The Indonesian government announces that it plans to divest its remaining 51% stake in publicly listed cement producer PT Semen Gresik to the Monterrey, Mexico-based PT Cemex Indonesia, a move that will net the government US$520 million. State Minister of State Enterprises Laksamana Sukardi said pressure to raise revenue for the state budget required the government to push ahead with the sale of Semen Gresik. Under a put option agreement with Cemex, the Indonesian government has the right to sell off its entire stake in Semen Gresik to Cemex for $520 million.

In 1998, Cemex purchased a 14% stake in Semen Gresik, lured by the government's promise to allow it to become a majority shareholder in the state company. Cemex then purchased another 11% through the stock market, raising its ownership to 25%.

Semen Gresik owns two subsidiaries, PT Semen Padang and PT Semen Tonasa, which were merged into the Semen Gresik Group in 1995. Together, they have an annual production capacity of 18.2 million metric tons of cement, as compared to the country's total output of 45 million tons.

Cemex's efforts to control Semen Gresik faltered after protests against foreign ownership in Semen Padang arose among Padang people of West Sumatra. Claiming that Semen Padang was built on their ancestors' land, the Padang people demanded the company be separated from Semen Gresik. The government already showed signs of ignoring the put option deal, saying it was studying ways of compensating Cemex for the loss of Semen Padang. To date, the results of the study have not been made public.

“We'll turn our attention to resolving the internal problems that exist between Semen Padang and Cemex,” noted Laksamana. Given a government target of raising some Rp 6.5 trillion (approx. US$743.70 million) through the privatization of state firms this year — and proceeds amounting to zero thus far — few options remain to meet the stated goal. “This is about the interests of the nation…I hope that they [the people of Padang] can understand that,” Laksamana added.

A similar demand has also been aired by people in South Sulawesi, who wanted the government to spin off Semen Tonasa from Semen Gresik. The South Sulawesi people, however, have taken a milder stance against foreign investors, claiming they would welcome Cemex investment in Semen Tonasa if the latter would be first excluded from Semen Gresik.