The myth of Chinese domination

The myth of Chinese domination

By George J. Aditjondro

NEWCASTLE, New South Wales, Australia (JP): "The Chinese
constitute only 3.5 percent of the population but control 70
percent of Indonesia's economy."

This myth has been repeated and repeated so often by the
world's press, that everybody -- including those sympathetic to
the plight of Chinese-Indonesians -- seem to believe it. One of
the latest references to this myth was an interview with
Australian Foreign Minister Alexander Downer in the Far Eastern
Economic Review of Aug. 7.

As far as I have been able to investigate, this myth
originates from a passage in the 1995 study of Michael Backman,
an executive officer with the East Asia Analytical Unit of the
Australian Department of Foreign Affairs and Trade in Canberra.

In his authoritative study, Overseas Chinese Business Networks
in Asia, he states that: "Sino-Indonesians control approximately
73 percent of listed firms by market capitalization. At the end
of 1993, Sino-Indonesians (who constitute just 3.5 percent of all
Indonesians) controlled 68 percent of the top 300 conglomerates
and nine of the top ten private-sector groups."

What many "instant specialists" on Chinese-Indonesians miss is
the extremely important footnote between those two sentences,
which explains what is meant by "market capitalization". It
states that: "Control by market capitalization has been
determined after listed firms controlled by governments or
foreigners are discounted."

In other words, Indonesia's Chinese minority controls nowhere
near 70 percent of Indonesia's economy. After discounting foreign
investors -- such as Freeport McMoRan which controls a majority
stakes in Indonesia's largest taxpayer, PT Freeport Indonesia,
Inc., and Coca-Cola Amatil -- and state-owned companies, such as
the ten strategic industries previously overseen by B.J. Habibie
and the lucrative state-owned oil company, Pertamina -- in the
Indonesian economy, the remaining large private companies are
indeed controlled by a handful of Chinese business families.
These include Liem Sioe Liong, Eka Tjipta Widjaja, and Prajogo
Pangestu and their relatives.

Most journalists who have recently reported on the plight of
Chinese-Indonesians have not bothered to obtain Indonesian
economic statistics, to uncover the proportion of Indonesia's
economic pie which is in the hands of foreign investors and
state-owned corporations.

Living a fair distance from the Australian National Library in
Canberra, and with a very busy teaching and thesis supervision
schedule on my plate, I am also not aware of the latest economic
statistics of my country.

However, simply repeating the myth that "Chinese-Indonesians,
who constitute only 3 percent to 4 percent of the population,
control 70 percent of the economy," without even bothering the
verify it with the existing economic and business statistics,
does not only reflect sloppy business journalism but is also a
convenient and racist way of blaming the victims.

For me it parallels the well-known but sexist argument of
justifying rape, by stating that the victims practically invited
to be raped by dressing provocatively.

Now, let us analyze the ownership of those nine-out-of-10 top
private sector groups to explore their supposedly Chinese-
Indonesian control and ownership. According to Backman, citing a
1993 Pusat Data Business Indonesia (PDBI) directory, the nine
conglomerates are the Salim, Sinar Mas, Danamon, Gajah Tunggal,
Astra, Lippo, Dharmala, Barito Pacific, and Ongko Groups.

The only indigenous Indonesian-controlled group out of the 10
was Bimantara, which is well-known to be one of the conglomerates
controlled by former president Soeharto's middle son, Bambang
Trihatmodjo.

But what about the nine? Who controls them: Chinese-
Indonesians? Or, to be more specific and thereby more accurate, a
handful of Chinese-Indonesian business families in tandem with
relatives of this country's rulers, namely the Soeharto family
and elements of the Armed Forces? The answer is, I strongly
believe, the latter.

The Salim Group, which controlled Rp 30.4 trillion worth of
assets in 1993, is controlled by Liem Sioe Liong and his family,
jointly with two pribumi families, namely relatives of then
president Soeharto and Ibrahim Risyad, an Acehnese businessman
who was brought into the fold of the first holding company of the
Salim Group, PT Waringin Kentjana, by Soeharto's cousin,
Sudwikatmono.

Apart from Sudwikatmono, two of Soeharto's siblings -- Siti
Hardijanti Rukmana and Sigit Hardjojudanto -- held the majority
stakes in Salim's financial flagship, Bank Central Asia
(BCA), until it went bankrupt after Soeharto stepped down.

Another major cash cow of the Salim Group is the Bogasari
Flour Mills, which has turned Indonesia into one of the largest
instant noodle producers and exporters in the world. This company
benefited from owning the monopoly of Indonesia's wheat imports.

This monopoly has been protected for decades by the Indonesian
logistics body, Bulog, which was headed for half of that time by
Lt. Gen. (ret.) Bustanil Arifin. His wife Christine obtained 21
percent of Bogasari's shares in 1977, a much larger chunk than
the 4 percent controlled by Sudwikatmono. The rest is owned by
family members and friends of Liem Sioe Liong.

Before Bustanil took over control of Bulog and his wife, a
relative of the late Tien Soeharto, of Bogasari, a 1970 state
gazette showed that the flour mill was obliged to donate 26
percent of its profit to two charities, namely the Tien Soeharto-
led Yayasan Harapan Kita and the Kostrad-controlled Yayasan
Dharma Putra Kostrad.

So, who actually controlled the Salim Group? Just family
members and friends of Liem Sioe Liong? Or the Liems and their
pribumi protectors, namely the Soehartos, the Arifins, and a
charity which Soeharto himself set up before he became
Indonesia's second president through the mysterious events of
September/October 1965?

Next is the Sinar Mas Group, which had Rp 14.6 trillion worth
of assets in 1993. This is predominantly controlled by Eka Tjipta
Widjaja, a Chinese-Indonesian businessman and his Ujungpandang-
born children.

Some of his businesses grew out of Sinar Mas' cooperation with
Salim, such as their agribusiness and cooking oil divisions. Its
chemical industry division, however, still overlaps with many of
Salim's companies, as well as the Bimantara Group, and the Timsco
Group of Timmy Habibie, the President's youngest brother. In
addition, the Sinar Mas property division, cooperates closely
with Soeharto's half brother, Probosutedjo, through its Duta
Pertiwi real estate company.

So, again, who actually controls Sinar Mas? Just family
members and friends of Eka Tjipta Widjaja? Or, those Chinese-
Indonesian businesspeople and their pribumi protectors, who just
happen to come from the powerful Soeharto and Habibie families?

Similar politico-economic analyses can be carried out for the
Danamon, Gajah Tunggal, Astra, Lippo, Dharmala, Barito Pacific,
and Ongko Groups, where a handful of Sino-Indonesian business
families dominate those companies, under the watchful eyes and
guns of their pribumi protectors.

Hence, can we still say that "Chinese-Indonesians" -- who only
constitute between 3 percent and 4 percent of all Indonesians --
control nearly 70 percent of the Indonesian economy?

Or, should we just name names of that handful of business
families, where the distinction between Chinese and non-Chinese
has now blurred in a web of overlapping shareholdings and
directorships, which include the families of Soeharto, Habibie,
and some of Habibie's ministers, such as Tanri Abeng, Akbar
Tandjung, and Fahmi Idris?

Lest we forget, the family holding company of the new Golkar
chairman, Marison Nusantara, has overlapping shares with several
Salim and Sinar Mas companies. Hence, Akbar sits on several
boards of commissioners with Liem Sioe Liong and his family
members, with businesses ranging from milk and palm oil, to
distributing German engineering equipment.

So, let us drop this myth which tends to blame the victims,
and work hard to restructure the Indonesian economy. I tend to
agree with Habibie's Minister of Cooperatives and Small Business
Adi Sasono, who on SBS Dateline on Aug. 8, said we should not
blame a certain ethnic group, but the monopoly system established
by Soeharto.

Therefore, let us see whether Habibie and his ministers have
the courage to restructure this system. A distorted monopolistic
and oligopolistic system, which has not only favored the Soeharto
clan, but also the Habibie clan, Akbar's Marison Nusantara Group,
Bakrie & Brothers under Tanri Abeng's directorship, and the Kodel
Group of Fahmi Idris, with their overlapping shareholdings with
Sudwikatmono.

Dr. George J. Aditjondro, reported business news for Tempo
magazine in the 1970s and 1980s and is now teaching sociology of
corruption at the University of Newcastle in Australia.

Window: ...simply repeating the myth that "Chinese-Indonesians,
who constitute only 3 percent to 4 percent of the population,
control 70 percent of the economy," without even bothering the
verify it with the existing economic and business statistics,
does not only reflect sloppy business journalism but is also a
convenient and racist way of blaming the victims.