Govt to decide on Cemex case today

The Jakarta Post, Jakarta

The government will decide on Thursday to propose an option to Mexico's cement giant Cemex SA in a bid to seek an out of court settlement over a long-standing investment dispute, according to a minister.

"There are 16 options. We will select one tomorrow," Coordinating Minister for the Economy Aburizal Bakrie told reporters on Wednesday. He declined to give details.

The selected option would be used to negotiate with Cemex, he said.

The government is under pressure to resolve its investment dispute with Cemex, not only because the government may risk paying huge financial penalties if an international arbitration court ruled in favor of the foreign cement giant, but also because a quick resolution to the high profile case would help revive investor confidence in the country.

Cemex has launched a law suit against the government for failing to execute a 1998 investment deal, under which the company was entitled to eventually become a majority shareholder in Indonesia's largest cement firm PT Semen Gresik after acquiring a stake of more than 25 percent in the East Java-based company six years ago.

The previous government has failed to resolve the case during the past couple of years partly due to strong opposition from people in West Sumatra, the home base of a subsidiary of Gresik, for Cemex to become the majority owner of the state-owned firm.

But State Minister of State Enterprises Sugiharto said earlier that the new government aimed to settle the dispute in 42 days.

According to sources at the ministry, some of the policy options being considered by the government include an option for the government to buy back Cemex's ownership in the publicly listed Semen Gresik, spinning off the company's units before allowing Cemex to control Gresik, and an option to allow Cemex to set up new cement factories if it agrees to sell back its shares in Gresik to the government.