Govt delays Semen Gresik sale plan amid protest

Berni K. Moestafa and Dadan Wijaksana, The Jakarta Post Jakarta

The government decided on Thursday to postpone the sale of a 51 percent stake in PT Semen Gresik to Mexican firm Cemex SA de CV, ignoring warnings that the move would dissipate whatever little foreign investor confidence remained.

"We have delayed the put option as we want to evaluate the transaction," State Minister for State Enterprises Laksamana Sukardi told reporters.

The decision could effectively annul a put option deal with Cemex under which Indonesia has the right to sell a 51 percent stake in Semen Gresik for $520 million. The option expires today.

Laksamana declined to say for how long the government would postpone selling Semen Gresik.

Secretary to the State Minister for State Enterprises Bacilius Ruru described the delay as a giving rise to a "stand still position".

PT Cemex Indonesia president Francisco Noriega told reporters after meeting the government that "nothing has changed."

According to Ruru, Cemex showed understanding when the government told the firm of its decision.

Cemex has been forced by the government to wait in limbo for three years ever since signing the put option deal in 1998.

Experts have described the divestment of Semen Gresik as a test case by which foreign investors will be able to gauge the government's seriousness in pushing ahead with asset sales.

The sale of Semen Gresik faces resistance from legislators who have fulminated against foreign control of the cement industry.

Although many economists suspect politicking behind these warnings, the government has nevertheless fallen at the last hurdle in respect of the exercise of its put option right.