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(Continued from page 3)
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to page 1 noputri wants a privatization team formed to study the impact of the sale. "The government has decided to delay the put option and spin-off," Dorodjatun told reporters. The government has had a long-standing agreement to sell its entire 51% stake in Gresik to Cemex through a put option by Oct. 26 for $520 million. However, there were problems linked to Semen Gresik's unit Semen Padang in West Sumatra. Public figures and villagers in the area oppose a foreign company taking over that company. (Editor's note:Recent articles in Indonesian publications indicate that Semen Padang has been operating at a loss and that several local businessmen who are also leading members of the regional Parliament have supply contracts with the company that would be jeopardized if it was sold.)
Dorodjatun said he will head the new privatization team which will also include State Enterprise Minister Laksamana Sukardi.
He said Laksamana will meet with Cemex to discuss the government's decision in delaying the put option. However, Cemex has already said that it is committed to Indonesia and will remain interested in buying Semen Gresik even if the put option is delayed.
Cemex holds 25% of Semen Gresik, which it acquired since taking a stake in the company in 1998. At that time, the government promised Cemex it could buy a further 51% through a put option. Dow Jones Newswires
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 | CONSUMER NEWS
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CONSUMPTION UP, CONFIDENCE DOWN
The World Bank's semi-annual report indicates that Indonesia's recovery in the real economy remains fragile. Despite the fact that the second quarter GDP results were better than expected, the first half results reveal a marked slowdown in growth 3.4 percent over the same period the previous year (compared to 4.7 percent in the first semester of 2000). Growth in government consumption eased because of fiscal strains, but consumption growth held up well, despite a sharp decrease in consumer confidence amid political turmoil, and net exports declined substantially in the wake of the global slowdown (see below). But the big surprise was fixed capital formation which, defying pervasive evidence of investor pessimism, climbed significantly in the first half of 2001, maintaining a trend that began in early 2000. Part of this could be statistical artifact, owing to the choice of investment deflator. But it could also indicate increased maintenance and rehabilitation of capital stock as growing manufacturing and rising capacity utilization have exacted a toll on existing plant and machinery. In export industries, it may reflect genuine investment in new capacity as firms responded to
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| MINING AND ENERGY
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PARLIAMENT PASSES NEW OIL AND GAS LAW
JAKARTA, Oct 23 (Reuters) - Indonesia's parliament passed a new oil and gas law on 10/23/01, removing Pertamina's decades-old monopoly over the lucrative sector.
Following is a summary of the main points of the law, which still requires detailed implementing regulations.
| Establishment within one year of a so-called Implementation Agency under government control to handle all contractual issues with oil investors. Unclear if this body will report direct to the president, cabinet or the Ministry of Mines and Energy;
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| The above requires Pertamina to transfer all production sharing contracts and other contractual agreements it has with investors to the agency;
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| All existing contracts will be honored until they expire;
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| Establishment of a Regulatory Agency under government control within one year to deal with downstream activities, including overseeing oil product imports, supply and distribution. This area is now open to private foreign and local companies.
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| Pertamina to become limited liability company under state control within two years. Unclear if its name will change; until it becomes a limited liability company;
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| Pertamina will hold overall responsibility for domestic fuel supply and distribution for four years;
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| Besides the limited liability company, separate subsidiaries will be established and be involved in upstream activities, LNG activities, importation, marketing, transportation, storage, processing and other non-oil and gas related businesses.
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| TRADE AND INVESTMENT
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IMPLEMENTATION OF INDONESIAN INVESTMENT PROJECTS SLUMPS 78%
JAKARTA - Implementation of foreign investment projects in Indonesia has slumped 78 per cent to US$1.8 billion in the first nine (Continued on page
5)
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