Multinationals eye local cement firms
Multinationals eye local cement firms
JAKARTA (JP): A senior governmental official warned of
multinational companies' possible domination of the country's
cement industry, saying that such a situation could severely hurt
the government's infrastructure development program.
Director general of chemical, agriculture and forest product
industries at the Ministry of Industry and Trade, Gatot
Ibnusantosa, said on Wednesday he feared that multinational
companies would one day "monopolize" the country's cement
industry given their current aggressive efforts to acquire the
country's ailing cement firms.
Once the multinational companies dominate the industry, he
warned, they will control cement prices in the domestic market.
"The government fears that the foreign investors will set
prices as they like, which could hurt the country and its
people," Gatot said following a hearing with the House of
Representatives' Commission V which deals with industry and trade
affairs.
Gatot said that, currently, foreign investors control 35.6
percent of the domestic market's cement supplies, through
majority shares in PT Semen Andalas and PT Indocement Tunggal
Perkasa.
He then added that foreign investors could increase their
control of the domestic market to 95 percent in the near future
if they managed to acquire stakes in another two local cement
companies.
Local cement companies already controlled by foreign investors
are PT Semen Andalas, which is 71 percent owned by French firm
Lafarge, and PT Indocement Tunggal Prakarsa, which is 61.7
percent owned by Kimmeridge Enterprise Pte. Ltd, a subsidiary of
German cement giant Heidelberg.
Semen Andalas controls 2.6 percent of the domestic market and
Indocement 33 percent, according to Gatot.
Another two companies now targeted by foreign investors are PT
Semen Gresik Group and PT Semen Cibinong which respectively
contribute 38 percent and 20 percent of the country's cement
supplies.
On Tuesday, shareholders of Semen Cibinong approved
management's plans to write off the company's deposits worth over
US$250 million. The write-off will pave the way for Swiss-based
Holderbank Financiere Glaris Ltd. to expand its stake to 75
percent from the present 12.5 percent.
Mexican cement producer PT Cemex Indonesia is also reportedly
interested in raising its stake in state-owned PT Semen Gresik to
a controlling stake from the current level of 25 percent.
"If the foreign players succeed in acquiring the two cement
firms, about 95 percent of the country's cement industry will be
under their control," Gatot warned.
In such a situation, the government would be unable to set
prices at low levels and foreign players would have greater
freedom to set their own prices.
"An increase of $1 per bag in the price of cement would result
in an increase of up to $480 million per year in the government's
expenditure on infrastructure development," Gatot said.
In order to increase domestic prices, the foreign investors
will boost their exports, Gatot said. (03)