Developer who's learned the hard way

Developer who's learned the hard way

Abdul Khalik, The Jakarta Post, Jakarta

In 1982, people would think you were crazy if, as a local in your
early 30s, you left your job as division manager on a salary of
US$5,000 per month at one of the largest British companies for
adventure as an entrepreneur in the property business.

That was just the beginning for PT Jababeka president director
Setyono Djuandi Darmono: To produce what we see now as Jababeka
city in Cikarang, West Java, with its population of 150,000, from
nonproductive and infertile land.

"I asked my British boss if I could ever be the top man, at
least in the company's branch in Indonesia, if not the highest
position in Britain. He said I couldn't, so I left the company to
run my own business," he told The Jakarta Post at his office in
the Batavia Building, Central Jakarta, recently.

That year, Darmono, who was born in Bandung in 1949,
immediately established PT Permada Binangun Jaya but did not cut
his links with the company, Imperial Chemical Industries (ICI),
as he remained its sole agent for several more years, relying on
this secure source of income for his property project.

With two of his friends, Darmono built Bumi Bintaro Permai,
his first housing complex, on a 10-hectare site near Ciputra's
Bintaro Jaya housing complex in South Jakarta.

Although the units on the 500-house complex sold out in only a
few months, Darmono, who graduated from a textile academy in
Bandung in 1970, said that he did not make much profit from the
development.

"We built a very exclusive complex but sold the houses
cheaply. That's why we made a small profit. However, I learned
everything about the property business from that experience. In
practice, after building the complex, I was ready for any
challenge," Darmono said.

At that time, the concept of a satellite city to support
Jakarta had been popularized, and several famous developers,
including Ciputra's Jaya Group, had started building giant
housing complexes.

These were aimed at providing Jakartans with easily available,
low-priced housing in the suburbs, such as Kelapa Gading in the
eastern part of Jakarta, Bintaro and Serpong (south) and
Tangerang (west).

Former president Soeharto's New Order regime had also been
trying hard to attract foreign investment to help develop the
country.

"I wondered how we could attract foreigners, given our set of
circumstances. We had only one government-owned industrial estate
in Pulogadung (East Jakarta) with rather poor facilities, while
the amount of red tape for opening new businesses was
frustrating," Darmono said.

Knowing that he would face stiff competition from giant
developers targeting local people, he started dreaming of
building an industry-based city somewhere outside Jakarta that
could help cut through the red tape and offer first-class
business facilities to both local and foreign companies, as well
as creating a demand for housing from the companies' employees.

Darmono told his partners that overseeing a small property
project had given them as much of a headache as a huge one.

He established PT Kawasan Industri Jababeka in 1989 in
an attempt to begin realizing his dream.

"We managed to lobby the government to let the private sector
build and own an industrial estate. The government gave us 500
hectares first, plus an additional 2,500 hectares later on,"
Darmono said.

However, he encountered difficulty in obtaining bank loans to
begin construction because of a lack of credibility and the
perceived high risk of the project.

Eventually, Darmono managed to persuade 21 well-known
businesspeople, including developers Budi Brasali and Ismail
Sofyan, to invest in his dream.

Within three years, all industrial buildings on the 500-
hectare site were sold, with giant tenants like PT Unilever and
PT United Tractors among the first companies to start up; soon,
an extension on another 2,500-hectare site was built.

"Success in attracting blue-chip companies boosted our image
and credibility. We went public in 1994, and have grown ever
since," Darmono said.

PT Jababeka then bought built Menara Batavia, Cilegon
industrial estate and electricity company Cikarang Listrindo.

End of the story? No.

In 1996, he took a sabbatical from his position as managing
director of PT Jababeka to build the 1,500-hectare Tanjung Lesung
beach resort in West Java, while the 1997 to 1998 financial
crisis almost destroyed everything that he had built up.

Prior to the crisis, PT Jababeka had a total loan of US$300
million, with total rupiah-denominated assets of Rp 3 trillion.
However, when the rupiah-dollar exchange rate dropped to Rp
15,000 (from Rp 2,300) in the midst of the crisis, the company
found itself in dire straits. Its stock traded at Rp 60 per share
in 1998 -- down from Rp 4,950 in 1996.

Darmono, who resumed his position as president director in
1999, quickly restructured the company's debts via a debt-to-
equity swap, as well as maintaining existing tenants by providing
quality services and cutting the number of employees from 1,500
to 750.

Darmono's magic worked again. A deficit of Rp 1,707 trillion
in 1999 was turned into a Rp 807 billion surplus in 2002.

In 2005, the number of tenants has grown to over 1,100 small,
medium and large companies, while the housing complex is home to
12,500 families.

"We have turned the areas with only 10,000 inhabitants into a
city with 150,000 residents, complete with facilities that a city
should have. Now, I want the city to become a real city with its
own administration.

"We have established a group that represent the residents. We
hope this will become a city council later on," Darmono said.

He recently established an education park in which some top
universities, such as the Bandung Institute of Technology (ITB)
and the University of Indonesia, have cooperated to create a
center of excellence.

Darmono, who lives with his wife and three children, added
that what he wanted now was to see the city become a laboratory
for excellence in bureaucracy, education and small and medium
enterprises as well as big business: Wishes that are no longer
out of his reach.

In the meantime, he still enjoys playing golf, his favorite
sport, and taking his family on trips to shopping malls or the
cinema in his leisure time.

Reflecting on both his and the nation's current situation, he
gave a hint as to what motivates him now: "I want to find ways to
help my country to provide better education for children, provide
more opportunities for small and medium enterprises, and hence,
create more jobs," he said.