The Indonesian government is unlikely to buy back shares of state-owned cement company PT Semen Gresik (SG) from Mexican cement giant Cemex SA due to its limited budget, according to Vice President Jusuf Kalla in a Jakarta Post report. He also said that the government’s program was to privatize state-owned firms to boost efficiency and obtain cash proceeds to help finance the state budget. "We are not going to buy back the shares since it would need funding allocation in the state budget," said Kalla on Saturday in response to a question whether the government will purchase back the SG shares from Cemex.
Deputy State Minister for State Enterprises Roes Aryawijaya said earlier that Cemex planned to sell its stake in SG, the country’s largest cement producer, to end a four-year dispute with the government over its plan to become a majority shareholder in the East Java-based cement firm. At present, Cemex has 25.5 percent shares in the publicly-listed SG, with the remaining 51 percent controlled by the government and 23.5 per cent by the public.
Cemex had filed a complaint with the International Center for the Settlement of Investment Disputes in Washington D.C., after the government’s alleged failure to fulfill its side of an investment deal signed back in 1998.
Under the deal, Cemex was to acquire a majority stake in SG, but the management of SG’s West Sumatra subsidiary, PT Semen Padang, adamantly opposed the deal in 2002, which was eventually supported by the government. The government has been under pressure to resolve the dispute quickly to help restore investor confidence and escape paying huge penalties.