The Story of the Fall of the Salim Business Empire and the Loss of BCA

The Salim Group is now renowned as a conglomerate with products known across Indonesia and internationally. However, behind its success, the Salim business empire was once severely hit by a major crisis. The rise and fall of the Salim Group is inseparable from its founder, Sudono Salim, and his relations with those in power at the time.

To understand how this business empire grew so large—and was then severely struck—we must trace back to the origins of the networks built by Sudono with the New Order regime.

Sudono Salim had close ties with Indonesia’s second president, Soeharto. Sudono worked as an importer of cloves and military logistics after independence. His extensive business network led Colonel Soeharto to want to collaborate with him.

Through his cousin Sulardi as an intermediary, Salim and Soeharto met for the first time. Salim then became a supplier of logistics for Colonel Soeharto’s troops during the War of Independence (1945-1949). That introduction changed Salim’s life.

“After Soeharto seized power in Indonesia in the mid-1960s and became president, he was supported by a group of crony businessmen, the largest and strongest of which was Liem Sioe Liong,” wrote Richard Borsuk and Nancy Chng in Liem Sioe Liong and the Salim Group (2016).

For three decades, the two were involved in a mutually beneficial relationship. Soeharto protected Liem and ensured his businesses 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 succeeded in being listed as Indonesia’s richest person. Meanwhile, Soeharto also succeeded in holding power in the country. However, their prosperity suddenly collapsed in just a few days in May 1998.

Target of the Masses’ Fury

Over three decades, Salim successfully built three business empires in three sectors, including banking (Bank Central Asia, BCA), construction (Indocement), and food (Bogasari and Indofood). However, all of this slowly crumbled upon entering the 1998 crisis. BCA suffered the worst.

Historian M.C. Ricklefs in A History of Modern Indonesia (2009) states that during the crisis, customers withdrew funds en masse and on a large scale. Hundreds of people queued for hours to drain all their savings. This situation left BCA, which was no longer trusted by the public, on the brink of bankruptcy.

Finally, this chain of crises peaked in May 1998.

Salim’s closeness to Soeharto turned out to be a disaster for him. The emergence of anti-Soeharto sentiment, stemming from the widespread economic crisis turning into political turmoil, dealt a severe blow to Salim. The public, aware of their closeness, made Salim a target. As the richest person, Salim 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 arson against houses, shop buildings, and many vehicles (Kompas, 14 May 1998). This action was carried out by provoked masses. They targeted buildings and vehicles owned by Chinese people, even targeting the Chinese individuals themselves.

Jemma Purdey in Anti-Chinese Violence in Indonesia 1996-1999 (2013) explains that the emergence of racial sentiment against the Chinese was caused by stereotypes that they deserved to be hated simply for being wealthy and close to the Suharto regime. And the central figure associated with that description was Sudono Salim.

“The companies of the cukong and the Suharto family were the main targets of burning and looting. Bank Central Asia, owned by Liem Sioe Liong, was the main object of attack,” wrote Ricklefs.

In the account by Richard Borsuk and Nancy Chng, as a target of the masses’ fury, fortunately during the riots, Sudono Salim, his wife, and several children were in the United States accompanying Salim for eye surgery. In Jakarta, only Anthoni Salim was at Wisma Indocement on Jl. Sudirman.

At that time, Anthoni did not dare to go home to his father’s house in the Roxy area. Because the masses’ riots also targeted Chinese settlements. It was feared that if Salim stayed at home, he could be killed.

That prediction then came true. In the morning of 14 May, Anthoni received news that his father’s house was visited by a group of threatening-looking youths, armed with jerry cans of fuel and tools. They wanted to enter Liem’s luxurious house.

Anthoni was helpless. He immediately instructed the security guard to allow the masses to enter and damage the house, rather than resist and cause bloodshed.

“In an instant, all the cars in the garage were burned, including the contents of the house. They burned furniture, removed paintings, and ransacked rooms. They even scrawled inappropriate words on the house,” Anthoni told Richard Borsuk and Nancy Chng.

After a few minutes of doing that, black smoke quickly rose high from Salim’s residence. On the streets, Salim’s photos were pelted with stones and burned by the angry masses (Kompas, 15 May 1998).

Seeing the very severe situation in Jakarta, Anthoni 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, Anthoni monitored his business developments after those difficult times.

The Collapse of the Business Empire

After the riots subsided and Soeharto finally stepped down, BCA suffered the most severe losses. It was recorded that there were 122 damaged branches, consisting of 17 offices completely burned, 26 branches damaged and looted, and 75 branches damaged but not looted. Then, there were 150 ATMs damaged and their cash taken, resulting in losses of Rp 3 billion.

Besides BCA, Indofood also came under attack. Its factory in Solo was looted and burned, incurring losses.