Loopholes closed in Indonesia’s bankruptcy legislation

The Financial Times reports bankruptcy cases against the profitable local operations of British insurer Prudential, in April this year, and Canadian rival Manulife in 2002 have shown the potential dangers facing foreign investors in Indonesia. The amendments allow only the finance ministry to file bankruptcy petitions against insurance, reinsurance, and some state-owned companies. They make the Capital Markets Supervisory Agency responsible for overseeing similar petitions against securities companies. Manulife Indonesia – now the country’s biggest insurance company – was declared bankrupt in 2002 despite being profitable, as a result of a dispute with a shareholder. Prudential’s profitable Indonesian operations faced bankruptcy proceedings in April after a disgruntled former agent, with whom the company was involved in a dispute, filed a bankruptcy petition against the British insurer. The case was thrown out by Indonesia’s Supreme Court in June. Full report in the Financial Times