Indonesia to retain 51 percent Gresik stake

Indonesia to retain 51 percent Gresik stake
Published: 16 December 2004

Indonesian officials said Thursday the government will retain a 51 percent stake in cement manufacturer Semen Gresik and will propose new options to end a row with Mexico’s Cemex over who should control the Indonesian group. Economics Minister Aburizal Bakrie said the government was no longer considering whether to allow Cemex to double its stake in Gresik in line with an earlier disputed deal, but was now examining "other options".Sixteen alternatives being prepared will be proposed to Cemex in an effort to prevent it from proceeding with international arbitration.  

An Indonesian parliamentary committee for industrial affairs had urged the government to keep its majority stake in Gresik to safeguard cement supplies for housing and infrastructure projects and to block foreign cartels. Foreign investors have taken majority stakes in two private Indonesian cement firms. HeidelbergCement controls 65 percent of Indocement Tunggal Prakarsa while Holcim holds a 77.3 percent of Semen Cibinong.  

The wrangling over Gresik has done little to improve the country’s poor reputation as a destination for foreign investment at a time when the government is attempting to attract more cash by tackling corruption. Speculation over the future of Gresik has caused stock prices in the group to climb by more than 20 percent in the past two weeks. One local dealer said gains had exceeded the firm’s fundamentals, describing them as suspicious. "I really don’t understand why the stock can keep running. My best advice is take profit," said Prayoga Triyono, an analyst with brokerage firm Henan Putirai.