Govt fears Cemex may back down out of Semen Gresik purchase
Dadan Wijaksana, The Jakarta Post, Jakarta
State Minister for State Enterprises Laksamana Sukardi said on Thursday that Cemex SA de CV had basically agreed with the government's new scheme for the sale of state-owned cement maker PT Semen Gresik, but he feared that the Mexican giant might back down amid concerns about legal uncertainty as protests continued in the provinces.
"I think in principle there's no problem (with the new scheme), but what they're (Cemex) thinking about is whether or not there'll be legal certainty.
"That's the problem, not the prices or the methods," Laksamana told reporters after a hearing with the House of Representatives Commission V on industry and trade affairs.
He added that what was important for Cemex and other investors was legal certainty, in terms of their ability to execute legitimate contracts.
Laksamana's comments came amid continuing protests from West Sumatra and South Sulawesi politicians and several unofficial leaders over the government's plan to sell a majority stake in Semen Gresik to the Mexican company.
West Sumatra and South Sulawesi are the home bases of PT Semen Padang and PT Semen Tonasa respectively.
The latest dissenting voice came from East Java, the home base of Semen Gresik, when Governor Imam Utomo sent a protest letter to President Megawati Soekarnoputri on Tuesday, after hundreds of the cement company's employees had staged a demonstration.
The government announced the new scheme for the Semen Gresik sale last week, under which it would sell a 51 percent stake in the company to Cemex and would use part of the proceeds to repurchase a 51 percent share in Semen Padang and Semen Tonasa.
The new deal was made to accommodate the demands of West Sumatra and South Sulawesi, which had not wanted to see foreigners controlling their local cement factories.
Under the original plan, which was supposed to have been executed on Oct. 26, Cemex would have become a majority owner of Semen Padang and Semen Tonasa.
The government was supposed to complete the Semen Gresik sale before the end of this year to raise proceeds to help finance the 2001 state budget deficit.
Laksamana did not rule out the possibility of the deal collapsing, saying the government was considering looking for alternative strategic partners.
"If Cemex pulls out, the whole deal will be canceled, and we'll start looking for alternative investors," he said.
"But we are still continuing negotiations with Cemex," he said.
However, he added that the process of seeking other strategic partners could not be finalized this year because it required a new due diligence process.
Attempts to seek comment from Cemex have been unsuccessful.
If Cemex does refuse to accept the deal, the government's credibility will be at stake. Moreover, it would take an enormous effort to restore investor confidence, because it seems that honoring contracts is definitely not one of the government's specialities.