Semen Gresik privatization delayed

Semen Gresik privatization delayed

The Jakarta Post, Jakarta/Surabaya

State Minister of State Enterprises Laksamana Sukardi said on
Monday that the government was unlikely to complete the sale of
the state-owned cement maker PT Semen Gresik to Mexico's Cemex SA
de CV as planned amid continuing protests from various quarters.

"I think we cannot say anything for sure at the moment.
Looking at the present conditions, it would be very hard to
execute it (this year)," Laksamana told reporters.

Separately, Surya Dharma Ali, chairman of the House of
Representatives Commission V on trade and industry, said that in
an effort to cool things down, the privatization program would be
delayed.

"There has been an agreement between the House and government
that there won't be any decision on Semen Gresik until after
January."

The government had planned to complete the sale of a 51
percent stake in the publicly listed Semen Gresik to the Mexican
cement company before the end of this year to raise badly needed
cash to help finance the 2001 state budget deficit.

The privatization program not only directly affects government
finances, but is seen as a crucial measure to help revive
investor sentiment in the ailing economy.

Meanwhile, shares in Semen Gresik dropped on Monday by 9.2
percent to Rp 5,450 each, a level not seen since June, due to the
delay in the planned sale.

Laksamana was referring to the widespread street protests in
local provinces opposed to the deal, which will allow foreign
control of the publicly listed company and its subsidiaries PT
Semen Padang and PT Semen Tonasa.

On Monday, around 3,000 employees of Semen Gresik staged a
rally at the East Java Provincial Legislative Council in Surabaya
asking the government not to sell its majority stake to a foreign
investor. A similar protest had occurred last week in a separate
town in the province.

Responding to the protest, a local legislator from the Golkar
party, Edy Wahyudi, noted that the protesters' demands were
rational and he would pass on their requests to the central
administration.

Similar protests led by some local politicians and local
community leaders have also been staged in West Sumatra and North
Sulawesi, the site of Semen Padang and Semen Tonasa respectively.

The delay in the deal shows the extent to which political
infighting has hampered attempts to raise revenue as well as to
regain investor' confidence.

Laksamana said that the failure to wrap up the deal as
previously scheduled meant that this year's revenue target from
privatization proceeds could not be met.

The government is set to finish the year with a total earnings
from the sale of state-owned assets amounting to Rp 3.5 trillion,
or Rp 3 trillion short of the projected Rp 6.5 trillion.

The earnings came from the sale of 11.9 percent shares in
state-owned telecommunications company PT Telkom last week and 40
percent shares in plantation firm Socfindo, the proceeds of which
contributed Rp 3.12 trillion and Rp 400 billion respectively to
government coffers.

Elsewhere, Laksamana said the government would continue to
hold negotiations with Cemex, Semen Gresik, and its two units so
as to keep the new scheme alive.

He said that the government had invited all concerned parties,
including the local legislature, governors of Central Sumatra and
North Sulawesi as well as Cemex to meet to help facilitate the
sale.

Laksamana earlier said that the government would have to seek
other buyers if Cemex backed out from the Semen Gresik purchase
plan.