Govt warned not to cancel Semen Padang's spin-off<\/p>\n
JAKARTA (JP): State cement producer PT Semen Padang has urged
\nthe government to go ahead with plans to spin off the Semen
\nPadang unit from the Semen Gresik holding company, in fear that a
\nreversal might trigger strong reactions from people in West
\nSumatra.<\/p>\n
Semen Padang president Ikhdan Nizar warned that the people in
\nthe province of West Sumatra would be very upset if Semen Padang
\nlost its status as a state company.<\/p>\n
\"They are likely to react harshly,\" Ikhdan said when asked
\nwhat would happen if the government reversed its decision to spin
\noff Semen Padang from the Semen Gresik Group (SGG).<\/p>\n
He was responding to local media reports quoting several
\neconomists as saying on Wednesday that spinning off Semen Padang
\nwould be a major setback to attracting foreign investment.<\/p>\n
The government plans to spin off Semen Padang from Semen
\nGresik to allow Mexican-based cement producer PT Cemex Indonesia
\nraise its stake in Gresik after people in West Sumatra opposed
\nCemex's plan.<\/p>\n
Ikhdan urged the government to keep its promise to the West
\nSumatra people in not letting Semen Padang fall into foreign
\nhands.<\/p>\n
\"For the people of Padang, the biggest ethnic group in West
\nSumatra, this is a matter of pride,\" he said.<\/p>\n
According to him, when rumors abounded that Cemex would become
\nSGG's majority shareholder in 1998, locals began blockading Semen
\nPadang's production facilities.<\/p>\n
He said the government managed to prevent the situation from
\nworsening, only after it promised that Cemex would remain a
\nminority shareholder.<\/p>\n
Asked whether locals could turn violent again, he said,\"I
\ndon't know, you can try (their reaction) if you dare.\"<\/p>\n
Local protests against companies can turn ugly such as in the
\ncase of pulp producer PT Indorayon Utama near Lake Toba in North
\nSumatra.<\/p>\n
Indorayon was forced to shut down both of its pulp and rayon
\nplants in 1998 after strong protests from locals that their
\noperations damaged the environment.<\/p>\n
Violent clashes between locals and security personnel added to
\nthe resentment locals harbored against the company.<\/p>\n
Indorayon has remained closed until today even though the
\ngovernment has allowed it to reopen its pulp plant.<\/p>\n
\"I just want to operate in a safe and peaceful environment,\"
\nIkhdan added.<\/p>\n
Locals in West Sumatra claim that Semen Padang's plant
\noccupies their ancestors land, for which they have never received
\ncompensation.<\/p>\n
The people of Padang, Ikhdan said, were not demanding a share
\nin the company, nor was their local government.<\/p>\n
\"Their (locals) idea of a state company is a company that is
\nowned by the state and the public,\" he explained.<\/p>\n
Ikhdan said that personally he thought spinning off Semen
\nPadang would bring the company greater economic benefits.<\/p>\n
In 1995 the government merged Semen Padang, PT Semen Tonasa
\nand Semen Gresik into SGG, to break the virtual oligopoly of
\nprivate cement producers in the domestic market.<\/p>\n
Ikhdan said during that time, the government regarded cement
\nas a strategic commodity, thereby subject to regulated trading.<\/p>\n
But the government later revoked the strategic product status
\nof cement, thus allowing the commodity to be freely traded, he
\nsaid.<\/p>\n
\"There is no reason anymore for us (SGG) to remain one (a
\nstrategic commodity); let the free market handle competition, it
\nis in line with the IMF (the International Monetary Fund),\" he
\nsaid.<\/p>\n
So far, he said, Semen Padang's growth was impeded by SGG's
\npolicy not to allow their markets to overlap.<\/p>\n
He also dismissed Cemex's important role in raising Semen
\nPadang's global competitiveness, saying that becoming a global
\nplayer was not his priority.<\/p>\n
\"Cement is a bulky and cheap product. It's high transportation
\ncosts make it rather commercially unfeasible as an international
\ncommodity. A cement mill therefore must serve its nearest market
\nto remain competitive,\" he explained.<\/p>\n
SGG is 51 percent owned by the government, 25.53 percent by
\nCemex, and 23.46 percent by the investing public.(bkm)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/govt-warned-not-to-cancel-semen-padangs-spin-off-1447893297",
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