Indonesian government may form consortium to buy Gresik stake

Indonesian government may form consortium to buy Gresik stake
Published: 17 May 2006

The government might form a consortium of state-owned companies to join Rajawali Corporation to take over the 24.9 per cent stake of Cemex in Semen Gresik (SG). The decision was made to minimize pros and cons that came up following the planned sales of the shares, an source said here on Tuesday.  He said the state-owned companies to join in the consortium were PT Jamsostek, PT Telkom, Pertamina, Bank Mandiri, BNI, BRI and also Semen Gresik itself.  However the State Minister for State Firms, Sugiharto, declined to comment on the claim. 

Meanwhile, a number of independent experts have warned the government not to thwart the planned sale of Cemex’s shares in PT Semen Gresik (SG) to local investor Rajawali Group as this would only further damage investor confidence in the country.

"This debacle has only served to create new uncertainty among investors," said Centre for Strategic and International Studies (CSIS) economist Hadi Soesastro on Tuesday. While, business leader Anton Supit commented, "It reflects a very narrow idea of nationalism. This is not good for the investment climate."

The Finance Ministry’s budget director, Ahmad Rochjadi, has said that the 2006 budget has not allocated any funds for the purchase of the SG shares, and that any move to seek funding for this would require the approval of the House of Representatives, a lengthy process that would not be completed in time as the government must make a decision soon under its agreement with Cemex.

Meanwhile, a source, who requested anonymity, said that Sugiharto was planning to squeeze the money from state-owned enterprises or resort to off-budget funds to buy the SG shares. "It’s not transparent, and it stinks of the old bad habits of the New Order regime," Hadi said, referring to the Soeharto administration, which often resorted to off-budget funds to finance dubious projects.

"I don’t understand why a senior government official is creating this mess. An investor should be given a free entry and exit strategy. The government must meet the deadline for its response to Cemex’s offer," Anton said.