Correcting the myth about the dominance of ethnic Chinese in Indonesian business
Business World (Philippines), 8 January 1999
"It is true that even under the anti-Chinese sentiment of the Dutch colonial rule, many Chinese were able to survive and to prosper. There is at least an image that Chinese are rich and control the economy. Yet for me it is a question why most of the newspapers write '3.5% of Chinese in Indonesia is in control of 70% of the economy'," said Sulawesi (not his real name), a priest involved in the campaign against human rights abuses in Indonesia. "The truth is Suharto and his cronies together with several Chinese cronies under his control dominated the economy."
Quoting research done by an Indonesian expatriate, Mr. Sulawesi said the source of the alleged fallacy is an Australian study that discounted all government and foreign listed companies when it tallied Indonesian companies.
"Many companies were not listed (in the Australian study). From the listed companies, they did not count government and multinational companies," he said.
The insight was provided through research done by George Aditjondro, who in his paper describes himself as a former business news reporter in the 1970s and 1980s, and presently teaches Sociology of Corruption at the University of Newcastle in Australia.
According to Mr. Aditjondro, the myth - that the Chinese constitute only 3.5% of the population, but control 70% of Indonesia's economy - "has been repeated and repeated so often now by the world press, that everybody - including those sympathetic to the plight of Chinese Indonesians - seem to believe it."
He traces this myth's provenance to a 1995 study of a foreign affairs and trade department official named Michael Backman. Otherwise an excellent research, Mr. Aditjondro said the study entitled Overseas Chinese Business Networks in Asia claimed that Chinese-Indonesians controlled about 73% of Indonesia's listed companies "by market capitalization." Thus by end-1993, they reportedly controlled about 68% of the country's "top 300 conglomerates and nine of the top 10 private sector groups."
But unfortunately, those who came across the Backman study reportedly failed to note what the phrase 'market capitalization' meant, which, quoting from the same, amounted to "control by market capitalization has been determined after listed firms controlled by governments or foreigners are discounted."
Mr. Aditjondro therefore concludes that the ethnic Chinese did not control the Indonesian economy, especially if one were to exclude from any listing companies such as Freeport McMorRan, which supposedly controls top revenue earner PT Freeport Indonesia, Inc. and Coca Cola Amatil, and state-owned oil firm Pertamina.
If excluded, noted the sociology professor, then it would appear that ethnic Chinese - notably former Suharto associate Liem Sioe Liong - controlled the economy.
Looking into the nine private sector groups supposedly owned by the ethnic Chinese, Mr. Aditjondro said the Australian study listed them thus: Salim, Sinar Mas, Danamon, Gajah Tunggal, Astra, Lippo, Dharmala, Barito Pacific, and Ongko Groups.
The sociology professor then sampled two of these to show who really owned what. The Salim Group, for one, is reportedly controlled by Liem Sioe Liong, two pribumi relatives of then President Suharto, and Ibrahim Risyad, an Acehnese associate of one of Suharto's cousins. This cousin named Sudwikatmono, along with two of Suharto's siblings, namely Siti Hardiyanti Rukmana and Sigit Harjojudanto reportedly controlled Bank Central Asia, which recently went under following Suharto's resignation.
On the other hand, Sinar Mas Group, while controlled by Chinese-Indonesian Eka Tjipta Widjaja, maintains ties with a real estate firm controlled by Suharto's stepbrother Probosutejo. Sinar Mas, the study also noted, maintains joint ventures with Salim in the chemical industry, and with companies of the Timsco Group controlled by President Habibie's brother Timmy. If true, this undoubtedly lends credence to the observation that the transition from Suharto to Habibie could not have been easier.
Mr. Aditjondro noted that even new Golkar party chief Akbar Tanjung maintains shares with some of Salim's and Sinar Mas' firms.
Meanwhile, Bimantara, which was the only pribumi-controlled group out of the 10 top private holding firms, is reportedly controlled by one of Suharto's son Bambang Trihatmojo.
But due to a minor lapse on the part of journalists, said Mr. Sulawesi, this information was lost in the process. And those 'caught' holding the bag were the minority ethnic Chinese.
"Unfortunately, the CEOs of many of the listed companies are Chinese. So they conclude that these are Chinese-owned. For some it is true since Chinese own 60% of the shares of a company. But they are all under the control of Suharto," said the activist priest.
Of course, another multinational institution that has a lot of say with regard to where the Indonesian economy should proceed - and which also dealt with Suharto in the past - is likewise invisible to the ordinary pribumi ransacking the hapless retailer's store next door. After all, the International Monetary Fund, said Mr. Sulawesi, has exacerbated the crisis last May with its unpopular and anti-poor conditions for the financial rescue package of about US(USDollar) 43 billion.
The Chinese-Indonesian priest knows too well that his parishioners do not have the slightest inkling that this behemoth institution - which has caused national economies to grow or go under - exists.
"For simple people, it is easy to blame the Chinese retail store owner next door when they suddenly can't afford to buy their children's milk."
Copyright(C) 1999 BUSINESSWORLD (PHILIPPINES)