Govt supports 'status quo' on Semen padang case

The Jakarta Post, Jakarta

The government would maintain the "status quo" in the high profile PT Semen Padang case, Minister of Home Affairs Hari Sabarno said on Thursday.

"For the time being, the status quo will be maintained in the (Semen Padang) case, meaning it (the company) will not be spun off nor will the put option be exercised," Hari told reporters after attending a state function in Merdeka Palace.

He also ordered the West Sumatra administration to make sure that protesting local people did not take over the Semen Padang plant.

"The important thing is that the plant can still operate and provide benefit to the local government and people," Hari said.

He did not provide details on the status quo policy, but the Office of the State Minister for State Enterprises has set a Dec. 14 deadline for the sale of a 51 percent stake in state-owned cement producer PT Semen Gresik, the parent of Semen Padang, to Mexican cement giant Cemex SA de CV via a put option deal. Cemex already owns 25 percent of Semen Gresik.

The initial deadline was Oct. 26, but it was put back due to protests from West Sumatra people demanding that Semen Padang be spun off from Semen Gresik before the government exercised the put option.

The protests against foreign ownership of Semen Padang culminated last week when the local administration issued a decree taking over the plant. This was approved by the local provincial council.

The move further jeopardized the country's already floundering privatization prospects and prompted a warning from the World Bank on Monday that other provinces could replicate the takeover attempt.

The World Bank's chief economist in Jakarta, Vikram Nehru, has urged Jakarta to overrule the takeover attempt and immediately press ahead with the sale, or risk creating "tremendous investor wariness and uncertainty" toward future sell-off attempts.

The West Sumatra administration, however, backed down from the takeover move earlier this week following strong criticism from various quarters.

Local leaders in South Sulawesi, the home of another Semen Gresik affiliate, PT Semen Tonasa, have been pressing the administration there to follow suit, also demanding Tonasa's spin-off from Semen Gresik.

Meanwhile, a senior government official said Thursday that State Minister for State Enterprises Laksamana Sukardi was scheduled to fly to Padang to seek an amicable resolution to the case.

Semen Padang president Ikhdan Nizar told The Jakarta Post on Thursday that reports of the takeover of the plant had not affected production.

He said that activities within the company were continuing as normal and that production per day had reached 18,700 tons.

"There's no problem, employees are working as usual," he said.

Semen Padang and Semen Tonasa contributed half of Semen Gresik's 2000 sales of around 13.8 million tons.