Gresik to remain in govt control: Minister

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.