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.