President Soeharto's Fury Unblocks Funding for Strategic Asahan Project

Jakarta, CNBC Indonesia - Indonesia’s second President, Soeharto, once became enraged and reprimanded his entire team of economic ministers because the budget for a Rp1.7 trillion mega-project remained unreleased.

The project in question was the Asahan Project, a collaboration between Indonesia and several Japanese companies signed on 6 July 1975, exactly 51 years ago today.

According to the PT INALUM website, the Asahan Project is an industrial and electrical project that utilises the flow of the Asahan River in North Sumatra as a source of hydroelectric power to supply an aluminium smelting plant. At the time, the project was one of the largest investments in Indonesia, valued at 4 unlit 411 billion yen, or approximately Rp1.7 trillion.

Due to the massive scale of the investment, Soeharto gave the project special attention. He appointed his trusted military aide, A.R. Soehoed, as the Chairman of the Asahan Project Authority to oversee its implementation.

However, one year after the agreement was signed, the project encountered obstacles. The budget required to support construction failed to be released by the government. Soehoed repeatedly raised the issue with the relevant ministers but received no certainty.

Unable to find a solution, Soehoed reported the matter to President Soeharto. The President initially asked Soehoed to coordinate further with the economic ministers, but the results remained nil.

“But, I asked the Coordinating Minister for Economic Affairs, and there was no response. So, I eventually went back to Pak Harto,” Soehoed recounted, as relayed to Tjipta Lesmana in the book Dari Soekarno sampai SBY: Intrik & Lobi Politik Para Penguasa (2008).

Upon hearing the report, Soeharto sought to confirm whether all possible efforts had truly been made.

“We tried, but we were unsuccessful,” Soehoed replied.

According to his account, Soeharto’s face instantly turned red. The President gave only a brief response and requested that Soehoed return to his residence on Jalan Cendana that afternoon.

Upon arriving at Cendana, Soehoed found he was not alone. Present in the room were Vice President Sri Sultan Hamengkubuwana IX and the entire ranks of the economic ministers.

During the meeting, Soeharto unleashed his anger upon his subordinates, believing they were not giving serious attention to a project deemed vital for the future of national industry.

“You must realise that this Asahan Project is extremely important! This is a long-term project, and it needs to be supported with sufficient budget. Everyone, pay attention to this!” Soeharto insisted.

According to Soehoed, the atmosphere in the room immediately became tense. No one dared to look the President in the eye.

“Soehoed admitted to being shocked to see the President shouting at his ministers,” wrote Tjipta Lesmana.

Shortly after that meeting, the budget for the Asahan Project finally began to flow, allowing construction to resume. After nearly a decade of work, Soeharto officially inaugurated the Asahan Project on 6 November 1984.

The partnership between Indonesia and the Japanese company consortium ended on 9 December 2013. Since then, ownership of the Asahan Project has been entirely in the hands of the Indonesian government through the State-Owned Enterprise, PT Indonesia Asahan Aluminium (INALUM).