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Wednesday, March 15, 2000

A tradition of mistrust


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Copyright  ©2001. South China Morning Post Publishers Ltd. All rights reserved.

A new start? Chinese Indonesians welcome the start of the Year of the Dragon in the year 2000 - the first time in more than three decades that open celebrations were allowed for the ethnic minority. Reuters photoA new start? Chinese Indonesians welcome the start of the Year of the Dragon in the year 2000 - the first time in more than three decades that open celebrations were allowed for the ethnic minority. Reuters photo
There are about eight million ethnic Chinese in Indonesia, less than four per cent of the population. While no accurate figures for Chinese economic activity exist, some estimates give ethnic Chinese a staggering 70 per cent stranglehold on all private wealth in Indonesia. And it is easy to see how the widespread mistrust between the communities has periodically exploded into bloodshed.

Chinese originally went to Indonesia as traders centuries ago. Many left the mainland to escape the oppressive trade practices of the Ming and Qing dynasties.

It was the Dutch who sowed the seeds of the present hostility towards the Chinese by creating a clear division between Chinese and local Indonesians. In 1870, the Dutch banned Chinese from owning agricultural land, forcing them into businesses. They began to dominate professions such as money-lending and tax-collecting as well as running the opium trade. Chinese Indonesians were prominent in administration and clerical work and formed a collaborative class for the Dutch colonists.

These activities aroused hostility from the populace and the Chinese in turn began to form private armies and secret societies. However, the Chinese were by no means a homogeneous block and organised themselves, as elsewhere in east Asia, along ethnic and dialect lines.

A land of opportunity

Many uneducated peasants from poor coastal provinces came from China to make their fortunes, and a group of cukongs, or tycoons, emerged from the immigrant community. For men like the Salim Group's Liem Sioe-liong and Mochtar Riady, who founded the Lippo empire, Indonesia was an El Dorado.

Mr Liem, until recently Asia's second richest man after the Sultan of Brunei, is perhaps the Chinese exodus's most famous son. His career epitomises the meteoric rise in Chinese fortunes under Suharto and sheds light on the close ties between the community and Indonesia's rulers.

The young Mr Liem migrated from Fujian province in the 1920s, arriving in Indonesia with hardly a penny to his name. He did, however, have connections, both through his family and more critically from his native Fuqing. After starting out with an elder brother in the peanut oil business, he diversified into cloves.

Cloves are a vital ingredient in Indonesian-style cigarettes or kreteks. By exploiting maritime connections in the Fujian overseas community, Mr Liem was able to get more cloves to more kretek factories faster and cheaper than his competitors. He quickly became a millionaire.

However his big break came during the war of independence with the Dutch, when he met a young nationalist commander named Suharto. The wily Mr Liem saw which way the wind was blowing and started using his trading empire network to help the independence movement, smuggling supplies and, according to some, arms to the rebels.

Mr Liem, unlike Mr Riady who was arrested and deported for pro-independence activities, was careful not to attract the notice of the authorities. While Mochtar Riady lost valuable time in exile on the mainland, Mr Liem reaped the rewards of patriotism painlessly. Following independence, management of some confiscated Dutch businesses passed into his hands.

By hitching his star to Mr Suharto, Mr Liem had struck gold. The army seized whole business empires from the liquidated opposition and elsewhere, offering their management of them to trusted proteges, among them Mr Liem and Mr Riady. To put it simply the new economic order consisted of the military owning the economy and the Chinese running it.

Under Mr Suharto, the route to success for Chinese Indonesians lay in finding a patron. And patrons did not come bigger than the president himself. Mr Liem received monopolies in clove importation, flour and cement.

After Mr Suharto began implementing his new economic policy, Mr Liem began moving into banking and other businesses, including textiles, chemicals and property. Rich beyond the dreams of avarice, Mr Liem is involved in everything. Business for him is a virtuous circle. Salim Group banks manage his trading empire, which in turn transports his raw materials to his factories, which produce goods sold in shops rented from his property interests.

Ethnic Chinese provided the military with management skills, trading connections with the rest of the Chinese exiles and best of all, absolute discretion. Mr Liem, like many cukongs, astutely cut the army in on his best deals. Until recently two of Mr Suharto's children owned 25 per cent of Mr Liem's now failing Bank Central Asia, which he bought from the Riadys. And Mr Liem initially shared his clove monopoly with Mr Suharto's half-brother, before it was taken over by Mr Suharto's youngest son, ''Tommy'' Hutomo Mandala Putra, who became the archipelago's clove king.

Mr Liem and Mr Riady have passed the baton to a new generation. Anthony Salim and James Riady take now care of day to day running of the Salim and Lippo empires. And like many cukongs, they have moved a lot of their wealth offshore.

A traumatic history

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