Cemex opens to amicable settlement of dispute

Cemex opens to amicable settlement of dispute

Sari P. Setiogi, The Jakarta Post, Jakarta

An out-of-court settlement to resolve an investment dispute
between Mexico's cement giant Cemex SA and the government of
Indonesia is still possible, according to a spokesman of the
company's local office.

Wimar Witoelar, senior advisor at Cemex Indonesia, said that
such an option was still possible if the government come up with
a "convincing proposal which could make the company reconsider
the arbitration process".

"Through arbitration proceedings, Cemex wants the Indonesian
government to pay all cost and expenses, but everything is
possible in life, so there is also a possibility for out-of-court
negotiation," Wimar told The Jakarta Post on Friday.

Asked what he meant by a "convincing proposal", Wimar said he
did not want to dictate to the government, but hinted that Cemex
was still hopeful it would be able to have a majority stake in
state-owned PT Semen Gresik, Indonesia's largest cement maker.

"It has been the company's spirit since the very beginning,"
he said.

"Cemex wants to show commitment to both the country and
employees. If we hold the majority shares, we are sure there will
be no layoffs. We might hire more employees at certain levels,"
Wimar said.

Cemex, the world's third largest cement maker, filed on
Wednesday a petition against the government with the
International Center for Settlement Investment Dispute (ICSID), a
Washington-based affiliate of the World Bank.

The move was made after years of efforts to reach a solution
to problems with its investment plan in this country had failed.

In the wake of the country's late 1990s financial and economic
crisis, Cemex reached an agreement with the government to buy a
25.5 percent stake in Semen Gresik for US$290 million. But this
September 1998 deal also provides an option for Cemex to increase
its stake to 51 percent by the end of 2001.

However, the government could not execute the deal due to
strong protests from PT Semen Padang, the West Sumatra-based unit
of Semen Gresik, and local politicians. The protesters opposed
the idea of the company being controlled by a foreign investor.
Attempts to resolve this problem have be unsuccessful, leaving
Cemex looking at an uncertain future for its investment here.

Some said that the government could not execute the agreement
with Cemex for fear of triggering conflict between the local
government in West Sumatra and the central government. Others
said that certain top politicians were also supporting Semen
Padang as without the control of Cemex, they could continue to
treat the company as their cash cow.

Elsewhere, Wimar also criticized the government for its poor
handling of the affair.

"We have given enough time to the Indonesian government to
negotiate, but they never submitted an official proposal to
Cemex. They only use the press to deliver sound-bytes," said
Wimar.

He said many times Cemex had asked for a meeting with the
State Minister of State Enterprises Laksamana Sukardi, but there
was no response. "Even during the last days before we filed the
petition, we still asked to see the minister and there was no
response."

Analysts have said the Cemex case could further undermine
foreign investors confidence in the country. The country is in
dire need of foreign investment to help boost economic growth to
a level that would be able to create enough jobs for the millions
of unemployed.