The Unity of Semen Baturaja in Holding SIG, Strengthen SOE Cement Sub Cluster

The formation of sectoral SOE holdings is part of the government’s strategic planning in optimizing the role of SOEs as agents of development or at the forefront of government initiatives. Sectoral holdings are carried out through BUMN restructuring by way of sharper mapping and regrouping/consolidation to achieve a more ideal number and scale of BUMN businesses. The restructuring of the management of BUMN including its subsidiaries is carried out in order to focus on the core business so that performance is more optimal and the creation of a more conducive business climate in the private sector.

The end of 2022 recorded a historic moment that completed all stages of the formation of the cement sub-cluster BUMN holding, the integration of Semen Baturaja (SMBR) into the SIG holding. BUMN The cement sub-cluster is listed as a BUMN holding which was first formed in 1995 through the consolidation of Semen Gresik, Semen Padang, and Semen Tonasa. The cement cluster SOE holding was continued with the formation of the strategic holding company Semen Indonesia (SIG) on January 7 2013. SMBR integration is one of the important milestones of the entire SOE transformation plan for streamlining and clustering of the cement sub-cluster.

Semen Baturaja was established on November 14, 1974 with share ownership by Semen Gresik and Semen Padang. SMBR continues to experience development and became a public company on March 14, 2013. For almost half a century, SMBR has been the pride of the people of South Sumatra. SMBR products have been used in national strategic projects, one of which is the Palembang Light Rail Transit (LRT) masterpiece, the Palembang-Indralaya toll road, the Sumsel 8 Steam Power Plant (PLTU), and many others.

SIG Director Donny Arsal emphasized that SMBR is a force in Southern Sumatra. The integration of Semen Baturaja into SIG has enormous potential for synergy to support the position and complement the footprint of the Cement Sub-Cluster SOEs, especially in the Sumatra region which is the second largest domestic market, win fierce competition and provide maximum benefits for the community and the State, as well as solidify steps SIG to become the leading building materials solution provider in the region.

Semen Baturaja has joined the holding by becoming a subsidiary of SIG through the addition of state capital in the form of inbreng to SIG based on PP 72/2016 with the Pre-emptive Rights (HMETD) mechanism. According to the Deputy Minister of BUMN II Kartika Wirjoatmodjo in the signing of the Deed of Inbreng of SMBR shares into SIG shares on December 19 2022, the BUMN Sub Cluster of Cement will encourage the recovery of the cement industry in the next two to three years through innovation, optimization and efficiency to overcome cost burden, maintaining cost structure and EBITDA consistency.

The HMETD mechanism also provides additional capital from the public/public participating in the HMETD purchase through a rights issue. The entire rights issue process was successfully carried out on December 28, 2022 with a total order reaching 96.9% of all transactions. The absorption of this rights issue shows the high interest and participation of public shareholders and the level of trust in BUMN.

SOE Minister Erick Thohir revealed that the corporate action in the form of a rights issue was intended to keep BUMN capital from relying too heavily on debt. This strategy is important to encourage the potential expansion of the BUMN business in the future. Additional capital is intended for SOEs with industries that have good prospects and potential going forward.

In the midst of national economic recovery after the Covid-19 pandemic, this integration momentum is expected to help realize the 2020-2024 National Medium Term Development Plan (RPJMN) agenda, namely strengthening economic resilience for quality growth through non-oil and gas export growth and strengthening economic development infrastructure and basic services by ensuring the smooth supply and distribution of adequate cement supplies for a better and more sustainable development of the nation.