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Native Groups Seek Wealth Shift - Voluntary or Not : Indonesia Pressures Chinese
By Michael Richardson International Herald Tribune

Tuesday, September 3, 1991
Sofjan Wanandi chuckled when he told a recent visitor to his corporate headquarters in a refurbished Dutch colonial mansion that the building once served as a hideout for him and other students organizing protests against Indonesia's left-leaning President Sukarno in the 1960s.
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Mr. Sofjan, a fourth-generation Indonesian of Chinese descent, heads the Gemala Group of companies, a privately owned conglomerate controlled by members of his family.
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Gemala has interests in Indonesia, Australia, Canada, Britain, Sweden and Ireland spanning manufacture of automotive parts, pharmaceuticals, chemicals, banking, insurance and property development. Group sales in 1990 were about $600 million.
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By far the largest part of Gemala's assets are in Indonesia and Mr. Sofjan - who said he speaks Indonesian and English but no Chinese - is not amused by some of the recent criticism of the Chinese community by prominent pribumi, or indigenous, Indonesian businessmen.
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For instance, Probosutedjo, chairman of the Association of Young Indonesian Businessmen, said small- and medium-sized companies, predominantly owned by pribumis, need government protection through anti-monopoly law.
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He implied that Chinese clannishness had a great deal to do with their commercial success. Indonesian Chinese had failed to integrate as effectively as Indonesians of Arab or Indian descent and had used "solidarity to gain profit," he said.
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In an earlier reproach in June to the country's "nonindigenous" businessmen, Mr. Probosutedjo said "we still doubt their sense of nationalism."
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His remarks are taken seriously in Jakarta because he is the half brother of President Suharto - a retired general who took over in 1967 at a time of growing economic chaos and hardship after pressure from students, backed by the military, forced Mr. Sukarno to stand aside.
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Remembering the risks that he and other student leaders took in those days, Mr. Sofjan responds with emotion to allegations of disloyalty to Indonesia.
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He said many Indonesian Chinese "are trying to be good citizens and build this country." He added, "If they do not consider me as an Indonesian, what the heck."
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The views of Mr. Probosutedjo reflect a vocal minority of pribumi business leaders, some of whom are pressing for introduction of a Malaysian-style system of legal discrimination against Chinese in favor of indigenous citizens in such areas as stock ownership quotas, management representation, access to bank loans and award of government contracts.
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Sudomo, the Indonesian minister for political affairs and security, rejected the Malaysian model for Indonesia. "We do not agree with it because it is a form of discrimination that will not help us build our economy," he said.
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Nonetheless, the issue goes right to the heart of economic and political life in Indonesia - the world's fifth-most-populous country, with almost 190 million people. Despite a marked improvement in living conditions for many Indonesians since Mr. Suharto came to power, the gap between rich and poor remains a burning issue.
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Although constituting only about 3 percent of the population, Indonesian Chinese, partly through hard work and entrepreneurial skill, have gained a disproportionately large share of wealth and wield dominant influence in many key sectors of the economy, said Christianto Wibisono, director of the Indonesia Business Data Center, a private consultancy.
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The economic role of Indonesian Chinese also is sensitive because President Suharto, his relatives and other senior civilian and military officials in his government have worked closely with ethnic Chinese business leaders for many years to develop an increasingly diversified, high-growth economy to provide jobs for the more than two million young Indonesians entering the work force each year.
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Along the way, the Suharto family and its small circle of Chinese business associates have prospered mightily. Many others in the ruling civilian-military elite have also done well financially from their links with Chinese businessmen.
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Two of the biggest pribumi conglomerates - the Bimantara and Humpuss groups - were founded by sons of Mr. Suharto and have extensive connections with Chinese-controlled companies.
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Since early 1990, the president has been urging Chinese business leaders to defuse growing popular criticism of their wealth and power by transferring up to 25 percent of their shares to employees and cooperatives, providing credits to small businesses, and extending commercial and training links with indigenous companies.
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So far, more than 100 Chinese-controlled companies have transferred 1 percent of their stock at par value. Chinese business leaders said the market value of the shares, which are to be paid for from dividends and cannot be quickly sold, is close to $200 million.
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Perhaps more important, a number of leading Chinese companies have over the past 18 months forged training, commercial and banking links with small and medium pribumi companies.
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In August, the Salim group - the largest conglomerate in Indonesia and one of three Chinese-run groups with particularly close ties with the Suharto family - signed an agreement with the Association of Young Indonesian Businessmen to pump $50 million into five new manufacturing projects.
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Anthony Salim, president of the group, said that members of the association would be made suppliers or contractors to the group provided they met the necessary competitive and quality standards.
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In a speech to mark Indonesia's national day last month, Mr. Suharto warned that economic and social disparities in Indonesia could cause jealousy: "If we are not careful, this issue could be exploited, either consciously or unconsciously, which could lead in the direction of ethnic and racial clashes."
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In handling the problem, the president seems to alternate between persuasion and threat. He warned in July that unless conglomerates stepped up sale of their shares at nominal cost to cooperatives "we will force them to do so by introducing a new ruling."
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This kind of talk alarms Chinese businessmen. They said privately that if the 25 percent target is made mandatory there will be massive capital flight out of Indonesia.
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Some analysts said Mr. Suharto - facing parliamentary elections in the spring and a presidential poll in 1993 - wanted to distance himself from the Chinese business community and deflect criticism from the business empire of his relatives by switching the focus of public criticism to the Chinese.
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There is also a religious twist to the debate because most indigenous Indonesians profess allegiance to Islam while many Chinese are non-Muslims, mainly Buddhists, Taoists and Christians.
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Abdurrahman Wahid, head of the Nadhatul Ulama, the largest Muslim organization in Indonesia, said that "basically the president wants to cleanse his name from close association with the Chinese."
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He said that Mr. Suharto also "wants to enlarge his political base by including not only the armed forces and the bureaucracy, but the Islamic community as well."
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To do this, Mr. Abdurrahman said, the president must show Muslims, who form more than 80 percent of the population, he is "serious about tackling the Chinese business community and helping Muslims catch up economically." He said rather than using compulsion, it would be "better to get the Chinese to help us to narrow the wealth gap and create a broader middle class."
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Mr. Sofjan, who often acts as a spokesman for Chinese business groups that have been active in developing broader ties in the Indonesian community, said he was optimistic that with time and effort the gap could be bridged. But he added it was not only the Chinese who must play their part.
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