Six Ways To Be The Next Indonesian Taipan
Lesson learned from business giants
Tai-pan [dai-pan]: A powerful businessman and especially a foreigner living and operating in Hong Kong or China.
From a small garage shop, a local pawn shop, to providing human civilization with nicotine in form of a small cylinder packed and sold in cheap prices, they managed to become Indonesian giants, the wealthiest people in the Republic of Indonesia.
It was nice to see the latest list of Indonesia’s richest top 50 charts. If you were conducting an in-depth Google research against each person’s background, you will find out that some of them were lions, while the others were sharks, and the rest of them are dragons. In this article, I will not mention who are the person that included in top 50, but I will give you some different perspectives in interpreting the Forbes’ list.
The first thing I notice is that there are four of the previous Indonesian giants were kicked out of the list, and replaced by four new faces. Sutjipto Nagaria of Summarecon, Sandiaga Salahuddin Uno of Saratoga, Winato Kartono of Provident Capital Indonesia (including Tower Bersama), and Kiki Barki of Tanito Harum Group, were out of the list and replaced by Husodo Angkosubroto & family (PT Gunung Sewu Kencana), Purnomo Prawiro (Blue Bird Group), Rasyid Abdul (Citra Borneo Indah, Sawit Sumbermas Sarana), and Irwan Hidayat (Sido Muncul).
Second, I did not see in the Forbes’ list mentioning any information regarding Tommy Winata. Do you know who he is? He pioneered the SCBD Sudirman Jakarta, owner of Arta Graha Bank, owner of Borobudur Hotel in Jakarta, and most remarkably, inviting Cristiano Ronaldo to a mangrove event in Bali, so how could he was not appeared in the list? I believe he is the type of Businessman who has high influence and has strong relationship with particular authorities in Indonesia.
To me, the chart does not mean anything. Having knowledge to know who is the richest guy in Indonesia and who had been kicked out of the list compared to the previous year, does not make any difference to me. They were the rich guy anyway, not me, and I think it’s quite a miracle for me to have $ 16.5 billion in my bank account.
The most interesting point to me is, what do these people have in common? What should I learn from them to make me become the richest guy in Indonesia? Should I open a cafe in Bandung as my business pioneer to climb my steep path to the Forbes list, or should I invest my money in palm oil business, or should I sell tobacco to be the richest guy in this republic?
So, I have scrutinized each person from the list, I have learned their educational background, each of the person’s ethnicity, and my objective was to answer these questions:
- Does higher education have correlation to success in order to become the top Indonesian richest?
- Is there any political affiliation between the Forbes’ top 50 and a particular political party? Does it giving them advantage to obtain or retain business to make them even richer?
- What is the difference between a Chinese descent and native businessman? Should I be a Chinese to piercing up to the Forbes’ list?
After some simple math and statistics of the 2014's list, I came up with 6 ways to pave your way to become the next Indonesian Taipan. Here it goes:
1. You need to be Chinese
I did not mean to be a racist in my article, but the truth is 76% of the Indonesian Richest is Chinese. There are only 11 native Indonesian (22% of population ) and one Indian born businessman (Sri Prakash Lohia) in the Forbes’ list. The next thing that came up in my mind is why Chinese is more success than the native Indonesian businessman? I decided to search into a literature on how Chinese people could become a successful businessman. Unfortunately, it’s quite difficult to find a local Indonesian literature, whereas it is very interesting to study the culture of Chinese people on conducting their business, or other culture (such as Minangese) about why they can be such a good and effective tradesman. Is there something that we can learn from them?
So, I found a literature from Nanyang Technological University’s paper about Chinese Ethnic and Cultural Traits. According to Maysami and Goby (2004), Chinese entrepreneurs respect community and human relationship, they are diligence, independence, and flexible. When you read each one of the richest person’s story, their business mostly started in small scale and grew bigger. Small business allows the business owner to have closer interpersonal relationships (with employees, customers and government officials), while also cultivating fast decision making, and taking full control for the business.
Or does the past Indonesian history, where there was a discrimination of Chinese in local educational institution or government institution could make them more efficient entrepreneur?
2. You have to be the first or be better
The origin of the richest’s wealth mostly derived from local consumer products and natural resources commodities, especially tobacco business. And if you notice, there is no direct agent of foreign technology or entity showed up in the list. According to Root (1987), which cited from Friberg and Lovén (2007), several modes of foreign market entry are consists of Export Entry Mode (Indirect, Direct agent/distributor, Direct branch/subsidiary, other), Contractual Entry Mode (Licencing, Franchising, Technical Agreements, Service Contracts, Construction/turnkey contracts, Contract manufacture, Co-production agreements, Other), Investment Entry Modes (Investment Entry Modes / Foreign Direct Investment, Sole venture: New establishment/greenfield investment, Sole venture: Acquisition, Joint Venture: New Establishment/acquisition, Other).
However, obtaining license or cooperating with foreign entity can be a pathway to absorb new technology. Establishing joint venture with foreign institution is an advantage to provide goods and services where there is no technology in particular country. For example, let’s learn a lesson from Achmad Hamami & Family of PT Trakindo Utama and Arifin Panigoro of Medco Energi and PT Apexindo Pratama Duta.
PT Trakindo Utama is a sole agent of Caterpillar product, a heavy equipment supplier for construction industry. Achmad Hamami resigned from the air force, and established his own company from his savings. As a sole agent of Caterpillar since 1970s (VIVA News, 2011), he gained advantage of the Indonesian economic and infrastructure growth, which makes the demands for heavy equipment rises.
Subsequent to Hamami establishing his own company, Arifin Panigoro also started new cooperation with foreign entity. We will not talking about his oil and gas company, instead I interested in his oil and gas services company. Back in the 1970s — 1980s, he was cooperating with Transocean (an oil & gas rig services company) to establish a foreign investment company in Indonesia. At that time, there was no local rig company, and through cooperation with Transocean, he could gain technological knowledge and he build his own oil and gas company services, PT Apexindo Pratama Duta. As the increasing production of oil and gas in early 1980s, while signing a lucrative contract with several oil and gas companies, and as the only rig provider in Indonesia, the company grew bigger and bigger.
So, what we can learned from both story is becoming a sole agent, can take you up to the list of Indonesia Richest, with the provision of you have to be the first to obtain it. Collaborating with foreign entity also allows us to master new technology. With the right timing on Indonesian economic boom, Hamami gained the advantage to supply the equipment as the demand in Infrastructure industry rises. Acquiring foreign technology can also make Arifin Panigoro established his own company, the only rig provider in Indonesia.
3. You should not involved in any political parties / activities
Gain a close relationship with public official or policy makers does not makes great significance to the growth of your company. Statistically speaking, 84% of the businessman in the top Forbes’ list does not have any political affiliation to certain political party. Only 4% of the person have political affiliation with Golkar, 6% with Indonesian Democratic Party — Struggle, 2% with Gerindra, 2% with PKB, and 2% with Hanura (despite the common knowledge that he resigned from Hanura and establish his own political party).
Probably, the advantage to have such relationship is that you can retain your business in participating in government procurement process. You have to be careful when establishing such relationship and it can be a backfire for you if you manage your business and have a relationship with government officials subsequently. For example, the owner of CCM, he was a PDIP fraction and his wife is a prominent member of Democrat party. Unfortunately, his wife was stumbled in a gratification case and prosecuted by Indonesian Corruption Eradication Committee (BBC, 2013).
Being independent, means run the business legitimately, out of any influence and you can focus to your business. On the other hand, establishing close relationship with public officials could generate potential red flags, and can lead to prosecution in corruption and bribery.
4. MBA Degree does not mean anything
That’s an inconvenient truth, but it does happen. You don’t have to earn MBA Degree to built your own empire. From the Forbes list, 30% of the richest guy in Indonesia does not have any bachelor degree, 60% completed their bachelor degree, and 10% of them have higher education. So, why should spend million rupiah to have a master degree on Ivy League colleges? or why should you waiting a scholarship in the British college prior to start a business?
Another fact is that the children of the top 50 Forbes list have better education than their parents. I think the parents wants their children possess better education than they were and preparing their children to take the thrones and promotes full control for the business to their descendants.
Other fact is, the top Forbes list does not came from any state-owned company or top business consulting firms. I have never heard that the owners were came from McKinsey, Accenture, or whatsoever. Having a career in business consulting can broad your chance to explore the world, but that does not mean to paved your way to the Indonesian richest. So, choose your own destiny, being hired by McKinsey or other top business consulting firms, or be the one who hired them?
5. Money grow from business
It is very simple. The top Indonesian richest does not wait for money, they create money. As a hedge fund, investing money in gold or other precious metal (e.g. gold, silver, etc) can protect the value, but the gold does not proliferate itself, doesn't it? Similar with the gold, investing money in mutual fund does not make you even richer, hiring an investment manager could be another cost to spend. Business is like a living creature. It evolved, and growing from smaller scale into a bigger one, and sometimes when leadership fails among certain organization, it will jeopardize the organization and may become a backfire to the business. On the other hand, precious metal can be categorized as a commodity, and unfortunately, the difference is that they cannot proliferate itself (I wish they could).
So, must I create a small start-up business prior to building my business empire? Yes, you must, but there is always another option. You can emulate the Indonesian notorious value investor, namely Lo Kheng Hong. Yes, you wouldn't find him in the top Forbes’ list, because he can be rich without having any specific business. He invests them. He had been a Stock Investor for 24 years. He is a voracious reader, for daily stock information and statistics taken from newspapers. He does not have any office, employees, customers, bosses, and debt (SWA, 2014). And the most important, he does not have any MBA Degree. Every year, he managed to travel around the world by savoring huge capital gain from stock trading.
According to the interview with SWA magazine, he provides explanation why he decided to be a stock value investor:
“I spend my money to buy stock because stock provides the greatest gain from other investment methods. I have never bought bonds because bonds provide small return. I also do not put my money in mutual funds, as putting money in mutual funds means our money is managed by someone else. What if the investment manager is dishonest and incompetent? My money could be all gone. There is lot of examples in real world.
I also never buy gold, because gold is not productive. If we keep gold 1 kg, then 10 years from now it will remain 1 kg. And I also do not buy the dollar. People who save dollars generally expect bad things to happen, the economic crisis, unstable country, so the rupiah weakened and he gained the advantage. Unlike the people who buy the shares, he would always expect good things happens, such as a safe country, economic growth, and increasing purchasing power in order to increase its stock price, too.”
Lo Kheng Hong has strategic mind to invest his money to business via stock exchange. Finally, starting a business or put your money in stock market can be an advantage to lead your way (you can do world trip, at least) to become the next Indonesian Taipan.
6. Re-define Success
We all heard that in order to be an entrepreneur we should possess several traits, such as perseverance, see opportunity that everyone does not see, out of the box, and what so ever. Some of the successful entrepreneur write their story in the book and sell them to increase the revenue (although they does not appear in the list).
After reading each of the richest story, I learned beyond the above traits. It’s not about pursuing your obscure passions, or to be pissed off from your current lives, or to resigned from the job and establish your own business. Life is about survival. If you read the story of the founder of Sinarmas, he started business in providing foods and beverages to the Japanese army. Or does running the business evokes a good past memory about the family? Like Kuncoro Wibowo of Ace Hardware. Through his childhood, he used to assist his father in running the family business. After his father passed away, he resumed the business. So, when he running the business, was he reminded the good times when he assisting his father? Who has passion to sell tools, heavy equipment, and other utensils anyway?
If you notice the other common thing from these richest, you will find that all the businesses have major impact to the people and the community. For the simple fact, the top business is a tobacco industry. Now, could you imagine how many people smoke today and how many people they employed to produce a pack of cigarettes? So, I have a notion that success is about how big is your impact to the people around you.
“Life is filled with tough jobs, and there’ll always be sharpies to cheat me! Well, I’ll be tougher than the toughies, and sharper than the sharpies” — Young Scrooge Mcduck
That’s all the six tips to become the next Indonesian Taipan. I hope you gain insight and courage to start your own business, either from scratch or establishing a cooperation with foreign entity. Me? Yeah, I do have my plan on my own business, but I believed it require vast technology and probably could not be started in the present time. Perhaps, in the future I will realized my dream. At last, I hope in the future there will be a businessman from local entrepreneurship college that piercing through the Forbes’s list.
References
BBC. (2013, February 4). Hartati Murdaya dihukum 2 tahun 8 bulan. Retrieved January 8, 2015, from BBC Indonesia: http://www.bbc.co.uk/indonesia/berita_indonesia/2013/02/130204_hartativonis
Maysami, R.C and Goby V.P. (2004), Chinese Ethnic and Cultural Traits: How Do They Affect Small Business Practices In Singapore, Nanyang Technological University: Singapore
Friberg, Claes and Lovén, Gustav (2007), Entry Mode Strategy and the Effect of National Culture on Foreign Subsidiary Performance, Swedish Institute for Growth Policy Studies: Sweden
Forbes. (2014). Indonesia’s 50 Richest. Retrieved December 10, 2014, from Forbes.com LLC: http://www.forbes.com/indonesia-billionaires/lists/#tab:overall
SWA. (2014, February 5). Lo Kheng Hong, Sang Value Investor yang Bebas Finansial. Retrieved January 8, 2015, from SWA Digital Magazine: http://swa.co.id/portfolio/lo-kheng-hong-sang-value-investor-yang-bebas-finansial
VIVA News. (2011, November 25). Rekam Jejak Kekayaan Achmad Hamami. Retrieved January 7, 2015, from Viva News Website: http://news.viva.co.id/news/read/267189-dari-mana-kekayaan-achmad-hamami-
Written and designed by Arif Nugraha Ruswidyo
