The Indonesian government still hopes to settle out of court a dispute with Cemex over Indonesia’s failure to exercise a put option to sell its majority stake in the country’s largest cement maker PT Semen Gresik. ’It is still in progress. We still want the best option which is an out of court settlement. But if they (Cemex) want another option, we are preared to face it,’ Coordinating Minister for Economic Affairs Dorodjatun Kuntjoro-Jakti told reporters.
Last December, Cemex filed an arbitration petition against Indonesia at the International Center for Settlement of Investment Disputes (ICSID) in Washington. In response to the filing, the government appointed a negotiator, Brigitte Stern, to represent it in the arbitration proceedings.
Cemex acquired a 14 per cent in Semen Gresik in 1998 and later raised its stake to 25 per cent under a put option deal with the government. It had an option to acquire a further 51 per cent which the government however let expire in 2001 due to strong opposition from local politicians and workers at Semen Gresik unit PT Semen Padang.
Cemex has reportedly offered three options for an out-of-court settlement: the buyout of the 25 per cent stake owned by Cemex; the acquisition by Cemex of the government’s stake; and Cemex injecting fresh capital into Semen Gresik to dilute the government’s ownership. As the government is desperately trying to sell assets to cover its budget deficit, it is very unlikely that it would be interested in acquiring Cemex’s stake in Semen Gresik. There has been speculation that the government may have been approached by other potential investors willing to acquire Cemex’s stake in Semen Gresik.