The business of shared Indonesian and Thai history

The business of shared Indonesian and Thai history

Richard Borsuk and Nancy Chng's new book on Chinese tycoon Liem Sioe Liong is more than just an account of his conglomerate, The Salim Group

ARTS & ENTERTAINMENT

The story of the life and times of Liem Sioe Liong (1917-2012), one of the most powerful overseas Chinese tycoons of Southeast Asia in the 1980s and 1990s, is a fascinating tale of an impoverished Fujian immigrant who arrived in Indonesia in his twenties. Over the next half century, he rose to achieve extraordinary wealth in Suharto's Indonesia and went on to play pivotal role in supporting Suharto's economic development programme.

The impact of the overseas Chinese on commerce and economic development throughout 20th century Southeast Asia is a well-known strand of the history of the region, extensively treated in English language books and articles. Some studies of the Overseas Chinese focus on their particular experience in one Southeast Asian nation, such as Jeffrey Sng and Pimpraphai Bisalputra 's recently published A History of the Thai-Chinese, while others, such as SG Redding's The Spirit of Chinese Capitalism, look broadly at the Chinese experience throughout the region.

Liem Sioe Liong’s Salim Group: The Business Pillar of Suharto’s Indonesia

by Richard Borsuk and Nancy Chng Institute of Southeast Asian Studies Singapore, 2014.

Richard Borsuk and Nancy Chng's Liem Sioe Liong's Salim Group: The Business Pillar of Suharto's Indonesia, is a significant contribution to this literature. Their story of Liem Sioe Liong is exhaustively researched through interviews with Liem and other protagonists of the story, supplemented by careful archival research and wide reading into scholarly accounts of modern Indonesian history. The authors' understanding of the Indonesian character and Indonesian society, gained over the 11 years that they lived and worked in Jakarta as journalists, comes through clearly in the book.

As the saga of this extraordinary man unfolds, Borsuk and Chng not only chronicle Liem's life, but also identify the key ingredients of his success that he shared with many of the other Southeast Asia Chinese tycoons of the second half of the 20th century. They include: traditional Chinese values of industriousness, loyalty and trust; nurturing favour and protection from strong political leaders; shrewd ability to identify strong business partners and the vision to seize opportunities and run with them.

Liem Sioe Liong, like many other successful Indonesian Chinese businessman, was from Fuqing (or Hokchia, as it is known using the local dialect pronunciation) in the district of Fujian province in South China. In 1938, he left his wife behind and followed his father to a provincial part of Java, where he learned the Indonesian language and customs, and married a second wife, also a member of the local Hokchia community. Starting as an itinerant seller of clothes, he moved on into coffee grinding. Gradually, through hard work, and through networking with other Hokchia, he developed business experience and began his lifelong accumulation of wealth.

Liem's big breaks came through developing a relationship with General Suharto. After assuming political control in 1966 from Sukarno, Suharto befriended Liem. Liem became a frequent visitor at the strongman's home. The bond between Suharto, a quintessential Javanese leader and Liem, a quintessential Chinese businessman, was perhaps the strongest of all of Suharto's patron-client relationships with local Chinese businessmen.

For Liem, regular access to the strongman yielded huge profits through special business opportunities, often shielded from competition and protection or bail out when he encountered problems. In return, Liem was an enormous contributor to Suharto's "charities", cut in Suharto's notorious children and other relatives on his business enterprises and did the strongman's bidding when Suharto decided investment was needed in some sector in support of national development plans. Liem's businesses proliferated -- clove imports, flour milling, automobiles, banking, instant noodles, real estate and others, controlled through his corporate conglomerate, the Salim Group.

This reliance on political patronage for growing a business was a prime example of Southeast Asian "crony capitalism", so well described by Joe Studwell in his 2007 book Asian Godfathers. Borsuk and Chng explain in vivid detail how crony capitalism worked in this case study of one tycoon. Suharto and Liem both benefited from their patron-client relationship, but, the authors point out, the Indonesian nation benefited as well through Liem's investment in key areas of the economy and efficient management of his group.

Borsuk and Chng describe the corruption and nepotism underlying the relationship, but place it in cultural context by explaining how this sort of patron-client relationship worked within a Javanese, and also Chinese, world.

The authors describe Liem as "the capable crony". His personal charm and generosity enabled him to win the friendship and trust of Suharto and other key Indonesian leaders, while his vision, access to capital, and business acumen enabled him to create both personal wealth and contribute to national economic development.

Personal qualities and the patron-client relationship with Suharto, however, were not in themselves sufficient to account for Liem's phenomenal business success. Borsuk and Chng explain that Liem was willing to plunge into businesses "he didn't know much about. His modus operandi was to find the right partner who could run the new venture for him. Liem's talent lay in sussing out capable and experienced people who could help him grow his stable of businesses."

Liem identified Indonesian Chinese Mochtar Riady as the ideal person to run Bank Central Asia for him and gave him a substantial stake in the bank in return. For flour milling, he turned to Malaysian tycoon Robert Kwok. For funding he often relied on Chin Sophonpanich and his Bangkok Bank. The Salim Group expanded outside of Indonesia, investing in Singapore, Hong Kong and the Philippines. Through their narration of Liem's business partnerships, Borsuk and Chng shed fascinating light on how Chinese tycoons networked not only within their own countries, but also regionally.

Lastly, the authors quote Liem, in one of the interviews they conducted with him, as giving credit to luck -- to being in the right place, at the right time, with the right connections. Liem's formula for success worked well in the conditions of Southeast Asia at a particular stage in its political and economic development.

With the possible exception of Myanmar, Cambodia and the Philippines, those favourable conditions came to an end around the turn of the 21st century. The regional business empires of Thailand's Chin, of Malaysia's Kuok and of Indonesia's Liem, all based on political connections and overseas Chinese networking, flourished under the special historical conditions of the half century after the end of World War II.

With the fall of Suharto in 1998, the Salim Group lost its patron. Liem increasingly turned the reins of control of the group over to his capable son Anthony Salim, who had to cope with the new, more complex and open society and politics of post-Suharto's Indonesia. Indonesian-born and British-educated Anthony brought a new management style to the group, enabled it to recoup from the shock of losing its political patron and found its way back to prosperity in the new environment.

Liem Sioe Liong's Salim Group is not a quick read. Occasionally the narrative provides us with more facts and figures about Liem's enterprises than we want to know, but the book rewards the patient reader abundantly with insight into both the life and business style of overseas Chinese tycoons in Southeast Asia and also into a fascinating half century of Indonesian history.

The authors skilfully interweave the story of Liem and his son Anthony with the unfolding of events in the Indonesia of late colonial Indonesia, of Suharto, and of his immediate successors, bringing to life the recent history of an important part of Southeast Asia little known to most readers in Thailand.

For readers in Thailand, this book is not only a window into post-war Indonesia, but also provides food for thought on the similarities and differences with the Thai experience over the time spanned by Liem's career.

Readers will recognise much that is familiar -- the business empires of the Sophonpanichs, the Chearavanont and other major Sino-Thai families that were built in much the same way as Liem's Salim Group. They will also see how the patron-client relationships between Thai military and Thai politicians with Sino-Thai business leaders differed little from the patron-client relationships of Suharto's Indonesia.

Also shared by Thailand and Indonesia was the economic collapse of 1997 and the IMF's heavy handed intervention. The economies and politics of both countries were much changed by the shock of the 1997 crisis. Post 1997, overseas Chinese businessmen continue to have large economic influence, but most have adapted their business style and methods to suit the post 1997 environment. The era of towering Chinese business leaders such as Liem Sioe Liong is now history. We are fortunate that Borsuk and Chng were able to spend many hours interviewing Liem in his final years so that the insights into his role in Indonesia's development could be recorded in this book.

Richard Borsuk and Nancy Chng will give a presentation on Liem Sioe Liong at a book launch at the Siam Society at 7pm, on Thursday. It is open to the public.

Liem Sioe Liong's Salim Group: The Business Pillar of Suharto's Indonesia

by Richard Borsuk and Nancy Chng

Institute of Southeast Asian Studies

Singapore, 2014.

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