Another business bust<\/p>\n
Only about five months after 51-year-old Robby Tjahjadi
\nsucceeded in convincing Golkar members of the House of
\nRepresentatives that he and his Kanindo business group did not
\nhave even a single cent in bad debts, his business empire is
\nabout to collapse under an estimated Rp 500 billion (US$230
\nmillion) in debts to two state banks alone.<\/p>\n
He certainly looked innocent when he appeared at the hearing
\nwith the Golkar faction of the House in late February to refute
\nrumors about his bad debts. He even got emotional and shed tears
\nover what he rejected as totally baseless rumors. He said he was
\ndeeply hurt because despite his great success in building up his
\nnew business empire, many people still remembered him as a former
\ncar smuggler.<\/p>\n
Robby likes to see himself as a lucky man. And he was lucky
\nindeed. After a district court in Jakarta found Robby guilty of
\nsmuggling in luxury cars and sentenced him to 7.5 years in jail
\nin March, 1973, the high court reduced the jail term to only 30
\nmonths. Later on, after years of running a variety of small
\nbusinesses, he entered the textile industry in 1986. Luck again
\naccompanied him. Within just six years he succeeded in building
\none of Indonesia's largest textile groups.<\/p>\n
Robby's luck seemed to make him the darling of state bankers.
\nWhen most other businessmen cried out under the credit crunch
\nimposed by the central bank to cool down the overheating economy,
\nhe got Rp 324 billion in investment and working-capital loans
\nfrom the Development Bank of Indonesia (Bapindo) and Rp 300
\nbillion from Bank Bumi Daya, both state banks. Several foreign
\ncreditors also showed great trust in Robby's business acumen.<\/p>\n
Robby's short-lived success story resembles the profile of
\nEddy Tansil who was recently sentenced to 17 years in prison for
\ncorruption related to an estimated $620 million in loans also
\nfrom Bapindo. Robby's Kanindo group, like Eddy's Golden Key
\ngroup, was reportedly associated with politically well connected
\nbusinessmen, at least during its start up, and employed a retired
\narmy general as a commissioner.<\/p>\n
The story of Robby's business bubble is now raising several
\npuzzling questions and giving strong credence to stories
\npreviously rejected as baseless rumors. The first question is how
\nsuch a businessman could get such large sums of loans from state
\nbanks for financing projects in the mature and highly competitive
\ntextile industry. How could state bankers close their eyes and
\nseem so stupid as to condone Robby's over-extension into the
\nhighly speculative property acquisition and development sector,
\nwhich was far outside of his core business -- spinning.<\/p>\n
Robby's bust also gives a great deal of credence to the list
\nof doubtful and bad debtors which was circulated in the middle of
\nlast year. This case even makes us believe that Eddy and Robby
\nare simply the tip of the iceberg of the state banks' go-go
\nlending to big businessmen who are associated with persons with
\nstrong political connections. They were simply the unlucky ones
\nthat got themselves exposed. We believe there are still many
\nother major bad debtors who remain \"shielded\" from the public.<\/p>\n
We think that is a major and delicate challenge for Bank
\nIndonesia (central bank) and the finance minister, especially
\nbecause state banks seem to be heavily exposed to big business
\ngroups. The way the big debtors are handled will very much
\ninfluence the public's trust in the repeated official
\npronouncements of the government's commitment to developing small
\nbusinesses and cooperatives and to bridging the wide inequality
\nin income distribution and asset ownership.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/another-business-bust-1447893297",
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"sponsor": "Okusi Associates",
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