Government may increase stake in Semen Gresik

Government may increase stake in Semen Gresik
Published: 22 December 2008

The government is thinking to increase its share ownership in the country’s largest cement maker PT Semen Gresik after the establishment of a holding company to group the shares of several local state-run cement producers, an official says.

Secretary to the State Minister for State Owned Enterprises Said Didu said the government would be able to raise its stake in the company should minority shareholders agree to swap their shares for an equivalent in (waived) tax obligations.

"For state-owned firms, the government options will either be to pay (the taxes) or swap (the taxes) for the stakes. So I believe there will be a jump in the government’s share ownership in Semen Gresik," he said.

The forming of a holding company will result in an additional tax for shareholders because there will be a revaluation of the assets of Semen Gresik.

Said, however, refused to specify the amount of shares the government may take as a result.

Currently, the government has a 51 per cent stake in Semen Gresik, while 24.9 per cent is held by the public and 24.1 per cent is held by Blue Valley Holdings – a subsidiary of the Rajawali Group conglomerate.

Said explained that although the setting up of the holding company was related to state companies, this would not make the participants free from tax obligations that might be accrued as a result (through taxes applied to acquisitions and mergers).

The directorate general of taxation has recently said it will not exempt state owned enterprises from such taxes, except for companies 100 per cent owned by the government.

Said suggested minority shareholders could swap their shares with tax obligations because it was likely their shares would be somehow diluted during the incorporation of Semen Gresik into the new holding.

"However, this would still be decided in a shareholders’ meeting," he said.

The holding plan requires Semen Gresik, which currently parents Semen Tonasa and Semen Padang, to change its status and becomes a subsidiary on the same level as Tonasa and Padang under the new holding company.

Semen Gresik president director Dwi Soetjipto has estimated the plan would cost the company about IDR3trn(US$276m) in taxes as a result of asset revaluation.

The government will also form a holding company for state-owned companies engaged in mining, plantations and banking. The holding company for banking is scheduled to be completed in 2010.

At present, there are 139 state companies with assets worth in excess of IDR1.3trn (US$142.8bn).

State companies, which have become the country’s economic backbone, are expected to pay the government IDR31.5trn and IDR35trn in dividends for this year and next year, respectively.