The Collapse of the Salim Business Empire After Three Decades of Glory

Nearly everyone in Indonesia is familiar with Indofood, one of the main pillars of the vast business empire managed by the Salim family. This large conglomerate is often seen as a symbol of national economic strength, with its management now being passed on to the third generation. However, behind its long track record and legendary name, few realise that the Salim family’s business wheel was once thrown to its lowest point. The ebb and flow of the Salim Group’s journey is strongly tied to the figure of its founder, Sudono Salim, and the close relationship he forged with the ruling authorities of the time. To understand the reasons behind the conglomerate’s soaring business scale—and its eventual collapse—it is necessary to trace the early partnership network woven by Sudono with the New Order regime.

Sudono Salim had a close relationship with Indonesia’s second president, Soeharto. Sudono operated as a clove importer and army logistics entrepreneur after independence. His extensive business network led Colonel Soeharto to seek cooperation with him. Through an intermediary, his cousin Sulardi, Salim and Soeharto were introduced for the first time. Salim then became the logistics supplier for Colonel Soeharto’s troops during the War of Independence (1945-1949). That introduction changed Salim’s life. As Richard Borsuk and Nancy Chng wrote in ‘Liem Sioe Liong and the Salim Group’ (2016), after Soeharto gained power in Indonesia in the mid-1960s and became president, he was supported by a group of crony businessmen, the largest and most powerful of whom was Liem Sioe Liong.

For three decades, the two engaged in a mutually beneficial relationship. Soeharto protected Liem and ensured his business ran smoothly. In return, Liem, through the Salim Group business empire, channelled funds to Soeharto, his family, and other cronies. As a result, both parties prospered in their respective paths. Salim was successfully listed as the richest person in Indonesia, while Soeharto successfully held power in the country. However, their glory was suddenly destroyed in a matter of days in May 1998.

Over three decades, Salim successfully built three business empires in three sectors: banking (Bank Central Asia, BCA), construction (Indocement), and food (Bogasari and Indofood). But all of this gradually collapsed when the 1998 crisis hit. BCA was the hardest hit. Historian M.C. Ricklefs in ‘Sejarah Indonesia Modern’ (2009) noted that during the crisis, customers withdrew funds en masse. Hundreds of people queued for hours to drain their entire savings. This situation left BCA, no longer trusted by the public, on the verge of bankruptcy. The series of crises eventually peaked in May 1998. The closeness to Soeharto turned out to be a disaster for Salim.

The emergence of anti-Soeharto sentiment, as the economic crisis spread into political turmoil, dealt a severe blow to Salim. The public, aware of the close ties between the two, made Salim a target. Salim, as the richest person, also had to be destroyed. This occurred after demonstrations turned into racial riots on 13 May 1998. That day, Jakarta and its surroundings were hit by riots, looting, and the burning of houses, shop buildings, and many vehicles (Kompas, 14 May 1998). These actions were carried out by a provoked mob. They targeted buildings and vehicles owned by ethnic Chinese, and even targeted the Chinese individuals themselves.

Jemma Purdey in ‘Anti-Chinese Violence in Indonesia 1996-1999’ (2013) explained that the emergence of racial sentiment against the Chinese was due to a stereotype that they deserved to be hated simply for being wealthy and close to the ruler Soeharto. The central figure associated with that description was Sudono Salim. Ricklefs wrote that the companies of the cronies and the Soeharto family were the main targets of burning and looting, with Liem Sioe Liong’s Bank Central Asia being the primary object of attack. In the account by Richard Borsuk and Nancy Chng, as a target of the mob’s fury, Sudono Salim, his wife, and several of his children were fortunately in the United States accompanying Salim for an eye operation when the riots occurred. In Jakarta, only Anthony Salim was present, working at Wisma Indocement on Jalan Sudirman.

At that time, Anthony did not even dare to return to his father’s house in the Roxy area, as the mob violence also targeted Chinese residential areas. It was feared that if Salim stayed in his home, he could be killed. That prediction later proved true. On the morning of 14 May, Anthony received news that his father’s house had been approached by a group of young men with threatening looks, armed with fuel canisters and tools. They wanted to enter Liem’s luxurious home. Anthony was powerless. He immediately ordered the security guards to let the mob enter and destroy the house, rather than block them and risk bloodshed. Anthony told Richard Borsuk and Nancy Chng that in an instant, all the cars in the garage were ablaze, along with the entire contents of the house. They burned furniture, tore down paintings, and ransacked the rooms. They even scrawled inappropriate words on the house. After several minutes, black smoke quickly billowed high from the Salim residence. In the streets, photos of Salim were stoned and burned by the angry mob (Kompas, 15 May 1998). Seeing the dire situation in Jakarta, Anthony immediately thought of leaving his office. He feared his office would suffer the same fate as his house. He then went to Halim Airport to head to Singapore using a private jet. From there, Anthony monitored the development of his business after those difficult times.