‘Payback time’: Indonesia’s ‘dragons’ versus the president

{"text":[[{"start":7.3,"text":"Earlier this year, Indonesian President Prabowo Subianto summoned some of the country’s top tycoons to his private residence in the lush hills just outside the capital Jakarta to seek their help with industrial development and create jobs."}],[{"start":21.35,"text":"The meeting, however, was more than that. In talks that lasted more than four hours until almost midnight, the president urged the five tycoons to share their wealth and do more to narrow the country’s inequality gap, according to people familiar with the discussions, which took place in February."}],[{"start":36.85,"text":"Prabowo’s message to tycoons, according to one of the people, was: “Indonesia is so big. We have to make everyone rich. Do not make it a small circle.”"}],[{"start":48,"text":"The message underscores a simmering discord between Prabowo and Indonesia’s top businessmen that threatens to have a spillover effect on south-east Asia’s largest economy, where wealth is concentrated in the hands of a few powerful families. Through wide-ranging conglomerates, their businesses also dominate the stock market. "}],[{"start":68.9,"text":"Since coming to power in late 2024, former general Prabowo has repeatedly railed against the business elite, calling them “thieves” and “corruptors”."}],[{"start":77.75,"text":"While he has not identified any of the businessmen, it is widely believed that he is referring to the country’s wealthiest tycoons, who are locally referred to as the “nine dragons” — or sembilan naga in Indonesian — as they are all ethnically Chinese. "}],[{"start":null,"text":"

"}],[{"start":92.85,"text":"The term, which originated during the more than three decades of the Suharto era, has since been applied loosely to a revolving group of the country’s top businessmen, who wield immense economic and political clout. Unlike many of their global counterparts, however, they tend to keep a very low profile — avoiding public events and media interviews — and flashy displays of wealth."}],[{"start":116.5,"text":"Some of the businessmen who met Prabowo in February are part of that group — Indonesia’s richest person Prajogo Pangestu, Garibaldi Thohir, Sugianto Kusuma, Anthoni Salim and Franky Widjaja. "}],[{"start":129.6,"text":"Prabowo’s confrontational approach — in sharp contrast to the cordial ties of previous presidents — is rattling the business elites who for generations have controlled key industries including mining, palm oil, retail and construction."}],[{"start":143.1,"text":"The relationship between the tycoons and the presidential palace was the worst they have ever been under any president, said an adviser to one of the country’s richest families. “Tensions are at an all-time high,” the person said."}],[{"start":156.7,"text":"“We fear that any perceived non-compliance could be followed by direct action [against us],” they said. “We could be subject to political, economic or even legal retribution.” Prabowo believes this is “payback time”, according to another person who advises tycoons."}],[{"start":null,"text":""}],[{"start":null,"text":""}],[{"start":173.35,"text":"Politicians and activists have long accused the tycoons of tax evasion, running monopolies and using their political clout for commercial gains. More recently, index provider MSCI has criticised some of their listed companies for concentrated and opaque ownership structures. It kicked six tycoon-owned stocks out of its indices in May. Unless reforms are sustained, Indonesia risks being downgraded to a frontier market."}],[{"start":199.25,"text":"“The idea to try to curtail the tycoons is good,” said Media Wahyudi Askar from the Jakarta-based Center of Economic and Law Studies, citing pervasive inequality. “But the way [Prabowo] does that, I don’t think it’s correct,” Media said, warning it could hurt investor confidence."}],[{"start":215.7,"text":"The sheer breadth of the tycoons’ business interests means that an attack on them risks hurting the economy and investor sentiment, already damaged by Prabowo’s expensive populist policies, increased state control and legal unpredictability, analysts say."}],[{"start":232.14999999999998,"text":"Any challenge to their dominance “does not necessarily have to be cataclysmic, but it could be costly, and it could be an inefficient drain on businesses, depending on how the process unfolds and how the proceeds get put to use”, said longtime political analyst Kevin O’Rourke."}],[{"start":248.04999999999998,"text":"Some of the tycoons are already delaying investments or considering deploying capital overseas, according to interviews with advisers to four different tycoons. Some were forgoing bidding for government contracts in an effort to avoid scrutiny, they said. None of the people wanted to be identified due to the sensitivity of the matter."}],[{"start":null,"text":""}],[{"start":268.09999999999997,"text":"Prabowo’s government has already taken several steps that directly affect their business interests. These include a push to create a state-run export agency for key commodities and cut production quotas for coal."}],[{"start":280.4,"text":"Last year, the tycoons were also asked to buy Rp50tn ($3bn) so-called patriot bonds issued by sovereign wealth fund Danantara at below-market rates of 2 per cent. Some of the businessmen bought the bonds as an “insurance policy” against any potential action towards their companies from the government, the FT reported."}],[{"start":302.9,"text":"The tycoons are expecting to be called on to participate in a second round of the bonds, according to the advisers who spoke to the FT. Some business could be forced to liquidate some assets to meet these demands, one adviser said."}],[{"start":318.34999999999997,"text":"Previous Indonesian presidents have urged tycoons to help with their economic targets or priority projects. Former president Joko Widodo, for instance, called on them to invest in a costly plan to develop a new capital in the jungles of Borneo. "}],[{"start":334.4,"text":"“The tycoons always try to build good relations with whoever the Indonesian president is because they see that they need the president’s political support to protect their business empire,” said Siwage Dharma Negara, a senior fellow at the ISEAS Yusof Ishak Institute. "}],[{"start":null,"text":""}],[{"start":353.4,"text":"Many tycoons got their first break during Suharto’s era, which ended with the dictator’s downfall in 1998. In exchange for political loyalty, they were rewarded with government contracts and licences that ensured monopolies in several key sectors.    "}],[{"start":369.2,"text":"The tycoons have withstood many crises over the decades, including the Asian financial crisis and widespread anti-Chinese riots in the late 1990s."}],[{"start":379.59999999999997,"text":"The family home of the founder of Salim Group, which owns the world’s largest noodle producer Indomie, was burnt down due to his close ties to Suharto. Many Chinese-Indonesian families moved big chunks of their wealth to Singapore and Hong Kong and have continued to diversify their assets."}],[{"start":397.24999999999994,"text":"There have been other controversies. In 2001, Asia Pulp & Paper — part of the Widjaja family-owned Sinar Mas conglomerate — defaulted on $14bn in bonds and loans, in what was then Asia’s largest-ever debt default. Other companies operating in palm oil and mining businesses have been accused of prolonged environmental violations and blacklisted by foreign buyers. "}],[{"start":421.6499999999999,"text":"Given their proclivity to stay under the radar, the tycoons were unlikely to openly display disquiet, but they could hold back investments and move capital out of Indonesia, said Siwage.  "}],[{"start":434.0999999999999,"text":"“The longevity of this group is extraordinary,” said O’Rourke. “They have been able to bend and fold and go which way the wind blows. So when the president comes to them and asks them for money, they typically give it and survive to fight another day.”"}],[{"start":450.2499999999999,"text":"The five tycoons who met Prabowo in February and their conglomerates did not respond to requests for comment. Prabowo’s office did not respond to a request for comment."}],[{"start":461.1999999999999,"text":"Data visualisation by Haohsiang Ko in Hong Kong"}],[{"start":472.6999999999999,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1783411915_4729.mp3"}