Govt to set up team to study Semen Gresik separation

Govt to set up team to study Semen Gresik separation

JAKARTA (JP): Newly appointed State Minister of State
Enterprises Laksamana Sukardi said on Friday that he would
establish a special team to examine the controversial demand for
the separation of cement company PT Semen Padang from parent PT
Semen Gresik.

He said that the issue had been ongoing for some time without
any resolution.

"For eighteen months now the separation issue has been on
hold," Laksamana said, after the swearing-in ceremony of
President Megawati's new Cabinet at Merdeka Palace.

He added that it was high time a decision was made.

Laksamana did not explain the structure of the team, but that
it should also listen to the aspirations of local people as well
as from the international community before making a decision.

The government had planned to separate Semen Padang from
Semen Gresik, following demands from the local community near
Semen Padang in West Sumatra, due to concerns over foreign
ownership in Semen Gresik.

Semen Gresik is 25.53 percent owned by the Mexican-based
cement maker Cemex SA de CV, which has long expressed a desire to
increase its stake in the company.

The separation issue has put the government in a difficult
position as it does not have enough money to sufficiently
compensate Cemex if the demand of the Padang people is to be
fulfilled. On the other hand a failure to come up with an
amicable solution would further damage investors' confidence in
the ailing economy.

Meanwhile, the high profile Semen Padang case has also
prompted the people of Makassar in South Sulawesi to demand the
separation of PT Semen Tonasa from Semen Gresik.

Semen Padang and Semen Tonasa were joined with East Java's
Semen Gresik in 1995 to increase production capacity, operating
efficiency, and expand market share.

In 1998 the government started privatizing the group by
selling 14 percent of the group's shares to Cemex, the world's
third largest cement producer.

The government holds 51.01 percent of the shares in Semen
Gresik, and the remaining 23.46 percent are held by the public.

Separately, Laksamana said that Indonesia's telecommunications
sector was the most attractive government asset to be sold to
foreign investors.

"I think demand in the telecommunications sector is huge," he
said, adding that the privatization of the two state-owned
telecommunications companies -- PT Telkom and PT Indosat -- was
crucial to boost their competitiveness in the future.

"It is better for us to tie up with foreign companies or
otherwise they will be destroyed," Laksamana added.

If government ownership is reduced, state companies will
become more transparent and effective and could better contribute
to government revenue, he said.

The government owns 66.19 percent of Telkom and 65 percent of
Indosat and is planning to divest between 10 to 14 percent this
year.(tnt)