Economists hail government's new plan on Semen Gresik

Dadan Wijaksana, Jakarta Post, Jakarta

Analysts hailed the government's new plan for the sale of state-owned cement producer PT Semen Gresik, describing it as a realistic approach to accommodate both the interests of local people and Mexico's Cemex SA de CV, the would-be investor.

"Laks has made a brave move, because this means he is willing to take on challenges from two sides; both the locals and Cemex," said Institute for Development of Finance and Economics (Indef) economist Bustanul Arifin, referring to the State Minister for State Owned Enterprises Laksamana Sukardi.

Bustanul, however, acknowledged that disappointment was inevitable as in this case the government could never make a decision that would please all of the opposing sides.

"It's a dilemma, the government can never satisfy both sides. Somebody will be disappointed either way."

Sri Adiningsih, an economist at Gadjah Mada University, concurred, saying: "The decision is a positive breakthrough on the part of the government as it took into consideration all the interests of the stakeholders."

The comments came as certain quarters in West Sumatra and South Sulawesi, respectively the home-bases of PT Semen Padang and PT Semen Tonasa, two key units of Semen Gresik, rejected the government's new proposal for the long-stalled privatization program of the cement giant.

The government announced last week that it would sell a 51 percent stake in Semen Gresik to the giant Cemex, and use part of the proceeds to buy back 51 percent of the shares in Semen Padang and Semen Tonasa.

Some lawmakers and informal leaders in West Sumatra, claiming to represent the local people, have strongly opposed the Semen Gresik sale plan, arguing that it would allow foreigners to control the local unit.

But even with the new plan, under which Cemex would only have a minority stake in Semen Padang and Semen Tonasa, protests from West Sumatra and South Sulawesi continued. They insisted that the two local units be spun off from Semen Gresik.

Sri deplored these rejections and said that the locals should realize the complexity of the problems that the government had to face in finalizing the deal.

"The locals should respect the decision of the government as the later has shown its good faith as evidenced by the newly designed scheme," she said.

"Not to mention that the world is now keeping a close eye on the case. If the government fails to properly settle this, then who will come and invest their money in Indonesia."

The government had been forced to extend an initial Oct. 26 deadline to sell a 51 percent stake in Semen Gresik to Cemex via a put option deal to Dec. 14 due to the continuing protests from local interests, particularly in West Sumatra.

With big cement producers PT Indocement and PT Semen Cibinong, having been taken over by foreigners, they argued that Cemex's taking over Semen Gresik Group would hand a lucrative national business to foreign control.

However, some analysts believe that the protests are politically motivated and represent struggles for control of the local companies, which are regarded by many as cash-cows to help finance their political ambitions.

Bustanul warned that the government was running out of financial resources from which to cover the 2001 state budget deficit, with the new scheme only providing some US$200 million in cash, far less than the $520 million in projected proceeds from the previous deal.

Elsewhere, legislator Suko Waluyo said that the local people had no alternative but to accept the decision because it had been designed to accommodate their demands, and the fact that they were now protesting against the decision was irrelevant.

"First, they did not want Cemex to hold the majority of the shares, which wish has already been fulfilled (by the government's plan). But now they're protesting again, why?" he said, referring to the recent rejection by locals in Padang.

If they still wanted to fully take control of the company: "Then there's no other way for them but to buy the 51 percent held by the government," said Suko.