Indonesian Chinese Take Business Expertise Back Home

THOUGH Indonesia's 7.2 million citizens of Chinese ancestry make up only 4 percent of the nation's population, they control 75 percent of the country's private assets.

After a failed communist-led coup in 1965, Jakarta broke off diplomatic relations with China, accusing Beijing of playing a role in the revolt.

When diplomatic ties were resumed in August 1990, trade between the two countries picked up. And when China began its intensive efforts to do business abroad, Indonesian tycoons, called ``conglomerates'' because of their ownership of many companies, moved in.

Sudono Salim, who is worth around $3 billion and is considered the richest man in Indonesia today, left his birthplace in the Chinese province of Fujian in 1916. Arriving in Central Java, he started his business in rice, corn, soybeans, and cloves. As a supplier to the Indonesian Army he made the acquaintance of a military leader who is now President Suharto.

Mr. Salim, who owns shares in more than 500 companies inside and outside Indonesia, has built textile and shoe factories, hotels, and office buildings in China, mainly in his birth-province of Fukien.

Eka Tjipta Widjaja, Indonesia's second wealthiest tycoon, migrated from China to Indonesia in 1931. Worth about $2 billion, his main business in China is in banking. ``In the year 2000 we hope to be the biggest private industrial group in China,'' he says.

Investors are not obliged to report their investments to the Indonesian Embassy in Beijing, but according to conservative estimates, those investments in China have reached some $750 million.

At first, public reaction in Indonesia deplored the ``capital flight.'' Some parliamentarians in Jakarta held that the money sent to China should have been utilized for Indonesian development. But business circles here have gradually become more positive about the transactions in China.

Sukamdani Gitosardjono of the Sahid Group, one of Indonesia's major hotel chains, says that with the current globalization of business, Indonesian businessmen should leave their ``stable'' in order to gain profits abroad. Native Indonesian conglomerates, such as Aburizal Bakrie and the state-owned PTP IV Plantation Corporation in Medan, North Sumatra, have also become interested in business relations with China.

Part of the capital invested by the Indonesian tycoons does not originate in Indonesia, but from their business branches and from banks in Hongkong and Taiwan as well as in China itself.

Mr. Suharto has welcomed the positive results of business relations between Indonesia and China. Indonesia's trade surplus with China amounted to $600 million last year, which has facilitated Indonesian investments in China. Indonesian tycoons of Chinese ancestry have also succeeded in persuading Chinese companies to invest in Indonesia.

One of China's biggest state-owned companies, Sinopec (China Petrochemical Corporation), has signed a memorandum with Indonesia's Barito Pacific Group to invest $2 billion in refinery and urea fertilizer projects in Indonesia.

At a recent meeting of the Pacific Rim Forum, China's Vice Premier Zhu Rongji said that China's gross national product will grow 13 percent this year, compared with Indonesia's 7 percent growth.