No one prospered more than the Suharto clan as Indonesia escaped from grinding poverty, writes Paul Hunt
FOUR government ministers mingled in a crowd of thousands at the launch in Jakarta of the Cakra and Nanngala, characters in the Ramayana epic whose names now adorn two sleek saloon cars. Organisers laid on models, traditional puppet shows, dancers and a banquet. Yet the host of the party, Bambang Trihatmodjo, second son of Indonesia’s President Suharto, hardly cracked a smile.
Local businessmen know 42-year-old Trihatmodjo as a reticent person, short of social confidence. But it was tempting to link his dour demeanour on this occasion to the car wars with his siblings that threaten the short-term profits of his enterprise.
Trihatmodjo is sinking a cool $1-billion into making the two saloons in a joint venture with South Korea’s Hyundai at a cost to customers of between $17 000 and $20 000. Unfortunately his younger brother, Hutomo Mandala Putra, known as Tommy, pulled a fast one on him.
A decree issued by Suharto in February allows 33- year-old Tommy to market a “national car” made entirely in South Korea without paying the usual duties on imported parts or an onerous 35% luxury tax that hits other producers. As a result, the Timor, as Tommy’s car is named, will hit the market in three months’ time, selling for about half the cost of his brother’s.
The saga of the national car has turned an unflattering spotlight on affairs at the heart of a family dynasty that now shapes the fate of 190- million people in the world’s fourth most populous state.
The controversy could hardly have surfaced at a more sensitive time. An announcement last month that Suharto would fly to Europe for medical checks sufficed to drop the Jakarta stock exchange 2,3%, a sobering jolt for a market that had been top of the pops among emerging markets over much of the past six months.
The death in April of his wife of 48 years only underlined Suharto’s own advancing years. After three decades of iron-fisted rule, trading democracy for order and economic development, the president shows no sign of surrendering power or revealing whom he would pick as his heir should circumstances force him to do so.
Hanging in the balance are the economic and social achievements on which Suharto has staked his claim to a place in history. Out of the political chaos and decay bequeathed by Sukarno, the charismatic first president of independent Indonesia he forced out of power, Suharto has forged the basis of a prosperous future.
In the last 30 years, Indonesia has struggled out of grinding poverty into the lower ranks of the world’s middle-income countries, notching up enviable growth and seemingly destined for ever more spectacular results.
No one has prospered more than the first family. The international airport you land at was built by Trihatmodjo, Indonesian analysts explain, mapping out the dimensions of one of the world’s biggest business empires, with tentacles stretching to every corner of the economy.
The onward domestic flight you take is likely to be on the airline owned by Tommy, or the cab you take into the city may belong to daughter Siti Hardiyanti Rukmana, known as Mbak Tutut. The tollroad that takes you into the city was built by her.
Eat noodles or drink Jakarta’s bottled water, smoke a kretek (clove cigarette), buy a mobile phone or a Mercedes, watch three of the five television channels, stay in Jakarta’s Grand Hyatt, or shop in the mall downstairs and you are contributing in some way to a business either owned by the family or by one of a tiny group of Chinese business magnates whose conglomerates are entwined with theirs.
Starting out from a modest trading company set up by Trihatmodjo 15 years or so ago, the children now market crude oil, run gas pipelines, ship liquefied natural gas and build billion-dollar petrochemical plants.
“Are they the richest people in the world? No one knows,” concludes a financial analyst. One estimate suggests they now control assets of $5-billion, another attributed to the CIA suggests the figure should be $30-billion.
Local researchers tracing the confusing web of interests believe Trihatmodjo is involved in at least 140 companies, with net worth of $1,2-billion, and Tutut has links to 100 companies with even higher net worth of $2-billion. Tommy came in a distant third, linked to 70 companies, with net worth of some $600-million.
The children’s business successes are a political headache. A difficulty confronting Suharto as he ponders the possible candidates to succeed him, is finding anyone sufficiently loyal and forceful to protect the family’s interests from the pressures most Indonesians predict will break them up or at least redistribute big chunks.
An outpouring of popular support for ex-president Sukarno’s daughter Megawati in recent weeks starkly underlines the problem. Her modest manners and unpretentious style is meat and drink to struggling workers and ambitious middle classes, weary of pervasive corruption and nursing long-smouldering resentment.
Heavy-handed military measures against Megawati have badly backfired, and served only to enhance her popularity.
Local and foreign businessmen are keenly conscious that the government’s handling of this issue casts a shadow over the performance of the economy. Sitting in Jakarta skyscrapers, bankers and businessmen were unaware of the beating administered by troops to pro-Megawati demonstrators earlier this month. A prompt dip on the Jakarta stock exchange, however, left no doubt of the impact of CNN film of the event on investors overseas.
Growing dependence on foreign funds to finance Indonesia’s deficits leaves the economy more vulnerable to investor confidence than even a decade ago. If Suharto and his children are sensitive to such concerns, they do not much show it. Far from slowing down their accumulation of projects and businesses, the children appear to be accelerating it.
And popular dissent on the streets of Indonesian cities would matter less to the business community if it were not for the hairline cracks that analysts detect in the structure of the New Order establishment as a result of sibling rivalry over the spoils of development.
The national car is a case in point. Trihatmodjo, less than pleased at Tommy’s coup, lobbied for identical privileges, to no avail. Tutut also reportedly jumped into the fray, pitching for a car venture of her own.
Japanese car manufacturers who hitherto have dominated the market and US manufacturers trying to break into it are unamused. The Japanese, in particular, may have thought the $1-billion worth of annual aid that their country gives might have earned a more sympathetic hearing. Both are threatening to fight the case in the World Trade Organisation.
The issue is even less amusing for Indonesians, who are particularly troubled by the lack of sound advice offered to the president and the controversial decisions coming down from him.
“We feel what is at stake is our national survival. The format of the New Order designed to answer the challenges of the 1960s and 1970s is no longer capable of dealing with challenges ahead,” asserts Dewi Fortuna Anwar, a political scientist. “Suharto has done something quite spectacular. It is unfortunate his rather short-sighted favours for immediate family members could actually undermine the good things he has done.”