Padang may suffer income deficit

Kasparman, The Jakarta Post, Padang, West Sumatra

The Padang Municipal Administration could lose up to Rp 13.6 billion (US$1.6 million) in tax from cement producer PT Semen Padang in 2003 as banks continuously reject checks issued by the firm's old management team that insisted on running the firm.

Padang Revenue Agency head Sinang Subekti said on Saturday that banks were rejecting checks issued by Ikhdan Nizar, who has refused to step aside after he was ousted as Semen Padang president by shareholders on May 12.

In May and June alone, Semen Padang checks worth Rp 2.2 billion were rejected by banks in Padang, he said.

"If Semen Padang checks cannot be cashed, this will seriously affect our development program," he said, adding that taxes from Semen Padang accounted for 20 percent of the Padang administration's income.

Sinang admitted that since the decentralization era, the development of the West Sumatra capital city had relied on local income (PAD), which came from various types of taxes.

The tax on Semen Padang is imposed under Padang bylaws and is collected monthly.

Before the conflict among Semen Padang's leadership emerged, the agency had no difficulty cashing the company's checks, Sinang said.

On May 12, Semen Gresik, the parent company of Semen Padang, held an extraordinary shareholders meeting, which decided to oust Semen Padang's rebellious top executives for opposing government plans to sell Semen Gresik shares to Mexican cement giant Cemex.

Instead, the executives demanded to separate Semen Padang from Semen Gresik. The sale of Semen Padang, which contributed one third of Semen Gresik's total output, is part of the government's privatization program.

The old management team, which seems to have the support of Semen Padang employees and the local court, however, vowed to retain their positions, claiming the management reshuffle was unlawful.

Ikhdan has argued that the move by Semen Gresik was illegitimate as a local court had terminated all legal rights held by Semen Gresik in Semen Padang.

On May 9, the Padang District Court annulled the sale of Semen Padang to Semen Gresik in 1995.

However, the Supreme Court later approved Semen Gresik's plan to hold an extraordinary shareholders' meeting on Semen Padang.

Dwi Sucipto, a former director at Semen Padang, has been appointed the new president, while Ismet Yuzairi, a former North Sumatra military commander, has been named president commissioner.

The old Semen Padang management allegedly held up Semen Gresik's 2002 accounts, forcing it to miss a March 31 deadline to submit its financial report, which prompted auditors to qualify its accounts.

As a result, the Jakarta Stock Exchange has suspended trading in Semen Gresik shares.

Sinang wished the conflict would end so the Padang administration could proceed with its development programs.

"The faster the dispute is over, the better it is for our development programs," the official said.