His name was
sukses
Buddhadev
Bhattacharya was in Jakarta on 25 August; there he signed an agreement with
Benny Santoso of the Salim group. Under it, the group will be leased 5100 acres
in 24 Parganas to develop an industrial city, a knowledge city, a biotechnology
park and a health city – or, in old-fashioned language, estates for industry,
information technology, laboratories and hospitals. A month earlier, the same
group was given land for a housing estate in Howrah and another plot in Uluberia
for a two-wheeler factory.
The Salim group
is named after its founder Liem Sioe Liong, alias Soedono Salim (Chinese
minorities in East Asia face local hostility; one way they cope with it is by
adopting local names. Thailand forces foreigners to take on local names; thus
Harbinder Singh would be locally called Sukornchik Thanpokai.) He was born in
Haikou in Fujian province of China in 1916. When he was 15, he started a
noodle-soup shop. Five years later, his father died. Those were the days of the
great heroic struggle of the eventually triumphant Red army against the
Kuomintang, which finally ran away to Taiwan; both armies were catching all the
young men around and conscripting them. Rather than indulge in the holy war,
Sioe Liong alias Salim ran away to join an uncle who had a provision store in
Indonesia. But the store did not have much business. So he started peddling
coffee: he would mill it at night, make little packets out of newspapers and
hawk them during the day.
His break came in the late 1940s, when an
armed revolt broke out against the Dutch who had returned to Indonesia after
the defeat of the Japanese. Soeharto, who had joined a Japanese mercenary
force, found himself out of work and joined Soekarno’s rebel force. Liem came
to know him and made himself useful smuggling arms. He also found good business
in cloves, which are an expensive input into the murderous Indonesian biris.
The two businesses made him rich.
But his real break came in 1965, when
Soeharto overthrew Soekarno in a counter-coup. Soeharto was reputedly the
world’s most corrupt ruler of his time. When he abdicated in 1998, he was
ranked the world’s sixth richest person; his assets were estimated at $16
billion. He was also the most nepotic of men. Almost all his cronies were from
his family – half-brother Probosu-tedjo, cousin Sudwikatmono, sons Sigit
Harjojudanto, Bambang Trihatmodjo and Hutomo Mandala Putra, and daughters
Hardjanti Rukmana, Hediati Harijadi and Hutami Endang Adiningsih. But two were
from outside the family – Liem and Mohamed Hasan. Of the two, Liem was the
closer, and he benefited more.
Indonesia saw a big oil-driven boom in
the 1980s and 1990s. Indonesia then had a big payments surplus. It increased
money supply at home; one of the most lucrative businesses in those
circumstances was to take people’s money and lend it out. Liong set up Bank
Central Asia to do it, and gave Hardjanti Rukmana and Sugit Harjojudanto a 30
per cent share of the capital. In 1997, the bank had 788 branches and 8 million
customers.
The bank gave Liem money to play with. So
he set up noodle, flour and bread businesses. He also set up Indomobil Sukses
Internasional to make cars, Indocement Tunggal Prakasa to make cement, and a
resort in suburban Jakarta; altogether he had about 500 companies in Indonesia.
But to spread
economic and political risk it was prudent not to put all one’s eggs in the
Indonesian basket. So Liem bought into QAF, a company that owned a supermarket
in Singapore, and First Pacific Co in Hong Kong. First Pacific took a 49 per
cent share in the Nandas’ telephone company Escotel in the 1990s, and also
invested in Smart Communications, a telephone company in the Philippines. Liem
was not as rich as Soeharto, but was far ahead of any other Indonesian; his
business assets were estimated to be $10 billion. His plans were even grander
than his empire. He wanted to take half a million acres of swamp in Kalimantan,
drain it and grow rice.
Then came the
East Asian crisis of 1998. Capital flew out of Indonesia, and the rupiah
collapsed; from 2,400 to the US dollar in July 1997, it went down to 11,500 a
year later. There was a run on Bank Central Asia. Mobs destroyed 122 branches
and 150 ATMs. There were terrible anti-Chinese riots all over Indonesia;
Liong’s villa in Jakarta was attacked. Indofood had $1 billion in overseas
loans; Indocement had $830 million.
The empire could
not come out of the crisis unscathed; but the Liem family managed it with
aplomb. Liem Sieo Liong moved to Singapore; his son Anthoni took over the
reins. The government took over Bank Central Asia; and since 90 per cent of its
loans were to Salim companies, it came effectively to own them. The Indonesian
Bank Restructuring Authority took over 107 Salim group companies, including 25
property firms, 24 plantations, 10 food and consumer product firms, nine
oleochemical firms, five coal and granite firms, four sugar firms and one
communications company.
It is difficult
to get a picture of the Salim group today. Of the companies that went into the
hands of IBRA, some were sold, some went back to the Salim group or were
rumoured to have been sold to their frontmen, while some continue to be in a
limbo; it is impossible to work out which belongs where. As far as I can see,
the group’s crown jewel, Bank Central Asia, is not back in the empire.
In the
meanwhile, a new generation of entrepreneurs has occupied the business space in
Indonesia. In finance, Hary Tanosoedibjo has brought his bank, Bhakti
Investama, to the fore. The kretek or clove cigarette business hardly suffered
from the crisis; Budi and Bambang Hartono, the brothers who own Djarum, have
had much money to play with. The Salims’ oleochemical plant was taken over by
the Wings group of Hanny Sutanto.
Buddhardev
Bhattacharya is right when he says that money knows no colour and that Salim’s
connection with Soeharto is history. If
the Salim group has money at its command and can use it to develop the land the
West Bengal government has given it, that is fine with me. What worries me is
that the Salim group itself may be history. Seven years ago it ceased to exist;
its remnants were taken over by the Indonesian government. Since then, Anthoni
Salim has had time to rebuild, but what precisely he has rebuilt is unclear. In
particular, I simply cannot find out what financial resources he can command. I
am not in the business of finding out; there are a number of financial
detective agencies which could. But the West Bengal government should have done
due diligence – and shown publicly that it had done so.
However, I am
not worried about Liem Sieo Liong. He lives in Singapore; hale and hearty at
88, last year he threw a diamond wedding anniversary party which lasted two
days and cost $350,000. Forbes valued him at $655 million. He certainly has
money.
