Suharto Inc. Probably the biggest family business in all Asia
Richard Lloyd Parry on rampant nepotism in Indonesia
Friday 13 December 1996
When I check into my resort hotel (the Bali Sheraton, perhaps), I will be doing my little bit for the cause. These pleasures will have one thing in common. They will all enrich one family - the wealthiest and most powerful family in Indonesia, that of its president, Suharto.
Suharto is a towering figure, a general who came to power in 1965 during a virtual civil war to create a unified country out of the diverse islands, races and languages of Indonesia. Under his rule, growth is running at a steady 7 per cent and the 75-year-old President has established himself as the unofficial figurehead of the Association of South East Asian Nations (Asean).
Suharto is old now, and as Indonesians become richer and more educated, his government's close relationship with the armed forces, intolerance of genuine democracy, and suppression of political opponents look more and more crude and anachronistic. But the greatest embarrassment - even for the country's elite, for whom authoritarianism is a worthwhile price to pay for stability - is the blatant corruption of Indonesian business. The symbols of this corruption are the First Children.
The Suhartos have an influential presence in most spheres of Indonesian life; a son-in-law is a rising general, a daughter is chairwoman of the ruling party. But it is in big business that they dominate. No one knows their collective worth, though intelligent guesses range from $8bn up to a CIA estimate of $30bn in 1989. It is concentrated in the hands of four siblings: brothers Bambang, Tommy and Sigit, and their sister, Tutut.
These four are among Indonesia's 13 richest indigenous businessmen, and the industries in which they participate range from airlines, telecommunications, hotels and toll roads to sugar and oranges. The advantages enjoyed by the Suharto children surpass those of the President's most privileged cronies.
The President's children are among his closest advisers. One of the secrets of Suharto's 30-year survival has been regularly shuffling his courtiers and banishing those who show signs of acquiring too much independent power. Suharto's children, with their unmediated access to the presidential ear, are in enormous demand as intermediaries for local and foreign firms bidding for contracts. One foreign analyst in Jakarta reckons that among US firms the going rate for a Suharto is 25 to 30 per cent of the value of a contract.
In 1990, the American firm AT&T was competing with Japan's NEC and Sumitomo for the right to sell $300m of telephone equipment. The Americans engaged as their "agent" the President's oldest daughter, Siti Hardijianti Rukmana,known as "Tutut". The Japanese hired Hutomo "Tommy" Mandala Putra, the youngest boy. The unfortunate officials presented with the dilemma of choosing between two of the President's offspring came up with an ingenious solution: they doubled the size of the contract, and awarded the prize jointly.
Nepotism on this scale is a drag on the economy and alienates the foreign investors Jakarta is trying to attract. The nadir came this year with the launch of the Timor, Indonesia's national car, a joint venture with the Korean car firm Kia. The Timor is a pet project of the President, and its award to Tommy was not a surprise. What did cause uproar was the decision to exempt it from import duties and the 35 per cent "luxury" tax. Tommy's Timor sells for about $10,000, almost half the cost of similar imported models.
Underlying the exasperation is a great deal of tension, and a sense that the achievements of Suharto's "New Order" are starting to unravel. The President was treated for a heart condition earlier this year and as he grows weaker, political opposition to his government is becoming more vocal. In July, Jakartans rioted after government-backed thugs raided the headquarters of the opposition Indonesian Democratic Party; dozens of non-violent political opponents were arbitrarily arrested.
Nobody stands out as a successor to Suharto, and the prospect of an uncertain or violent succession terrifies many Indonesians - among them, surely, the President's children. Their enormous greed, and their father's willingness to indulge it, smacks of desperation, a sense that time is running out.
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