Robert Go – When Singapore Technologies Telemedia (STT) paid 5.62 trillion rupiah (S$1.2 billion) for Indonesia's second-biggest telephone company last December, the story should have ended there.

Since the beginning of the Asian financial crisis in the late 1990s, no foreign company has spent more money on a single Indonesian acquisition. With many investors not even glancing this way, one would imagine that STT would receive a warm welcome.

But several hundreds marched in Jakarta last week demanding inquiries into the Indosat deal. Politicians are also taking swipes at one another over it, each for his own political purposes.

Dr Amien Rais, speaker of top lawmaking body MPR (People's Consultative Assembly), branded State Enterprises Minister Laksamana Sukardi a traitor for selling a "strategic national asset". Mr Laksamana's lawyers have filed character-assassination lawsuits against Dr Amien.

The debate doesn't stop at questions of nationalism. Former president Abdurrahman Wahid, known for making controversial remarks in the past, has accused government officials of taking "commissions". To date, he has produced not a shred of evidence to back up this claim. But that has not stopped rumours.

Ironically, the rumours hurt Indonesians more than anyone else. After all, that Indonesia benefits from privatisation is a no-brainer.

The government gets cash to plug huge gaps in the state budget. This year alone, Jakarta targets 8 trillion rupiah from privatisation. New management can also clean up the notoriously inefficient and corruption-prone state firms and kick off expansion or moderni- sation programmes.

So, why is the process so slow and controversial? Blame it on the legacy of the Suharto era, when shady transactions happened alongside, or before, public deals, say observers. These have become so deeply ingrained that many find it hard to believe that much has changed, despite all the talk of reform.

Government officials have dismissed these charges and challenged the naysayers to prove allegations. But still the rumours keep swirling, fanned no doubt by those who stand to gain politically from doing so.

It would be scarcely surprising, then, if investors grow wary of getting involved in Indonesia's privatisation schemes. Pity. That would be yet another example of internal squabbles costing Indonesia dearly and slowing its pace of economic recovery.