Cemex agrees to delay Gresik purchase
Berni K. Moestafa and Kasparman, The Jakarta Post, Jakarta/Padang
Mexican-based cement giant Cemex SA de CV said on Friday that it accepted the Indonesian government's decision to extend a deadline for the sale of a 51 percent stake in state-owned cement company PT Semen Gresik under a put option deal.
"Cemex would like to express its ongoing support to the government of Indonesia by accepting the request made by the Minister for State Enterprises Laksamana Sukardi to extend the Semen Gresik put option up to December 14, 2001," the Mexican firm said in a statement on Friday.
On Thursday, the government said it decided to skip the Oct. 26 deadline because it had not had time to evaluate the impact of the deal.
Cemex, which already owns a 25 percent stake in Semen Gresik, gave the government three years to execute the put option deal from its signing in 1998.
If realized, the sale would rake in around US$520 million, or some 80 percent of the government's privatization target of Rp 6.5 trillion ($635 million) this year.
The government is in bad need of the funds, given that it has not been able to secure a single sale in 2001 to help plug the budget deficit.
Protests from two Semen Gresik units, PT Semen Padang and PT Semen Tonasa, have attempted to derail efforts to sell the state company.
The two units were merged into Semen Gresik in 1997, under a government initiative to thwart competition from private cement producers.
They now reject the put option and demand to be spun off from Semen Gresik, arguing their merger would be detrimental to business.
In the run-up to the Oct. 26 deadline, locals in Padang staged rallies opposing the sale of Semen Padang to a foreign firm.
On Friday, they continued protesting the government's reluctance to spin off the unit.
Legislators in Jakarta have added their support to criticism of the sale, warning Indonesia would lose its national cement industry to foreigners.
Economists and analysts, however, have urged the government to go ahead with the sale as a stimulus for further asset sales.
They said foreign investors were observing the Semen Gresik events and the planned sale of PT Bank Central Asia (BCA) to gauge the investment climate here.
The International Monetary Fund (IMF) in Jakarta has suggested that the government initiate a campaign to inform the public of the long-term benefits of selling state assets.
The fund said that, on top of securing income for the state budget, privatization improved the efficiency of companies and stimulated economic growth.
IMF experience in other countries has shown that resistance from groups likely to be harmed by privatization was normal.
A political observer noted that many Indonesian state firms had become the cash cows of political parties, which would not be possible if they were under private control.