Gresik to remain in govt control: Minister

Urip Hudiono and Rendi A. Witoelar, The Jakarta Post, Jakarta

The government has decided that it will retain its 51 percent controlling stake in the country's largest cement producer PT Semen Gresik (SG), a senior economic minister said.

The decision to keep a majority stake in the company would be the government's main parameter for the seven final options it has prepared to amicably settle a protracted investment dispute with Mexican cement giant, Cemex SA, State Minister for State Enterprises Sugiharto said.

"The most important thing to note here is that the government does not want its control over Semen Gresik to be less than 51 percent," Sugiharto told reporters on Thursday, after a meeting with Coordinating Minister for the Economy Aburizal Bakrie and Minister of Finance Yusuf Anwar.

"That is the parameter I have to protect," he firmly added.

Sugiharto explained that this parameter would fulfill the consensus his office had reached with the House of Representatives Commission VI on trade, industry and state enterprises that the government must protect the country's vital cement industry from the possibility of being controlled by a cartel of foreign cement giants.

The government currently controls a 51.01 percent stake in SG and its Semen Padang and Semen Tonasa subsidiaries, whose cement production capacity accounts for some 40 percent of the nation's total production. Cemex holds a 25.53 percent stake in SG, while the investing public holds the remaining 23.46 percent stake.

Concerns that Indonesia's cement industry would be controlled by a foreign cartel comes as German cement firm Heidelberg is now the major shareholder of PT Indocement Tunggal Prakarsa, while Swiss-based Holchim and French-based Lafarage, are the main shareholders of PT Semen Cibinong and PT Semen Andalas respectively.

The Cemex dispute itself came after Semen Padang's management and West Sumatra politicians opposed plans to let Cemex increase its shares in SG over similar concerns, despite the option being stipulated in a deal Cemex had inked with the government in 1998, when it first bought SG's shares.

Cemex, therefore, decided to take the case to the International Center for the Settlement of Investment Disputes, demanding that the government pay damages.

Sugiharto further explained that the government will also use the parameter in narrowing down the 16 options it had previously prepared for an out-of-court settlement for the Cemex case to seven.

"After considering all the pluses and minuses of the 16 options, we have now reduced it to seven final options," he said.

Sugiharto however declined to elaborate what the options were, as they were part of the government's strategy in resolving its dispute with Cemex.

Separately, advisor for the State Minister of State Enterprises, Lin Che Wei, explained that all matters concerning the case would now be handled by the Coordinating Minister for the Economy, to avoid any further discrepancies.

"The final option itself is still to be decided on Saturday," he said.