Tuesday, June 12, 2012
THE ENIGMATIC LIEM SIOE LIONG
Many of his colleagues and fellow business players attributed his success to his ability to look deeper into the inner workings of global trade and in making strategic business acquisitions to build a strong foundation for his empire.
Liem arrived in Indonesia as an impoverished young man from Fujian, China, who escaped Japan’s ransacking of his motherland in 1938. Under the guidance of his big brother, Liem started his life anew in Kudus, Central Java, by working at a tofu factory.
His first big break in business was when he, together with his family, became a logistics supplier for the Diponegoro Military Command in Semarang in 1950s, during which he befriended a colonel who later would become Indonesia’s second president, Soeharto.
Within that period, the family was already deeply involved in clove trading in order to supply the booming business of cigarette making in Java. His family also supplied cloves to Maluku, Sumatra and North Sulawesi, via Singapore.
Having heavily engaged in cross-border trading, Liem and his family saw the need to establish a financial institution to support their business transactions, thus the venture into the banking industry through Bank Windhu Kencana and Bank Central Asia.
After Soeharto officially came to power in 1968, Liem managed to make the most of his good relations with the new president and benefited from policies that allowed his companies to enjoy a monopoly over several industries.
Still in his early years as the nation’s president, Soeharto introduced what later became known as the food diversification program to secure food supplies and control inflation. The program entailed various initiatives, including the opening of the Indonesian market to imported food commodities.
The policy paved way for Liem’s further expansion into commodity trading.
In 1969, Liem along with Soeharto’s cousin Sudwikatmono, Djuhar Sutanto and Ibrahim Risjad, established CV Waringin Kentjana, a trade company dealing in coffee, rubber, sugar and rice. They later became known as “The Gang of Four” that built a flour mill company, PT Bogasari, in 1970, backed by easy access to credit provided by the government through state-owned banks.
Bogasari then monopolized the import, milling and distribution of flour in the country. The company was the world’s largest commercial buyer of wheat by 1991.
Liem entered the property business by partnering with engineer-entrepreneur Ciputra to establish PT Metropolitan Kentjana in 1972, a company responsible for high-value projects such as the Pondok Indah Real Estate development and Jakarta’s first so-called satellite city, Bumi Serpong Damai. Three years later, Liem invested in cement production through PT Indocement Tunggal Perkasa. The company later enjoyed dominance over the cement market.
Liem’s business interests further expanded in 1980s into the automotive industry through PT Indomobil Sukses International.
Of all of his businesses, PT Indofood Sukses Makmur, is by far the most successful. Founded in 1990, under the name of PT Panganjaya Intikusuma, the company is now the world’s largest instant noodle producer, with a leading noodle brand, Indomie.
Indofood transformed into a total food solution, with its four major business lines: branded consumer products through PT Indofood CBP Sukses Makmur, flour and pasta production through Bogasari, agribusiness through PT Salim Ivomas Pratama and PT PP London Sumatra Indonesia, and product distribution, as stated on Indofood’s website.
As of 1997, Liem’s holding company, the Salim Group, had amassed assets reaching US$20 billion, with over 500 companies and 200,000 employees.
“He managed businesses well. Some of his companies conducted initial public offerings [IPOs], and achieved positive [results]. Almost all sectors, where he ventured, are strategic sectors. Apart from pros and cons, his businesses made positive impacts on Indonesia,” Industry Minister MS Hidayat said on Monday.
“Om [Uncle] Liem was a central figure of our country’s private sector, particularly during New Order regime, which lasted around three decades.”
Trade Minister Gita Wirjawan praised Liem for his legacy in bringing local products to the global audience.
“He was one of the few Indonesian businessmen to accomplish such things,” the minister told The Jakarta Post.
Liem’s business story in Indonesia entered a bitter chapter in 1998 when the nation was engulfed by the Asian Financial Crisis that led to riots and demands for regime change.
The accusation that Liem benefited immensely from the relationship with Soeharto made him the target of anti-Chinese mobs, who ransacked his home in Jakarta, after which he relocated to Singapore.
At the same time, Liem had to give 108 companies to the government to settle Rp 52.7 trillion (US$5.58 billion) worth of debt to domestic and foreign creditors.
Commenting on Liem’s close relations with the late New Order leader, Hidayat insisted that the businessman had utilized his connections with the president “in positive ways”.
“I respect him for that,” he said.
Liem, also known as Soedono Salim, was ranked by Forbes as the 25th richest person in Southeast Asia, with assets valued at $655 million in 2004.
At the age of 97, Liem passed away due to age-related illnesses at Raffles Hospital in Singapore at around 3 p.m. local time on Sunday. His remains are currently at Mount Vernon Funeral Parlour in Singapore and his burial at Chua Chu Kang cemetery is scheduled for June 17.
Liem’s son Anthony, who has led the Salim Group since 1997, would carry on Liem’s legacy in the country’s business world, according to Hidayat. Liem’s son-in-law Franciscus Welirang helped the group particularly in flour business.
“[The group] is well managed by Anthony Salim. He is smart, well educated and knows the industry’s future,” he continued.
As of last year, Indofood remained one of the group’s largest contributors, booking Rp 3.08 trillion in net profits. Indomobil, Indonesia’s second-largest automotive assembler and distributor, yielded Rp 310 billion in net profits in 2011. Anthony has a 1.76 percent stake in BCA.
Despite having continuous success, Salim Group still faces a challenge in the form of the Reform era government’s open investigation into the tycoon’s alleged swindling of Bank Indonesia Liquidity Assistance (BLBI) funds.
Liem is survived by his wife, Lie Las Nio, and four children, Albert, Andre, Anthony and Mira.