Semen Gresik sale to continue as planned<\/p>\n
JAKARTA (JP): The bidding process for state-owned cement maker
\nPT Semen Gresik will continue as scheduled although its
\nsubsidiary PT Semen Padang may have to be excluded from the sale
\nin the wake of last week's protest by West Sumatran community
\nleaders, State Minister of the Empowerment of State Enterprises
\nTanri Abeng said yesterday.<\/p>\n
"The deadline for the second bidding stage remains August 19,"
\nhe told reporters yesterday following a seminar on privatization.<\/p>\n
He explained that after completing the bidding process, the
\ngovernment would sit together with the winning investor to
\nformulate a new "strategy" that would be acceptable both to the
\ninvestor and the government.<\/p>\n
Such a compromise is also expected to accommodate the
\naspirations of the Sumatran people who strongly objected to the
\nprivatization, which will allow foreigners to become a majority
\nshareholder of Semen Padang, a wholly owned subsidiary of Semen
\nGresik, he said.<\/p>\n
"I admit that this will not be easy," Tanri said, but added
\nthat the modification would not confuse the foreign investor
\nbecause it would be based on good intentions.<\/p>\n
"The modification can be communicated as long as it is done
\nwith good intentions. We will not cheat or make profit
\nunilaterally. Good faith in business is very important," he said.<\/p>\n
He added that the foreign investor would have a long-term
\nbusiness plan in Indonesia.<\/p>\n
"I don't think they would mind losing money in the first two
\nto three years," he said.<\/p>\n
Germany's Heilderberger Zement AG, Switzerland's Holderbank,
\nand France's Laferge Asia Pacific are competing in the second
\nbidding stage to top the first price offer made last month by
\nMexico's Cemex SA de CV of US$287 million for a 35 percent stake
\nin Semen Gresik.<\/p>\n
The latter, however, has the right to top any new bid within
\nfive days after the second bidding stage is completed.<\/p>\n
Under the initial plan, the winner would be allowed to
\npurchase another 16 percent stake in the publicly listed Semen
\nGresik through a tender offer mechanism to become the majority
\nshareholder.<\/p>\n
Last week West Sumatran community leaders, who culturally lay
\nclaim to the land on which Semen Padang's facilities are located,
\ndemonstrated against the sale plans.<\/p>\n
"The protest will not delay the privatization process although
\nwe'll have to make a modification that is acceptable to the
\npublic," Tanri said.<\/p>\n
He declined to disclose the new alternatives but admitted the
\nmodification might include restructuring the ownership of Semen
\nPadang to prevent foreign control of the company or releasing it
\nfrom Semen Gresik, and retaining the government's majority
\nownership of the company.<\/p>\n
Credibility<\/p>\n
Pande Raja Silalahi, an economist at the Center for Strategic
\nand International Studies, said that if Tanri failed to appease
\nthe public uproar against the privatization plan, investors would
\nquestion the government's credibility.<\/p>\n
"I think Tanri must make a courtesy call on the senior leaders
\nof the West Sumatran people and let one of them become an adviser
\nto Semen Gresik or allocate part of the sale proceeds for the
\ncommunity ," he said.<\/p>\n
The government plans to divest part of its shares in 12 state-
\nowned companies this fiscal year to raise $1.5 billion to help
\nfinance the state budget which is heavily burdened by the huge
\nsubsidy commitments to help the poor in surviving the current
\ncrisis.<\/p>\n
Semen Gresik is the first to be privatized.<\/p>\n
Tanri, however, stressed yesterday that the government would
\nlimit the number of companies being sold off this fiscal year
\nbecause of the state of the capital market.<\/p>\n
He said shares of state companies which are listed on the
\nstock exchanges are mostly undervalued at present and their value
\nshould therefore be allowed to increase before the firms are sold
\noff.<\/p>\n
He cited that publicly listed international telecommunications
\nprovider PT Indosat's current market value of less than $1
\nbillion would have to be boosted to around $2.5 billion before
\nthe government sold 20 percent to 30 percent of its shares.<\/p>\n
"We can do this by restructuring Indosat in cooperation with
\nthe telecommunications regulator so that the company can have new
\nincentives," he said.<\/p>\n
"Through this kind of value creation strategy, we can get cash
\nflow without selling more state assets," he said.<\/p>\n
Indosat is one of the 12 state companies being prepared for
\nfurther privatization.<\/p>\n
Tanri also said that although the government had received some
\n$14 billion in international aid to close its wide budget
\ndeficit, the $1.5 billion privatization proceeds were still
\nneeded.<\/p>\n
He also said that the public should not be upset by the
\nprivatization because $1.5 billion represented less than 1
\npercent of the total assets of the country's 159 state-owned
\ncompanies.<\/p>\n
"It's peanuts," he said, adding that the privatization would
\nhelp the crisis-hit country to restore the badly needed investor
\nconfidence.<\/p>\n
"Foreign aid is politically driven, but inflows of
\nprivatization money are an indication that investor confidence
\nhas started to return," he said. (rei)<\/p>",
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"sponsor": "Okusi Associates",
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