Be Rich, Stay Rich

BY CHRISTIAN CHUA
Jun 11, 2011

How Chinese continue to dominate the apex of Indonesia’s economy, even after the fall of Suharto.

Or take Anthony Salim, who heads the Salim Group of business ventures, founded by his father Liem Sioe Liong, President Suharto’s closest crony. His conglomerate used to include BCA (Bank Central Asia), the biggest private bank in Southeast Asia. After Suharto was deposed in 1998, Salim was accused of corruption, taken to court, and had to settle enormous debts. He lost the BCA, and the whole group was about to break apart. At the time, no one would have placed even a small bet on its survival. However, Anthony Salim is today fifth on the Forbes list, with a net worth of US$3 billion. This does not exactly correspond with the common definition of “crash”. It looks like a remarkable survival.

Continuity

Together with Mochtar Riady and Anthony Salim, no less than 12 other owners of conglomerates listed in the last top 30 ranking before the 1997-98 financial crisis have made it into the current top 30. This is significant continuity. Within Indonesia, the previous transition, from Suharto’s predecessor Sukarno to the New Order, produced a more substantial reconfiguration of the business class.

The present continuity points to three characteristics of post-authoritarian Indonesia. First, the political regime in reality only underwent minimal, superficial change. The underlying structures were not dismantled. The new regime needed quick economic recovery. Chinese Indonesian businesses were its indispensable pillar. Rapid reconstruction of the economy without their capital was no option.

Second, old political forces proved to be rather resilient. Personnel continuities in the legislative, executive, and judiciary branches of government allowed corrupt practices to continue. The conglomerates had had many years of experience here. They were experts.

Capital

But third, a slow yet steady turn to a more market-based economy is definitely taking place. This helped the Chinese capitalists emancipate themselves from their former patrons, making them less dependent on political patronage. In post-crisis Indonesia, their capital alone provides plenty of protection, especially since their ethnicity cannot be used as a justification to shackle them any longer.

So in the end, as the country gradually leaves behind its authoritarian, centralised, protectionist past and moves towards a democratic, decentralised, deregulated future, the old conglomerates are well prepared to flourish under any regime that might come. After a few worrying years, today they feel on top of the world. A glance at the business sectors in which the billionaires make their money speaks volumes: palm oil, coal and tobacco. In other countries, many corporations steer clear of these activities, because they are so contentious. The political lobbying they require is just too difficult. But in today’s Indonesia there seem to be few limits for capital. For those who had a good start under the New Order, the accumulation of extraordinary wealth is easier than ever.

Christian Chua works for Deutsche Bank and lectures at the University of Frankfurt. He is the author of “Chinese Big Business in Indonesia: The State of Capital” (Routledge, 2008).

This article was first published in Inside Indonesia.