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)