considering that the Supreme Audit Agency (BPK) has validated ASDP's investment.

Actually what investors need is transparency and consistency. If the allegations are corruption, there must be a clear document and can be used as a reference. The more opaque it becomes an obstacle for investors to enter Indonesia because it will signal negative to the business climate and investment in Indonesia," said FEB UI economist Dr. Fithra.

UI economist Dr. Fithra continued, Consistency is a problem in the case of JN acquisition by ASDP. It is not a problem of corruption but transparency and consistency. So that when the KPK is not transparent, and the KPK refers to certain cases as stumbling over corruption, even though the reference is also unclear, it will be a concern for investors to enter Indonesia. It could be that when the investment comes in, then it is obedient, already transparent in accordance with the regulations, suddenly out of the blue there are allegations of corruption, even though the reference that makes a reference for the accusation does not exist, which can be said to be very minimal because from the existing documents, for example, it does not show any indication of corruption; this is a problem of transparency in its corruption prosecution.

Dr. Fithra emphasized, The ASDP step is in accordance with regulations and standards, especially when it involves international institutions. So that when there are allegations of corruption related to the process that should have been transparent, it will become a problem. So this is actually not corruption but policy consistency and transparency. It's not a matter of corruption. If it is corruption, then it is clear which documents are referred to, then what the process will be like.

According to the KPK, the acquisition of JN, a leading ferry company in Indonesia, involved the purchase of 53 used vessels that were deemed ineligible and the company's debt was almost Rp600 billion. The KPK claims that there is a state loss of at least Rp1.27 trillion, namely the transaction value itself. Taking over the debt with the company's assets is a common practice in business acquisition. State loss determination can only be made absolutely by the BPK.

Judging from ASDP's steps in acquiring JN with a strict due diligence process involving leading institutions, there are no indications of an error that can justify criminalization of the director of BUMN and private entrepreneurs.

* The Need for Legal Certainty in Creating a Safe Investment Climate * Eradicating corruption is important for creating a conducive business environment, increasing investor confidence, and protecting Indonesia's reputation as a safe and stable investment destination. If the anti-corruption system in Indonesia creates legal uncertainty by criminalizing entrepreneurs without clear evidence of bribery, this can cause investors to feel insecure, hinder investment interests, and damage Indonesia's reputation.

Justice should be the main principle. It is important for the Indonesian government to increase transparency, accountability, and legal systems in order to improve the investment climate and attract more investors.

The acquisition of JN by ASDP is part of the 2020-2024 ASDP Long-Term Plan to support fleet expansion and crossing routes, bring significant strategic, operational, and financial benefits, and support ASDP's plan to conduct an IPO. Under the leadership of SOE Minister Erick Thohir, this expansion strengthens the position of ASDP as the pioneer of innovation in the Indonesian ferry industry. This is in line with President Joko Widodo's maritime vision by strengthening national maritime infrastructure through the addition of a ferry fleet and increasing the capacity of sea transportation services.

JN's acquisition increased the ASDP fleet from 166 to 219 units, making it the largest ferry operator in Indonesia, expanding the reach and frequency of ASDP services, and increasing operational capacity. Cruise optimization and routes increase revenue, efficiency, and service quality. Currently, ASDP has 311 lanes, with 70 percent of which are pioneer routes. Strengthening commercial trajectories is needed to support the sustainability of ASDP services and maintain a balance between the two services.

In 2023, ASDP recorded the highest net profit in its history (Rp 637 billion). Without this acquisition, ASDP is at risk of facing exposure loss. JN operates profitable commercial routes. Acquisition of 53 ferries and 21 commercial sea lines will take time and high risk without acquisition. ASDP's total assets jumped from IDR 8.22 trillion in 2021 to IDR 11.05 trillion in 2023, reflecting fleet expansion and a route that strengthens the company's position.

"Investors will definitely see this BUMN as healthy because it can carry out network acquisitions outside SOEs; carry out strategic acquisitions that increase its valuation. I think this is very positive signal for the development of SOEs and for sectoral developments, especially in the maritime sector," said UI economist Dr. Fithra.

The addition of 53 ferries from JN is in line with the government's efforts to expand and strengthen maritime infrastructure and increase marine-based economic integration.

In an audit report released on March 14, 2023, BPK concluded that the management of investment activities at ASDP had been carried out in accordance with laws and regulations and internal provisions of the company in all material matters. The results of the BPK audit are a reference or reference from the market," explained Dr. Fithra.

It is important to clarify the definition of "state losses" from the KPK, considering that the KPK has not provided detailed calculations. In general, criminalization of investors without clear evidence and media manipulation can harm the investment climate, as well as damage Indonesia's reputation and democracy. Objective and evidence-based evaluation is important to maintain investor confidence and economic stability.

Acquisition involves in-depth studies and due diligence by domestic and international independent institutions to ensure the implementation of Good Corporate Governance (GCG), as well as obtaining approval from shareholders and Minister of SOEs. Due diligence was carried out by PT Deloitte Consultant Indonesia for Financial Due Diligence, and PricewaterhouseCoopers Indonesia (PwC) for Tax Due Diligence. Hiswara Bunjamin & Tandjung (HBT) acts as legal advisor, PT Bureau of Indonesian Classification (BKI) handles Engineering Due Diligence, and KJPP Muttaqin Bambang Purwanto Rozak Uswatun & Partner (MBPRU) conducts Asset Due Diligence. PT Sarana Multi Infrastructure (Persero) acts as Financial Advisor. KJPP Suwendho Rinaldy & Partner conducts Stock Appracial. Acquisition is carried out with assistance from the Financial and Development Supervisory Agency (BPKP) as well as the Prosecutor's Office. International investors have confidence in the assessment of Deloitte and PwC. Indonesia must respect the global community of investors to attract Foreign Direct Investment (FDI).

The acquisition price of JN is set at IDR 1.27 trillion, which is lower than the independent valuation of IDR 1.34 trillion. Purchase of assets below market value provides significant benefits for ASDP and the state treasury. This price difference allows ASDP to strengthen its financial position and support further development and expansion. Savings from lower acquisition prices support the efficient management of the state budget, strengthen ASDP's position, and contribute to the growth of the country's economy and welfare.

The government focuses on efforts to attract investment into Indonesia to support economic growth, infrastructure strengthening, increasing competitiveness, and job creation. Investment also has the potential to increase state revenue, encourage technological advances, and diversify the economy, which will ultimately strengthen people's stability and improve people's standard of living. The potential criminalization of JN acquisition by ASDP should not be a bad precedent that can scare investors, which is against the Government's vision.