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Despite getting entangled in what it says is an unfair legal dispute in Indonesia, executives of the Singapore investment firm are not about to shake the dust off their feet and quit the neighbouring country.

In fact, Temasek’s executive director Simon Israel sees a clear distinction between Indonesia’s well-intentioned leaders and the anti-monopoly watchdog that wants Temasek to pay a 25-billion-rupiah ($3.9-million) fine and exit one of Indonesia’s top two mobile phone operators soon.

“I think one has to use the word ‘Indonesia’ with some caution,” Mr Israel said at the company’s first media briefing since KPPU, also known as the Business Competition Supervisory Commission, declared on Monday that Temasek was guilty of controlling the telecommunications market.

“I believe the Indonesian government has been working very hard to improve the investment climate in Indonesia. As a long-term investor, we are very supportive of that,” he explained.

On the other hand, “the KPPU, as I understand it, is an independent body. As to what their objectives are and their motivation, other than what is prescribed under the law, frankly, I can’t answer that. Because the whole case seems illogical to me”.

Corruption has been raised as a possible factor swaying the KPPU’s decision. Temasek’s defence submission included “a letter from a labour leader alleging the corruption of KPPU“, said the firm’s lawyer in Jakarta, Dr Todung Mulya Lubis.

Bribery allegations arose after the commission plunged into a full-fledged investigation of Temasek’s indirect stakes in Telkomsel and Indosat, despite the Federation of State Enterprises Labour Unions withdrawing its complaint that Temasek operated a monopoly.

Media reports alleged KPPU officials were bribed by Altimo, a Russian company allegedly behind a plan to force a Singapore divestment of Indosat.

The year-long controversy, however, has not caused Temasek to write off Indonesia as an investment destination.

“I don’t think we should be deterred or become exceptionally cautious as a consequence of something which hasn’t been resolved,” said Mr Israel. “We should let this go through due process to see what the answer is, before we jump to conclusions about what we should or should not be doing in the future in Indonesia.”

Temasek’s fight against the KPPU decision could be a long-drawn process.

The Singapore firm is waiting for the release of the watchdog’s entire verdict, after which it will file an appeal with Indonesia’s District Court within 14 days and wait another 30 days for a judgment. If the outcome is still unsatisfactory, the case will go to the Supreme Court, which could take up to the middle of next year to reach a conclusion, said Dr Mulya.

The last resort is international arbitration, which could take one to three years, said Singapore Senior Counsel Davinder Singh, one of three lawyers flanking Mr Israel at the briefing.

Mr Singh said the KPPU’s decision-making process contained “fatal flaws” and contradicted the Indonesian government’s stamp of approval given to ST Telemedia’s — Temasek’s wholly-owned unit — purchase of Indosat in 2002.

Others said KPPU’s verdict hurt foreign investor sentiment.

“It’s up to the Indonesian government to go into damage control mode and … solve this problem now,” Indonesian parliamentarian Alvin Lie told Channel NewsAsia.

But for Temasek, such woes are neither new nor daunting. In 2005, ST Telemedia failed to buy into India’s Idea Cellular because of a perceived link to Temasek’s partly-owned SingTel.