Minister confirms Cemex legal battle over<\/p>\n
Rendi A. Witular, The Jakarta Post\/Jakarta<\/p>\n
State Minister of State Enterprises Sugiharto has announced that
\nMexican cement giant Cemex SA agreed to suspend its lawsuit
\nagainst the government and to accept an out-of-court settlement.<\/p>\n
Sugiharto made the official announcement on Friday to amend
\nlast week's comment by Coordinating Minister for the Economy
\nAburizal Bakrie, who said the government and Cemex had reached
\nterms for negotiation, including not to continue the legal
\nproceeding scheduled for Jan. 11.<\/p>\n
\"After lengthy and complicated negotiations, we arrived at a
\ndeal to temporarily halt the legal battle, unless Cemex disagreed
\nwith our options for settling the dispute,\" Sugiharto said.<\/p>\n
The dispute arose when the government failed to fulfill its
\nside of an investment deal signed in 1998. Under the deal, Cemex
\nwas to acquire majority control in state-owned cement producer PT
\nSemen Gresik, but a subsidiary in West Sumatra, PT Semen Padang,
\nprotested the arrangement.<\/p>\n
The subsidiary company, along with local politicians, opposed
\nthe plan, fearing foreign domination of the cement industry.<\/p>\n
Cemex countered by filing a lawsuit with the International
\nCentre for the Settlement of Investment Disputes.<\/p>\n
The government has thus been under pressure to resolve the
\ndispute quickly to help restore investor confidence and to avoid
\npaying huge penalties.<\/p>\n
Sugiharto said the suspension of legal proceedings was part of
\nthe government's requirement to protect itself against any
\npossible legal threats from Cemex during negotiations over the
\nout-of-court settlement.<\/p>\n
\"Negotiation is only possible if Cemex is not pointing its gun
\nat us. There should be mutual goodwill to settle the protracted
\ndispute... I expect it to be settled by this month,\" he said.<\/p>\n
The government has offered six out-of-court options to Cemex,
\nincluding a buy-back mechanism, in which the government will
\npurchase Cemex's 25.5 percent stake in Semen Gresik. After
\nselling off Gresik's subsidiaries -- PT Semen Tonasa and PT Semen
\nPadang -- it will allow Cemex to retake control of Gresik.<\/p>\n
Another option is to allow Cemex to build new cement factories
\nin the country to help meet the rise in demand expected from the
\ngovernment's plan to break ground on massive infrastructure
\nprojects this year.<\/p>\n
Sugiharto declined to elaborate on the four other options, but
\nreiterated that the government would retain its 51 percent stake
\nin Semen Gresik at all costs and would not pay any compensation
\nto Cemex because of its limited budget.<\/p>",
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