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Web-only Exclusives
November 30, 2000

From Our Correspondent: Hirohito and the War
A conversation with biographer Herbert Bix

From Our Correspondent: A Rough Road Ahead
Bad news for the Philippines - and some others

From Our Correspondent: Making Enemies
Indonesia needs friends. So why is it picking fights?

Asiaweek Time Asia Now Asiaweek story

SUHARTO'S SON RISES

Slowly and quietly, the Indonesian president's second son has been building a robust business empire. Who is Bambang Trihatmodjo and why are people whispering about him?

By Keith Loveard / Jakarta


IT'S TWO HOURS SINCE the successful launch of the Palapa C-1 satellite at Florida's Cape Canaveral and Indonesian and American officials are visibly relieved. The party has been bused to the plush confines of the nearby La Cita Country Club, where it's time for toasts and glad-handing. Among the top brass is businessman Tommy Winarta, resplendent in gold-trimmed batik. He is a partner in PT Satelindo, which has just spent $190 million on the launch. Among other proud countrymen is Indonesia's Ambassador to the U.S. Arifin Siregar who is so pleased he takes a victory whirl on the dance floor with the wife of an executive from Hughes Space and Communications.

Yet nowhere among the crowd is Bambang Trihatmodjo, second son of Indonesian President Suharto. As the major shareholder through his Bimantara group in the Palapa satellite, he has the most to gain or lose from the launch. Reports from the other side of the globe indicate he's not at Satelindo's Jakarta ground station either. Trihatmodjo apparently preferred to watch the direct broadcast on television behind the high walls of his home in the elite Jakarta suburb of Kebayoran.

Bambang's absence was typical. For years, the powerful president's most powerful son has shunned the limelight -- while quietly building one of Indonesia's fastest-rising conglomerates. Already a strong presence in such key sectors as broadcasting, cars and oil, the Bimantara Citra group is now looking to make telecommunications its biggest revenue raiser within five years. Trihatmodjo's personal wealth is said to be growing in other ways as well. Through a web of personal and corporate tie-ups, Bambang's reach is extending across the country and overseas.

Interest in the 43-year-old tycoon has grown in concert with his rising wealth and business connections. But getting a clear portrait of the media-shy Trihatmodjo is not easy. Until recently, the Ministry of Information actively discouraged reporters from writing about the first family and its businesses. The lingering effects of that policy and the Suharto family's immense power still keep people quiet today. Adi Adiwoso, of PT Pasifik Satelit Nusantara, which owns six of the 34 transponders on the Palapa C-1 satellite, backs off nervously when asked about the president's son. Another business partner has a similar reaction, adding, "You're kidding, I've got my kids to think about." A Western businessman who deals with Bimantara advises: "Pick another topic."

When there is talk about Trihatmodjo, it is usually gossip passed in whispers or in private. The decision by the government to hand over the satellite business to Satelindo in 1993 is the latest in a line of licenses Bimantara is seen to have grabbed because it has a first family member at its helm. Even those who praise the leadership of President Suharto often raise questions about the children's success.

Like Bambang, his brothers and sisters are reticent about talking to the press. Six in all, the children of President and Madame Tien Suharto are seldom seen among Jakarta social circles. The recent exception is older sister Siti Hardijanti Rukmana, 47, known as Mbak Tutut, who has adopted a more political stance and can be found at functions of the ruling group Golkar. Bambang was elected to Golkar as well, along with younger brother Hutomo Mandala Putra, 34. But they have largely remained behind the scenes or, more likely, uninvolved in political affairs. Other siblings, such as the oldest son Sigit Harjojudanto, 44, are virtually never seen in public (see profiles, pages 34-35).

Trihatmodjo's preference for privacy and the fact that he never went to university have given rise to suggestions that he's not that smart; that his business success is due to having a powerful father. Some even say privately that his wife Siti Halimah, who has an accounting degree from a U.S. university, is the real force behind Bimantara.

All this leads to the questions: Who is Bambang Trihatmodjo and what is his real role at Bimantara? Through a series of interviews with friends, colleagues and business acquaintances, Asiaweek was able to put together a totally different picture of the man than the one painted by popular lore. "He's smart, even manipulative," says one senior Bimantara executive. Another colleague concurs: "He's got a sharp mind and he takes a responsible attitude to his work. The fact that he's got a good management team around him should suggest that he picks his people well, not that they do all the work for him."

Another business partner says Trihatmodjo is fair: "If you work on a project with him and you lose, the loss is shared. If you win, that's shared too. If you go out somewhere together, you share the costs. In a business sense, he's also constructive. He has some good ideas and works them through." And people who have spent time with Trihatmodjo away from the office say he's not stuck-up. "He likes to hunt and he likes to fish," says a friend. "In the mornings, it's common for him to be the one to get the breakfast. He serves us."

Trihatmodjo is also described as the glue that holds the Bimantara partners together. Among the elite Bimantara fold are brother-in-law Indra Rukmana, former schoolmates Rosano Barack and Muhamad Tachril, and Peter Gontha, a former executive at Citibank in Indonesia. While Rukmana, Tutut's husband, doesn't take a major role in management, he is said to often be the one who smoothes out personnel problems and lends a helping hand when it's needed. Barack is described as the "power-seeker" who searches out new business ties. "Affiliation-oriented" Tachril is said to be good at making sure those connections remain strong. Gontha, meanwhile, is called the consummate professional, though he is known for taking on more than he can handle.

Critics tend to disregard the fact that the Bimantara group has for some years been consistently more open than the other Suharto children's companies. In some respects, it is more transparent than many Indonesian enterprises. Since the lead-up to holding company Bimantara Citra's public launch in the middle of 1995, group executives have made themselves available to the press on request. The group is tied by stock market regulatory rules to quarterly reporting, which it has adhered to.

And though he is called "shy" and "insecure," Trihatmodjo does occasionally talk to the press, though he never tends to say much. In one surprise interview last year in Hong Kong, an Asiaweek correspondent recalls that Trihatmodjo was "very cordial, relaxed. He just wasn't talky. He kept repeating himself, or laughing." Corporate public relations sources admit Trihatmodjo's reluctance to be more open tends to cement the image that he's dull. Still, they say they have been unable to persuade him to be more frank and forthcoming.

At a recent press event, however, Trihatmodjo was willing to talk -- though, true to form, he was hardly verbose. "I'm just like you and everyone else, just another human being," he told Asiaweek. On his obvious nervousness in public, Bambang said: "I've been like that since I was a kid. Since I was small I have never said much. What's important is to work."

It wasn't entirely work, though, that led Trihatmodjo to England in the early 1970s. An old friend recalls meeting him and Tachril at a house near the southern seaside city of Brighton: both sported long hair and were walking around with no shirts. It was the post-hippie days in the West, and the boys were apparently sharing in the fun of the flower power generation. Trihatmodjo seems to remember his days in England with warmth; he's named one of his investment companies Brighton.

For a while, Trihatmodjo played in a four-man Jakarta rock band with Tachril, Barack and another friend, Hariyadi. Today, Trihatmodjo, Tachril and Barack are Bimantara's leading lights, while Hariyadi is managing director of PT Bimantara Wisesa, originally a property company but more recently active in trading.

Tachril says Bimantara was conceived when he, Trihatmodjo and Barack made a schoolboy oath to work together in the future. But the dream only began to come together in 1979, when Tachril was working with Indonesian trading giant Bakrie & Brothers and Barack was with electronics firm National Gobel. The trio started to lay plans, formally establishing Bimantara two years later. The three friends frequently consulted Indra Rukmana on how the business should operate; eventually they asked him to join.

The way the founders tell it, Bimantara's beginnings were modest. In the early days Tachril says he found himself "operator, secretary and the guy who went to get the food." It was a friend of Barack's father who put up some money to pay for their office rent while the former band members took out loans to meet other initial expenses. "We started as traders, dealing in anything, operating as brokers," recalls Tachril. The Suharto links apparently helped. Barack's university education in Japan and a brief stint there with electronics conglomerate Matsushita also provided the company with contacts. Tachril nonetheless claims the Suharto name didn't always open doors. He recalls being thrown out of an office at state-owned oil giant Pertamina three times when he tried to arrange a meeting about possible business partnerships.

There were suspicions and criticisms about Bimantara from the beginning, according to Tachril. "After about two years we started to look seriously for professionals to join us. We had to be able to handle the company in a professional manner. A lot of people were saying: You are just a company selling facilities," Tachril says, using an Indonesian euphemism for connections.

Tachril doesn't deny that Bimantara had connections. "I don't think there's anyone in the world who doesn't need connections. The problem is, how do you use those connections? Every major company [in Indonesia] that was ever born or got big did so because of its connections," he claims. "If we had not used ours properly, they could have become a boomerang which would have turned around and hit us."

Among the professionals taken on by Bimantara in its initial expansion was Kadir Assegaff, now group finance director. The former Citibank executive recalls that he had to ask if the managers wanted to make Bimantara into a profit-seeking multinational or a corporate presence that would aid in Indonesia's development. After all, Assegaff says, "I was not only putting myself but my family in this company."

Assegaff signed on in 1984 and credits a dedication to hard work and professionalism for the group's success. That has required shedding many of the subsidiaries formed in the early days. "[Bimantara] companies were being formed every week but they were not hiring any professional talent," Assegaff says. "We had to be serious about how good we could make those companies and how to improve them."

Since 1990, a progressive downsizing of operations has seen Bimantara reduced from over 100 subsidiaries and affiliates to 51. When it went public last year, only 26 of these companies were included in the float; the remainder were placed under holding company PT Bima Intan Kencana. The Bimantara group companies are concentrated in a number of core business groups, notably entertainment, telecommunications, infrastructure, finance, autos and electronics. Some remain speculative enterprises, such as a joint venture waste-treatment facility south of Jakarta run by Aqualindo Mitra Industri. The company also has tie-ups with high-profile multinationals such as Hyundai, Ford, Nestlé, Union Carbide and NEC.

Given the Bimantara track record, doing deals with Trihatmodjo is seen as the way to wealth. "We believe he's the key to success, particularly in communications," says a U.S. satellite executive. "If he signs on, you've got a winner. If he doesn't, you're struggling." Multinational Shell found that out the hard way when Bimantara pulled out of a projected deal to build a petrochemical complex in Central Java in 1991. Negotiations stalled when Bimantara demanded more than 5% of the action. Indonesians close to the deal said Bimantara resented Shell's take-it-or-leave-it attitude. Shell executives were shocked when Bimantara turned around and formed a strategic alliance with Indonesians Prajogo Pangestu and Henry Pribadi in the rival Chandra Asri petrochemical project in West Java.

Today, Bimantara Citra is a publicly listed company with an estimated net profit in 1995 of $47.8 million on revenues of $319 million. Finance director Assegaff is clearly fulfilling all requirements for transparency. From here, all will be clear, but the same is not true about where the seed money came from. Some of it may have been "invested" by companies keen to do business in Indonesia. "We do write checks," admits one U.S. executive, who asked not to be identified. "It's the only way we can guarantee the business." Another businessman insists that his company does not pay anything. But, he adds, "we lose business that way, and one of these days we may have to reconsider our policy." There is of course no evidence that any of the Bimantara principals has ever received a cent in "commissions."

There's good reason everyone wants to tie-up with Bimantara. Among the group's lucrative divisions is PT Samudra Petroleum, an early subsidiary, which holds contracts to ship Indonesian oil overseas. And since the mid-1980s, another long-term source of funds has been PT Mindo, an oil marketing operation that handles around 5% of Indonesian production. Some oil industry executives believe the deal is actually illegal, since the law governing Pertamina says the state firm alone has the authority to market Indonesian oil. One Bimantara executive says that's not true: "The law doesn't state that Pertamina may not subcontract this right. It's a gray area, and Indonesian business is very good at operating in these gray areas."

Bimantara's most important coup before the satellite business was in broadcasting. Commercial station RCTI, bleeding money after its set-up in 1990 when it was restricted to encrypted broadcasts, won the right to broadcast freely the following year. Trihatmodjo's sister Tutut snuck ahead in 1992 with permission to transmit peak-time programming nationally on her TPI station. But RCTI quickly got the government to let it go national too and has since maintained market leadership.

PT Satelindo president Iwa Sewaka says the government had sound reasons to transfer its satellite launch program to private hands. Asked why it chose Satelindo, he simply shrugs. Before the Palapa C-1 launch, United Development Party MP Mohamad Buang stressed that it was high time that such opportunities were offered by tender. The director-general of post and telecommunications, Djakaria Purawidjaja, agrees: he told a pre-launch press conference at Cape Canaveral that in future all telecom projects would be awarded by tender.

Bimantara stands to make a lot of money from its satellites, which are expected to take over from the television station as the group's major profit-generator. Too much money? MP Buang asks why Satelindo should charge between $1.6 million and $4 million a year to rent each of the 34 Palapa C-1 transponders when the government-run Indosat charges less than $1 million.

The cash return of $115 million from the June 1995 IPO of Bimantara and $586 million from the sale of 25% of Satelindo stock to Deutsche Telkom seemed to free up Trihatmodjo for other ventures. Operating with Johannes Kotjo, a former Salim group executive, he has bought a controlling stake in Indonesia's largest textile maker, Kanindo. Kotjo had been actively raiding listed Singapore companies, apparently acting in concert with Bambang. But Kotjo may have been too active or, in the eyes of the Stock Exchange of Singapore, not discreet enough in his comments to the press. In December, Kotjo was banned from joining the board of directors of any additional SES-listed company for 30 months.

Then came a share-buying move late in January in Singapore property and trading company Amcol Holdings from Tommy Winarta and Sugianto Kusuma. The pair are the other major partners with Bimantara in PT Bima Graha, the holding company which controls the major stake in Satelindo. Another Indonesian tycoon, Henry Pribadi, who holds nearly 18% of Amcol, said he welcomed the move.

With Pribadi also linked to Bimantara through holdings in petrochemical company PT Chandra Asri, analysts said there is a strong suggestion of a concerted takeover of Amcol. But a source close to the deal denies such an intent: "As far as I can see we are just looking to make some money. With this sort of speculation around you can expect others to want to get a share of the action."

Trihatmodjo is also active through Asriland, the real estate company he owns with his wife. This is becoming a major investment vehicle for the couple. Asriland is, in turn, a part owner through Bima Graha of Satelindo and may have extensive holdings elsewhere. Is Trihatmodjo trying to ensure a way out of Indonesia if he needs it, for instance through his share deals in Singapore? "That's rubbish," he says. "We are active there so that we can more easily attract funds to use within Indonesia. You know yourself that interest rates here are high."

Complicated share dealings and growing Suharto family empires still lead ordinary Indonesians to question what is going on in their country. There is widespread resentment at what are seen to be special favors. To the elite, that's business as usual. Trihatmodjo and his siblings "are the children of a high official," says one of Bambang's longtime friends. "The culture here is that the children of such high officials are given special deals. It's as simple as that. That's the way Indonesia works."

Trihatmodjo, however, denies that he ever used connections to his father for personal benefit. "We go by the procedures, that's all," he says. He is aware that the world at large doesn't believe him. "People can make their own judgments. It's normal to me now. As long as I don't do anything wrong and as long as we keep within the regulations there is nothing we have to worry about."

The perceived culture of favoritism sparked debate last year about whether the children of high officials should be banned from business. One of Trihatmodjo's close associates calls that idea nonsense. "What are the kids supposed to do? Go to the government and ask for a pension? It's the government's fault if people prefer to do business with someone like Bambang," he says. "If you take a proposal to the government it will sit untouched on someone's desk for three months. With Bambang, you just say, hey, look at this idea. If he likes it, everything is on its way in two days."

Ultimately, of course, the first family firms can't hope to debunk the perception they succeeded because of special treatment until after President Suharto's death. "However good we are, people will always say that we only can do it because of who we are and because we get special deals," a Bimantara executive says. "If we fail, people will say, look, they got all those special deals and still mucked it up. We can't win." That may be true. But however they have gained market share and conquered new corporate frontiers, it looks like Bambang Trihatmodjo and his Bimantara team will remain winners for decades to come.


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