Salim spends US$571 million to control Philex

First Pacific Company Ltd, a company controlled by Salim Group, has just entered into conditional sale agreement through its Philippine affiliate, Two Rivers, to acquire an additional 5.9% shares in Philex which will make the company controls 15.1% shares. First Pacific has previously purchased 31.5% shares in Philex for US$234 million.

On completion of the Acquisition, Two Rivers’s total investment cost in acquiring approximately 15.1% interest in Philex will amount to approximately US$337 million and the Group’s total investment cost in acquiring approximately 31.5% interest in Philex will amount to approximately US$234 million, thereby making up a total of US$571 million.

Philex is a mining company. The company has operated for the past 51 years the Sto. Tomas II deposit at Padcal, Tuba, Benguet. The Padcal mine is the first underground block cave operation in the Far East. Total ore mined to year-end 2008 was 332.2 million tones, with a metal production of 162.2 million grams of gold (5,218.4 thousand ounces), 897.4 million kilograms of copper (1,981.7 million pounds), and 177.9 million grams of silver (5,732.7 thousand ounces). The Padcal mine is the only remaining large-scale copper-gold operation in the Philippines.

First Pacific is a major player in the Philippines with 26.5% economic interest in PLDT (telecommunications), 54.1% in MPIC (infrastructure), and Philex (40.7%). First Pacific controls 50.1% shares in PT Indofood Sukses Makmur (INDF) Tbk which currently has market cap of US$3.5 billion.

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Marubeni vs Sugar Group continues

Legal dispute between Marubeni Corporation and PT Sweet Indolampung, a subsidiary of Sugar Group of Companies, continues at Central Jakarta district court. 

In the court proceeding yesterday, Indolampung rejected Marubeni's claim of defaulted payment of 3.52 billion yen and US$7.92 million.

Hotman Paris Hutapea, lawyer for Indolampung, insisted Marubeni is not one of their creditors. Hotman said Lampung court had rejected similar claims from Marubeni. Marubeni will have two weeks to respond Indolampung's defense statement. 

In a related development, Judicial Commission will examine Supreme Court justice Djoko Sarwoko for his role in the ruling on legal dispute between Marubeni and Indolampung in Jakarta court. 

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Salim wins court case against Raflesia

Subsidiaries of Gallant Venture Ltd, a company controlled by Salim Group, win special appeal in respect of land ownership claims filed by PT Raflesia Matrawisata.

Gallant announced the receipt of the decision by the Supreme Court of Indonesia regarding the special appeal or Motion to Reconsider (permohonan peninjauan kembali) by two of Gallant’s subsidiaries, PT Buana Megawisatama (BMW) and PT Bintan Resort Cakrawala (BRC) against the judgment of the Supreme Court which was in favor of PT Raflesia. 

In this latest decision, the Supreme Court (in reviewing the case under special appeal) has ruled in favour of BMW and BRC (and the co-defendents, namely, Badan Pertanahan Nasional (the Indonesian National Land Office) and Badan Pertanahan Nasional Cq Kantor Pertanahan Kabupaten Kepulauan Riau (the Bintan Land Office) and PT Bintan Lagoon Resort), and rejected in totality the claims of PT Raflesia and have accordingly, removed any and all injunctions and claims.

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Salim appoints 5 investment banks

PT Salim Ivomas Pratama, a 90%-owned company of Indofood Agri Resources Ltd, has appointed five investment banks as underwriters of Rp1 trillion bonds.

Indofood Agri, listed in SGX, said the underwriters are PT Danareksa Sekuritas, PT CIMB Securities Indonesia, PT Kim Eng Securities, PT Mandiri Sekuritas, and PT OSK Nusadana Securities Indonesia.

Indofood Agri's stock price dropped from S$2.87 in July 2008 to as low as S$0.375 in October 2008 or 86% crash. But since then, with the recovery of CPO prices, the stock regained grounds and closed at S$1.52 today to reflect a 304% gain.

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Salim Group enters Solagran

Solagran Limited, Australia, has commenced a partnership with Salim Group in the development of human and animal health and nutrition for Asian markets. 

Solagran told ASX this morning that a nomineed of Salim Group has taken 36.9 million shares in Solagran for A$5.54 million. Salim will then control 13% of the ordinary fully paid shares of Solagran. 

Solagran said earlier that the new strategic partner will provide critical support to Solagran's ongoing product commercialization efforts and, in particular, its strategy of gaining access to the vast Asian market with a new range of OTC products for general health and well being, and potential penetration of the pharmaceutical market.

Solagran is focusing on strategies to commercialize its pharmaceutical product range, in particular Ropren which was recently approved in Russia as a hepatoprotector for use in treating chronic hepatitis and hepato-biliary dysfunction.

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Salim Group won Philippine water privatization

Salim Group's subsidiary Metro Pacific Investment Co (MPIC) and its partner DMCI Holdings Inc won the competitive bidding to acquire 83.9% shares of Maynilad Water Services Inc from Philippine govt at USD447 million. MPIC is the local unit of Salim Group's Hong Kong-listed First Pacific Co., which also controls Philippine Long Distance Telephone Co. (PLDT), the country’s largest telecom service provider. This is one of the largest overseas investment from Salim in recent years besides the USD5 billion investment in India.

Salim Group's other major investment is Dalu Coal Chemical Industrial Park in Mongolia, which has recently started its construction in Zhunge er County of Erdos City. The company also invests USD240 million on dairy farm in the country.
Few years back, Salim acquired 45% shares in Cosco Property Group with USD500 million. This gave the Salim group an entry into Shanghai’s booming real estate business. How about Indonesia, where Salim started to build up its fortune?

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Third Generation of Salim Group

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Indofood ownership at Salim Invomas further diluted

Ownership of PT Indofood Sukses Makmur Tbk in plantation subsidiary PT Salim Ivomas Pratama would decrease from 83.84% to 60.45% as a result of reverse takeover transaction through an exchange by Indofood Singapore Holdings Pte (ISHPL) on all shares in Indofood Oil & Fats Pte Ltd which owns 90% shares of Salim Ivomas, with approximately 98.67% shares of Cityaxis Holdings (to be changed to Indoagri) by placement of new Indoagri shares owned by ISHPL.

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Indosiar is for sale

To confirm my earlier reports, media published several statements from Indosiar management in the last few days about the possibility of other companies to acquire the ailing TV station previously controlled by Salim Group.

Indosiar is currently controlled by PT Indosiar Karya Media (IDKM) Tbk, listed at JSX. IDKM itself is owned by PT TDM Aset Manajemen (28.02%), PT Prima Visualindo SA C/F Credit Suisse Singapore (27.3%). Trimegah & Windsor also hold IDKM warrants 9% respectively.
In a report to JSX late last week, IDKM confirmed media reports that the company want to pay bonds due 2008 with bank loans (refinancing), rights issue, or the combination of both methods.
TransTV, controlled by Salim's business partner Chairul Tandjung, is said to acquire Indosiar. TransTV had previously acquired 50% shares in another ailing TV station, TV7, with the remains controlled by Jacob Oetama (Kompas Gramedia Group)

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The Richest Indonesians & The Ironies

What a coincidence! Out there, Dow Jones quoted Forbes Asia's rich list, naming Sukanto Tanoto (owner of Raja Garuda Mas/RGM) as its Indonesia richest. At home, newspapers quoted SOE Minister Sugiharto pledge his support for state bank PT Bank Mandiri Tbk to take legal action toward recalcitrant debtors. Mandiri had named RGM as one of the debtors with no good faith.

While it's difficult to verify the exact figures, Sukanto's wealth according to Forbes reached US$2.8 billion, well above Putera Sampoerna (2.1), Eka Tjipta Widjaja (2), Rahman Halim (1.8) or R. Budi Hartono (1.4) and Aburizal Bakrie (1.2). In the previous list, Forbes named Halim as Indonesia's wealthiest while Sukanto was not even in the top five list. Wondering how the Forbes list has changed so significantly in the last few months.
Detik.com reported Sukanto is still in the police's fugitive list. But I'm not sure whether he is listed there still.
It's true that Sukanto once named a fugitive. His name also linked closely with Unibank which was closed down in 2001 but none held responsible for third party liabilities in the bank. The case isn't closed yet.
Sukanto's wealth mainly derived from palm oil business. He has pulp & paper empire, and recently oil and gas as well.
Surprisingly, no Sjamsul Nursalim in the top 10 list. Riady family, Tommy Winata, and Mum'in Ali Gunawan are out of top 10 as well. Riady family is partnering with Forbes for Indonesian edition, scheduled early next year.
Like it or not, agree or disagree, Forbes list could help Indonesia's tax officers chasing their tax payments or Bank Mandiri's bargaining position on bad loans. The list also useful for politicians, regent, governor candidates, or hopeful president candidates.
If you follow years of Forbes’ rich list, there is no significant change on the names of Indonesian richest. The difference is only on the amount of wealth & the rankings. The wealthy Indonesians could be categorized in several groups based on how they got their fortunes.
First, cigarette groups. We have Sampoerna family (even though they sold out the cigarette business to Phillip Morris), Wonowijoyo (Gudang Garam), Hartono (Djarum), and Peter Sondakh (Bentoel).
Second, forestry & plantation groups. We have Eka Tjipta Wijaya family (Sinar Mas Group), Sukanto Tanoto (Raja Garuda Mas), & Prajogo Pangestu (Barito).
Third, consumer goods. We have Salim and Wings Group.
Fourth, energy & engineering groups. We have Bakrie family, Panigoro (Medco), Kris Wiluan (Citra).
Fifth, property group. In this group we have Tan Kian (Dua Mutiara), Haliman Trihatma (Podomoro), Tommy Winata-Sugianto Kusuma (Artha Graha), Riady Family (Lippo).
Sixth, manufacturing. In this group we have Nursalim (Gajah Tunggal) for example.
So, mainly they got the fortunes from Indonesia’s rich & cheap resources (natural & human).
While most of these groups have expanded overseas (mainly China, India, or Brazil), Indonesian operations are still their main source of wealth. Most of these conglomerates were hurt by financial crisis, with the exception of cigarette groups.
But they have recovered in the last few years, thanks to the generosity of Indonesian people, the taxpayers. The state bailed out their bad debts. Some surrendered assets, but others managed to escape the financial responsibility easily.
Salim Group, for example, surrendered assets in 107 companies to pay around Rp56 trillion (US$6 billion) debt following the turmoil at Bank Central Asia (BCA). Government sold almost all the pledged assets with recovery rate of around 35%. Nursalim also did the same to pay his Rp28 trillion (US$3 billion) debt, with lower recovery rate.
Government also spent almost US$2 billion to bail out Bank International Indonesia (previously owned by Eka Tjipta’s Sinar Mas, currently controlled by Temasek).
That’s why there is almost no significant change in names listed in Forbes, the latest edition and in 1990s. The fact that Sukanto & Eka Tjipta are listed as number one and third in the ranking sparked criticism about how they created the wealth.
Both Sukanto & Eka Tjipta have strong pulp/paper & plantation (mainly crude palm oil) businesses through APRIL (RGM) Holdings & Asia Pulp & Paper (APP) respectively. Both groups have been the subject of continues allegation of environmental groups over massive deforestation in Sumatra Island.
WWF report few months ago said that APRIL and Asia Pulp & Paper (APP), the Indonesian paper producers, are accelerating the deforestation of Sumatra's jungles in spite of a bid to portray themselves as green.
According to the report, APP has been responsible for about 80,000 hectares of natural forest loss every year, equivalent to roughly one-half of the Indonesia province of Riau's annual forest loss since 2002. As of 2005, the company controlled nearly one-fifth, or 520,000 hectares, of the natural forests left on Riau's mainland. All these forests are under threat, as are any additional forests that APP acquires in its quest to fill its wood supply gap and expand pulp production.
WWF didn't publish the same press release on APRIL. But WWF Monitoring Brief June 2006 elaborated the organization's analysis on APRIL's activities.
Jikalahari (Riau NGO alliance) investigators have found evidence that APRIL's mills accepted wood from legally questionable third party source as late as May 2006. WWF admitted in the report that it calls APRIL to stop sourcing timber from this area until completion of the government legal verification process.
One NGO leader wrote cynically in Indonesian media recently that if you want to be rich, do the forestry business in Indonesia like Sukanto & Eka Tjipta. Other names listed in the Forbes report also have been regularly accused of various illegal practices such as fraud on reforestation funds or involvement in drugs & narcotics trading, gambling operation, or fishy deals with government and the military. But none of them convicted or worse various interest groups make huge chunk of money from the allegations on these richest men.

/Named a Suspect/
Apart of environmental concerns, the Forbes report has also been responded by Indonesia’s largest lender (by asset), Bank Mandiri, which happens to be the largest lender to Sukanto’s RGM. The bank has, several times, classified RGM as the debtor without good faith in settlement of almost US$500 million debts. Mandiri demands an increase in debt installment following the huge jump in pulp prices worldwide.
The day Forbes announced the rich-list, Indonesian minister for state-owned enterprises (Mandiri’s shareholder) pledged his support for Mandiri’s plan to take legal action against recalcitrant debtors, especially RGM. RGM denied all the charges arguing it follows the debt restructuring agreed upon few years ago.
A director at Mandiri was quoted by Indonesian newspapers saying, “You may rich, but pay your debts,” responding the list.
But it’s the police who surprised many when it announced the plan to reopen the investigation on Sukanto, not for the alleged environmental crime or his debts at Mandiri, but on a suspected banking crime that almost untouched in five years.
Just days after Forbes published the list, Indonesian police announced that it has resumed the investigation on Sukanto, named a suspect in a banking crime few years ago. Police declared that the case, involving Unibank---a bank initially owned/controlled by Sukanto and his wife Tinah Bingei, has been reopened after five years of almost no significant progress in investigation despite the fact that Sukanto had been named a suspect.
Unibank was closed down in 2001 leaving the state paying all third party liabilities (Rp3.9 trillion, almost US$400 million) with no shareholders held responsible. Sukanto was named a suspect on irregularities of export L/C worth US$230 million.
"Based on a meeting between Police Chief and Attorney General in August 2006, Sukanto's case has to be reopened and his status is still as suspect. The case is being handled by police team for corruption crime (Tipikor)," Paulus Purwoko, chief of public relations division at National Police Headquarter as reported by Indonesian media.
The sudden announcement failed to surprise the media at the time of eroding trust on the country’s campaign to fight corruption. Many raised the question, would the police be serious this time? Why the police reopen the case after so long? Could this be just part of ‘political’ game?
"Whatever the results might be, the reopening of the case has made Sukanto, well-known for his generosity overseas, shivering," a journalist from respected magazine commented the move. So far, police has not confirmed yet on when they would summon Sukanto for investigation.
The fellow journalist mentioned about Singapore-INSEAD's Tanoto Library or Carnegie Mellon's Tanoto Professorship. The owner of Raja Garuda Mas (RGM) also established Tanoto Foundation, which provide scholarships.
It’s not about his donations that make people doubt the investigation, but mainly the power politics in the country’s corrupt-legal system. Police might finalize the investigation, but state prosecutors may drop the case like what’s happened with the recent corruption allegation on Eddie Widiono (state-owned electricity company PLN).
Other intriguing issue is the unavailability of legal cooperation between Indonesia and Singapore. While Sukanto normally come to Indonesia, he stays in Singapore. “The problem, we have no bilateral agreement on this,” sighed the deputy attorney general Basrief Arief, who is also the Chief of Corruptors Hunting Team.
Besides, the five-year time lag since the Unibank’s closure in October 2001 is critical especially when it comes to witnesses. That’s why Attorney General’s Office said they would start the investigation all over again. This is clearly a big test for the country’s tattered image on corruption eradication campaign. Without serious efforts to end bad governance in Indonesian business, we can’t expect a cleaner sheet in the future rich lists.

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Yani Alifen, new CEO of UIC

Listed chemical company PT Unggul Indah Cahaya (UIC) Tbk, the largest detergent raw material producer in South East Asia, promoted Yani Alifen as its new president director/CEO replacing Hartono Gunawan.

Mr Alifen was vice president director of UIC since 1995. Yani is also treasurer of Petra Christian University Foundation.
Meanwhile Mr Gunawan has been appointed chairman of commissioners of UIC replacing Andi Hartandi. Gunawan is also the chief of Salim Group's chemical division.
UIC is a JV between two conglomerates, Salim & Wings Group. The company produces alkyl benzene sulphonate (ABS), the raw material for detergents and other surfactants.
Wings is owned by two families, Katuari & Sutanto. Handoyo Sutanto is the new director at UIC, while Hanny Sutanto and Teddy Jeffrey Katuari as commissioners. Plus Jimmy Masrin from Lautan Luas (key partner of Wings), may be the war between Salim-Wings in noodle business as I posted many times in the past has been in Wings' favour. What do you think?

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ANTV acquires LaTV, TransTV buy TV7

In the latest move of broadcasting moguls, ANTV (partly owned by Ruppert Murdoch, controlled by Bakrie family) is reportedly acquiring majority stakes of debt-ridden LaTV (owned by Abdul Latief, former minister under Soeharto regime).

Meanwhile, Koran Tempo reported last week that TransTV (owned by Chairul Tanjung, Para Group) was in talk with TV7 owner Jacob Oetama (controlling shareholder of Kompas, the largest newspaper in Indonesia) for a possible acquisition.
If all these plans will materialize, Indonesia's TV industry will be more concentrated in several hands. Bimantara Citra (partly owned by Soeharto-linked families and groups) is currently own three TV stations (RCTI, TPI & Global TV).
Other TV stations are owned by Surya Paloh (Metro TV, Media Indonesia group), Mahaka (JakTV), some groups inc Soeharto family (SCTV) and Salim (Indosiar).

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Just outsmart Berkeley Mafia!

A group of economists appeared in a seminar titled 40 Years of Mafia Berkeley vs Alternative Ideas of Indonesia's economic development, yesterday. They're former chief economic minister Rizal Ramli (under Abdurrahman Wahid administration), Kwik Kian Gie (former chief economic minister under Wahid, replaced by Ramli), Ichsanuddin Noorsy, Revrisond Baswir, and Sri Edi Swasono (son-in-law of first Vice President Mohammad Hatta). Guest speaker was Jeffrey Winters (Northwestern University).

It was an unbalanced seminar as none of what they called Mafia Berkeley delivered arguments, no exchange of arguments actually, it's a kind of monologue of ideas, it's like bad idea vs good idea. That was not an academic exercise of thoughts. The speakers believe the alternative ideas they delivered are the only public goods. So that's a seminar with so many personal issues at stakes.
The speakers even failed to explain or acknowledged what they did and didn't while they have power in their hands to drive the economic policies into what they believe the right way and change the course of the nation.
Nor did they explain what's wrong or right during BJ Habibie's strong influence in the economy of the early 1990s. So don't expect them explaining what's right and wrong during the early years of Berkeley Mafia.
How we explain the massive debt settlement of 1998-2001 during which the government's domestic debt jumped to Rp700 trillion (US$80 billion) to bailout corporate debts of the like Texmaco Group's Rp30 trillion, Salim's Rp60 trillion, Sjamsul Nursalim's Rp28 trillion, or Sinar Mas's Rp14 trillion?
It were Soeharto's last year, Habibie, Wahid and Megawati administration's economic team who endorsed the debt settlement through agreements like the Master of Settlement and Acquisition Agreement (MSAA), MRNIA, or Debt Acknowledgement Acts (APU). How we explain the problems at state-owned enterprises like Habibie's aircraft company PT IPTN (now Dirgantara Indonesia), Garuda Indonesia, PLN, Pertamina and so forth?
I believe the Mafia Berkeley had committed some wrongdoings, just like the other mafias of Habibie's, Ginandjar's, Rizal Ramli's or Kwik Kian Gie's.
Look at this. Rizal Ramli and Kwik Kian Gie as the coordinating minister for the economy during Wahid administration had the chance to fix the lousy debt settlements with Salim, Nursalim, or even Sinivasan's Texmaco. But they were hopeless, not because of the Berkeley Mafia, but simply because of the complicated and fluid political situation aftermath of the 1998 reform.
I believe in one thing...when it comes to liberalization, globalization, privatization...they're all political decisions, not just economic models. There are a lot of aspects of the society at play. Simply blaming the mafi is just like you had a headache in the morning and keep blaming the traffic jam on your way to office for your bad day.
What's amazing is the acknowledgement of this alternative group of how powerful the Berkeley Mafia so it could survive almost 40 years and still in the driving seat of the economy even though none of them hold official position in the cabinet. I must say this Mafia Berkeley is so smart to control this big country four decades so far and may be more.
Other mafia groups might have to learn of how Mafia Berkeley keep its power. An old advise, if you really want to beat the members of this mafia, outsmart them all! All you have to do is to convince all the stakeholders of this nation to get their full attention on your alternative ideas. People are smart enough to make decision, they could analyze what's wrong and right with Berkeley Mafia and what's wrong or right with your ideas! Don't get mad, get even!

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The trials we missed, The winners takes all

It's just inches away for former president Soeharto to be a free man. The cabinet has prepared the presidential decree for a full rehabilitation for him and the first president Soekarno as the sweetener. In fact, as reported by Tempointeraktif.com, Attorney General's Office had lifted the overseas travel ban on Soeharto. So, he could get first-class medical treatment overseas very soon. I do agree with Koran Tempo's editorial today that insists a trial for Soeharto and after that the president may issue an abolition or amnesty.
But I do realize that's a daylight dreaming especially with the current political structure, a result of Soeharto's clever moves. Most people still in the believe that Soeharto always pretend to be a sick person whenever prosecutors try to have him stands trial. But even if he's mentally healthy, as I believe that's the case, the power structure has been weak enough to make it happen. And this also applies to those banking criminals. Why?
Soeharto's aides were so clever to endorse the political liberalization aftermath the boss downfall. The reformists blindly campaigned for a full liberalization without ever calculating the impacts on their movements, especially on Soeharto and his cronies. Without limitation on number of political parties entitled to contest the 1999 election, the nation was stunned with almost 45 political parties registered to contest.
The New Order regime smartly invested in establishing political parties, not to resume the power, but mainly to prevent one single party win the election with clear majority votes. The strategy worked pretty well. PDI-P came out as the winner but only with 33% seats in the parliament. Golkar was the second with 20%-something, while others well below 20%. That was the first victory for Soeharto followed by the second when Megawati lost the presidential election to Abdurrahman Wahid. Golkar clearly was behind Wahid's win. Wahid appointed Marzuki Darusman, a Golkar executive, as the Attorney General. The then Golkar chairman Akbar Tanjung won the election of the House Speaker.
On the surface, the new administration led by Wahid and Megawati was seen as a strong coalition of nationalists. Wahid did start the prosecution on Soeharto and named him a suspect with corruption charges. Soeharto didn't show up in the first hearing in August 3, 2000 and missed two consecutive hearings in August 31 and September 14, 2000. Two weeks later, judges rejected the trial and released Soeharto from city arrest status.
Wahid once sent Susilo Bambang Yudhoyono (that time as mining and energy minister) to negotiate the return of Soeharto family's wealth (Time magazine once reported the amount) to the state. Soeharto's oldest daughter Siti Hardijanti Rukmana (Mbak Tutut) admitted the meeting with Yudhoyono that time.
But then the coalition broke up with shameful impeachment of Wahid supported immensely by Golkar, PPP, other parties, and most importantly the silent support from Indonesian military.
Megawati replaced Wahid and Hamzah Haz (former minister under BJ Habibie administration, then chairman of PPP) was the elected VP. We had new coalition of PDI-P, Golkar and PPP; plus the military. In such a coalition, Megawati administration was hopeless when it comes to Soeharto's trial. Megawati found a new friend, Akbar Tanjung and his Golkar Party without which she wouldn't survive till the 2004 election. Her administration revived the investigation in June 2002, but Soeharto's medical team managed to stop the trial when they announced Soeharto's permanent brain disorder.
In the 2004 election runoff, politicians 'managed' to impose stricter requirements for political parties which entitled to contest. Megawati lost the election despite formal support from Golkar which came out as the winner of legislative election. Military, despite its out-of-politic claim, was in fact behind Megawati's main contender, Susilo Bambang Yudhoyono, a retired army general. Megawati tried to boost her popularity with a promise to bring Soeharto to court, but people just didn't buy. Critics on Yudhoyono's partner, Jusuf Kalla (key Golkar figure and businessman), were also ignored. SBY-JK won anonimously the election. Few months in office, Yudhoyono explicitly told public that he would prefer to forget the past and move on with the new chapter. And last year he paid a visit to Soeharto when the former boss was rushed to a hospital. VP Jusuf Kalla and other political figures did the same. They echoed the call to put an end to Soeharto's trial. This week, almost all of the national leaderships join the chorus and this time Soeharto would likely score the biggest victory. Freedom! Rehabilitation! Abolition! Whatever.
Soeharto's crony capitalists have scored their own victories at the time of reform euphoria in the 1998-1999 period. This is the period when Soeharto's loving 'pupil' BJ Habibie lead the transition administration. Habibie's administration signed the famous Master of Settlement and Acquisition Agreement (MSAA) with bank owners who committed banking crimes i.e. the violation of legal lending limit (LLL).
Under the MSAA, Habibie's administration agreed not to bring the bankers to court for their respective crimes as long as they payback the amount of bailout loans. These bankers agreed with condition that they don't have to pay in cash. Government said OK, cash and nearcash or other assets that could be sold.
Salim, the owner of Bank Central Asia (BCA), then paid few trillions of rupiah in cash and shares in 107 companies to pay around 60 trillion debts. Sjamsul Nursalim (Gajah Tunggal) agreed to pay one trillion rupiah in cash and Rp27 trillion in assets. Soeharto's golf buddy Mohammad 'Bob' Hasan and Soeharto's cousin Sudwikatmono also signed the similar MSAAs. Government have sold out almost all of these pledged assets at heavy discounts, some bought by the debtors themselves through special purpose vehicle companies established overseas.
Other bank owners signed different forms of MSAA such as MRNIA or APU, which were basically the same i.e. exchange the freedom with payments of debts. Some says these crony capitalists invested a lot in some political parties to get these agreements, something extremely difficult to proof. And these agreements were the saviour for the banking criminals, bullets proof!
These are the trials that we missed so much. And these supposedly crime suspects are the winners that takes all, including our dream for justice. The least Yudhoyono could do, may be, is telling public his negotiations with Soeharto family during Wahid's administration to return the wealths to the state.
PS: A banker from Switzerland sent greetings to Soeharto. He asked me whether it's true that Soeharto is free to go overseas. Unfortunately he didn't tell me why he raised that particular issue!

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Reinventing Crony Capitalism, A Research

If you have any interest in Indonesian tycoons, the rise, fall, rise again and maybe fall again...and how politics at play...Reinventing Crony Capitalism might be a good start...

About the business conglomerates in the past, present, and future...Salim Group, Nursalim-Gozali, Eka Tjipta, Sukanto, Prayogo, Riady family, Wings Group, Djarum, Gudang Garam, Sampoerna family, Martua Sitorus-Wilmar Group, Cendana family business (Humpuss, Citra Lamtorogung), Soerdjaja family, Bakrie Family, Bukaka, Bosowa, Mahaka, Medco, Artha Graha, and others...send inquiries to my email at yosardi@hotmail.com.

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The Drunken Republic show & TV business competition

Every Monday night, I enjoy the TV show aired by Indosar titled Republik BBM (Benar Benar Mabok), literally means The Really Really Drunken Republic. Commedian Taufik Savalas act as president and Ucup Keliek as the vice president. Ucup is similar to Ucu, nickname of VP Jusuf Kalla. This is really a funny show. Look at the picture. Mimmicking president Susilo Bambang Yudhoyono and Vice President Kalla. The difference, surely, the president in the show shorter than the VP, while SBY is taller than Kalla.

Communication expert Effendi Gazali is one of the panelists in the TV show along with Wimar Witoelar, former spokes person of Abdurrahman Wahid administration.
Yesterday, Gazali informed the viewers that Indosiar management had asked the stoppage of the program after a meeting at VP Jusuf Kalla's resident on Sunday morning. Gazali said two Indosiar competitors expressed their objection on the program.
Several TV stations owners attended the meeting. They were Anthony Salim (Indosiar), Chairul Tandjung (TransTV), Surya Paloh (MetroTV), Abdul Latif (Lativi), Aburizal Bakrie and Anindya Bakrie (ANTV).
But Kalla's spokes person Mukhlis Hasyim denied the report saying VP Kalla even wanted the protesters to express their criticism through TV shows like Republik BBM.
Well, according to the law, the VP has no rights to ban such TV show. But the Broadcasting Commission has that. The VP must be drunk enough to do such things. Viewers are dizzy with such pressure and should rally behind Indosiar to keep the show alive, right?
I hope we could still enjoy the show tonight. According to the schedule of program, tonight's episode would be about the cabinet meeting to discuss the naughty neighboring country. I bet this is about the recent Australia-Indonesia diplomatic tension.
Political analyst J. Kristiadi from CSIS will appear in the show tonight as a friend of Gazali (president's advisor).
"The issue of stopping the show is a mere business competition between TV stations," Kristiadi said to Detik.com.
How healthy is the TV business?
Indonesia has four TV stations with national coverage which struggling financially. Lativi, for example, has huge bad debts to Bank Mandiri. Metro, TV7 (Kompas Group), and state-owned TVRI are also reportedly in financial trouble. Indonesiar booked net loss of Rp148 billion last year, in contrast to 2004 net profit of Rp125bn due to significant drop in advertisement income.
RCTI, on the other hand, booked net profit of Rp148bn last year, unchanged from the same amount it booked in 2004. SCTV also recorded net profit of Rp65.4bn, improved from Rp52bn in 2004.
I have no information on two other major TV stations, TransTV (owned by Chaerul Tanjung) and ANTV (Bakrie & Rupert Murdoch).

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What's weird with Forbes' Indonesia rich list?

We knew from the Forbes that Rahman Halim and family (Gudang Garam) is the richest in Indonesia followed by R Budi Hartono (owner of Djarum Group), Putera Sampoerna, Aburizal Bakrie, Lim Sioe Liong (Salim Group), Eka Tjipta Widjaja (Sinar Mas), and Paulus Tumewu (Ramayana Group).
1) Rahman Halim = US$2.3 billion
2) Budi Hartono = US$2.2 billion
3) Sampoerna = US$1 billion
4) Aburizal Bakrie = US$735 million
5) Lim Sioe Liong = US$655 million
6) Eka Tjipta Widjaja = US$515 million
7) Paulus Tumewu = US$500 million

Is it true that Bakrie is wealthier than Lim or Eka? Eka's net worth in 1999 Forbes list was at US$2.5 billion. It's true that the company struggled with the crisis at Bank International Indonesia (BII) in 2001 and the huge bonds at Asia Pulp & Paper. But the company survived and aggresively expand its business in the last four years.
Could it be possible that Tumewu or Bakrie are richer than Sukanto Tanoto who has US$7 billion investment in Brazil and China?
"No way that Bakrie could match Sukanto. I would say Eka Tjipta is the richest for Indonesia," said one investment banker in Singapore.
Where is Hashim Djoyohadikoesoemo with his US$2.5 billion worth of oil and gas assets in Khazakhstan & Azerbaijan?
How about Mochtar Riyadi family with their Lippo Group? How about Peter Sondakh who got US$800 million in cash from the divestment of Excelcomindo to Telekom Malaysia?
How about Soeharto? Where is Soeharto family's money which Time magazine estimated at US$15 billion eight years ago? The Soehartos' net worth was put by Forbes at $1.7 billion in 1999 and $4 billion in 1998. I just can't believe the family's wealth had dropped to below US$500 million.
What about Sjamsul Nursalim?
While he once had US$3 billion debts to government and pledged some key assets like Gajah Tunggal (the largest tire manufacturer), GT Petrochem (petrochemical company), and Dipasena (the largest shrimp farm in Asia), I believe that Sjamsul regained control over two of these companies, not to mention other assets in Indonesia and Singapore.
So many questions I can't answer myself. But I tend to believe that the Forbes list could help some of Indonesian richests who still owe the state or those who bought back their pledged assets to keep away from tax officers or those who want to squeeze their money for various reasons.
Last year tax officers questioned Paulus Tumewu over his personal income tax. Tax officers claimed Tumewu had cost the state losses of Rp355 billion (US$40 million). But no further investigation since September 2005 as Tumewu left the country to Singapore for 'medical treatment'.

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Bimantara takeover, how serious?

UBS is seeking to help finance the takeover of two Indonesian companies, PT Bimantara Citra Tbk, the conglomerate which owns four major television channels in Indonesia, and toll-road operator PT Citra Marga Nusaphala (CMNP) Tbk, according to individuals in Indonesia familiar with the transaction.

Global Crown Capital, a special purpose vehicle, owned by the Salim family, Peter Gontha (former shareholder and executive at Bimantara), and Indra Rukumana (former President Suharto’s son-in-law) is seeking to acquire controlling stakes in Bimantara and CMNP. In order to obtain the funding, the three parties have pledged shares they have in Bimantara and CMNP to UBS in order to obtain a loan of up to US$350m, said individuals in Indonesia.

Few details were available about the goings on, but Bimantara last week issued a denial stating that the conglomerate had not been approached by GCC to acquire the assets. Salim also denied the plan to acquire Bimantara and CMNP.

But Bimantara wrote to Jakarta Stock Exchange (JSX) authority on Friday that recently it recieved a proposal from one of its shareholders (Almington Assets Limited) which represents 5% shares of the company that it want to pledge the held shares to UBS AG Singapore Branch.

JSX suspended the trading of both Bimantara and CMNP shares on Friday. No information so far on when JSX will lift the suspension.

Individuals in Jakarta said there were definite signs that the consortium had already obtained funding from UBS in their attempt to take over the assets. Investor Daily on claimed on Friday that it got a document showing the financial support from UBS Bank to GCG to acquire Bimantara and CMNP. In exchange GCC will pledge to UBS some marketable securities, cash, and shares of Bimantara and CMNP. Under the loan proposal to UBS, GCC needs funding of US$250 million to US$350 million.

According to the document, before it acquires Bimantara and CMNP, GCC would takeover shares of PT Televisi Pendidikan Indonesia (TPI, a TV station under Bimantara) and CMNP Manila (toll road operator in Manila).Under the loan proposal to UBS, GCC needs funding of US$250 million to US$350 million.

Meanwhile, IFR Asia reported an official who acts as custodian of shares traded on the Jakarta Stock Exchange said UBS has recently requested that a large shareholding of Bimantara shares be blocked under the Swiss bank’s name.

“If that’s so, then that’s a sign that the GCC conglomerate has already pledged shares to UBS,” said one banker in Indonesia.

Investor Daily reported today that Almington Assets had pledged its 11% shares through GCC to UBS AG with the address at Temasek Boulevard 18-00 Suntec Tower Five, Singapore. GCC also planned to acquire 14% shares of CMNP owned by Heffernan International Limited, Delta Equity Assets Ltd, and Commonshare Investment Ltd, all are special purpose vehicle companies registered in British Virgin Island.

Another banker said to AFR Asia: “UBS private banking has been shopping the local market to finance the rupiah-denominated portion of the deal. One of the parties approached was Sinar Mas Securities, so we know something big is going on.”

The battle for the Bimantara assets will be a lively one, said investment bankers in Indonesia, given that Bhakti Investama, another Indonesia company, now holds a stake of around 40% in Bimantara and 10% indirectly.

“It therefore will be very difficult for GCC to gain a controlling stake in Bimantara,” said an investment banker to AFR Asia.

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Salim denies acquisition plan on Bimantara & CMNP

Salim Group strongly denied reports that it has intention to acquire two listed companies PT Bimantara Citra Tbk and PT Citra Marga Nusaphala (CMNP) Tbk.
In a letter to Jakarta Stock Exchange (JSX) authority today, Philip Phiong, executive of Salim Group, stated the group neither has the plan to do such acquisition.
Today Investor Daily stunned the market with its report that Salim Group will acquire Bimantara and CMNP through a company named Global Crown Capital with the financial support from UBS. The newspaper quoted Bimantara executive who confirmed the plan. JSX quickly suspended the trading of both Bimantara and CMNP shares in the early hours to prevent speculation and manipulation.
Bimantara wrote to JSX yesterday afternoon that it heard the information about certain parties which plan to acquire the company but it had not received formal documentation or reliable information.
But Bimantara notified JSX in the letter that recently it recieved a proposal from one of its shareholders (Almington Assets Limited) which represents 5% shares of the company that it want to pledge the held shares to UBS AG Singapore Branch.
Meanwhile CMNP simply said to JSX that it hadn't receive any formal proposal from certain parties which plan to acquire the company.

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The Berkeley Mafia, Boediono, & Liddle's lost of translation?

Last week, professor William R. Liddle wrote an article in Tempo magazine tittled Boediono's Offering.

The Indonesianist from Ohio State University, Columbus, Ohio, US, started the article with question (or accusation?) whether the reshuffled cabinet of president Susilo Bambang Yudhoyono is a reincarnation of the famous Berkeley Mafia?
His answer was yes. Both Professor Widjojo Nitisastro from University of Indonesia, once the capo of Berkeley Mafia and Professor Widjojo adalah mahluk Orde Baru yang otoriter...The sentence could be interpreted as follows: Widjojo is an authoritarian creature. It is true that Widjojo was key economist in the New Order regime. It is also true that New Order was an authoritarian regime. But I'm not sure if Widjojo is an authoritarian.
Another fatal statement is...Audiens Widjojo adalah Soeharto, literally means Widjojo's audience was Soeharto. It is true that Soeharto was authoritarian president. But I'm not sure if Widjojo's advise was to serve Soeharto's interest only.
Unfortunately, I have no chance to meet both Widjojo and Boediono to ask their comments. But I'm sure Liddle's article was based merely on his political perspectives without in-depth analysis and observations. Besides, Liddle should spend more time to learn Indonesian bahasa (language).

Some noted members of The Berkeley Mafia are:
1) Those who got PhD from the University of California at Berkeley:
- Professor Widjojo Nitisastro (Berkeley 1961)
- Professor Emil Salim (Berkeley 1964)
- Professor Ali Wardana (Berkeley 1962)
- Professor JB Sumarlin (Berkeley
- Professor Barli Halim (Berkeley 1959)
- Professor Dorodjatun Kuntjoro-jakti

2) Non-Berkeley alumni:
- Professor M. Sadli (MIT)
- Professor Boediono (Pennsylvania)
- Professor Subroto (Harvard)

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