State-owned cement giant Semen Indonesia is looking to develop its business portfolio into property, with plans to develop a 200-hectare plot of land into a township in Gresik, East Java, as its first project
tate-owned cement giant Semen Indonesia is looking to develop its business portfolio into property, with plans to develop a 200-hectare plot of land into a township in Gresik, East Java, as its first project.
Semen Indonesia finance director Ahyanizzam told reporters on Thursday that his company was looking to explore business potential in a non-cement industry, by establishing a subsidiary focusing on the property business.
Ahyanizzam said his company had planned to disburse up to Rp 200 billion (US$17.1 million) to set up the property unit, which will start operations before the end of the year.
The new unit, Ahyanizzam said, will develop Semen Indonesia's plot of land in Gresik into a satellite city, which will include residential areas, apartments, commercial buildings, logistics, schools and a port.
'We decided to establish a property subsidiary to generate additional income from our idle asset in Gresik,' he explained. 'We have yet to calculate how much investment is needed and how long the project will take, but it will be jointly operated by the new subsidiary and an experienced company.'
State-run construction firm Wijaya Karya (Wika), which also runs a property business, is among the companies that Semen Indonesia is considering forming a joint venture with, Semen Indonesia president director Dwi Soetjipto said.
'We hope to be the majority shareholder in the joint operation,' Dwi added.
Semen Indonesia and Wika inked a memorandum of understanding (MoU) on Aug. 19 to begin a partnership in the energy, realty and property sectors.
But Semen Indonesia's business diversification does not only eye the property sector, as the company is also looking to establish three new subsidiaries focusing in infrastructure, trading and logistics, according to Dwi.
The firm has set aside around Rp 500 billion to set up its non-cement subsidiaries, including Rp 200 billion for the property unit.
'We're trying to tap the potential from fields that we might have the competence to offer [something to],' he said.
Semen Indonesia is mulling working with state construction company Hutama Karya for a toll road project, and is planning on setting up its own logistics and trading firms to cut expenses.
Meanwhile, for its core business expansion, which is cement, the company has allocated $50 million a year for its overseas expansion.
The company is aiming to boost the production capacity of its Vietnamese subsidiary Thang Long Cement Company (TLCC) from 1.5 million tons a year to 2.5 million tons a year by early next year.
Semen Indonesia is also looking to take over a grinding mill in Bangladesh and is currently studying several companies that have the potential to be acquired.
The company is also currently going through the ongoing process of forming a joint venture with a Myanmarese private company, having allocated about $300 million from its budget and from bank loans for the plan.
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