JAKARTA – Tycoon and political heavyweight Aburizal Bakrie has been written off before, but his eldest son’s decision to drop out of the race for the chairmanship of the powerful Indonesian Chamber of Commerce and Industry (KADIN) has once again raised the question of whether his day has come and gone.
It took President Joko Widodo’s direct intervention to compel Anindya Bakrie, 46, to withdraw his nomination and leave the field open for energy company executive Arsjad Rasjid, 51, two days ahead of KADIN’s three-day congress in the Southeast Sulawesi province capital of Kendari.
The conference will still go ahead in the middle of Indonesia’s latest alarming surge in Covid-19 cases, but with limited numbers and without the formality of an election after Anindya agreed to what was politely touted as a compromise solution in which he becomes head of KADIN’s advisory council.
The president’s support for Arsjad, CEO of coal mining and construction company PT Indika Energy Tbk, had long been apparent before he summoned current KADIN chairman Rosan Roeslani and the two candidates to the palace on Tuesday.
The move is seen as another setback for the 74-year-old Bakrie, whose money troubles appear to have deepened with the collapse of coal prices last year, which impacted his flagship PT Bumi Resources Tbk, owner of Kalimantan’s Kaltim Prima and Arutmin mines.
In 2007, Forbes Asia put the Bakrie family’s net worth at US$5.4 billion, making it Indonesia’s richest at that time. Last year, the Bakries didn’t even figure in the magazine’s Top 50 Indonesian businessmen, whose combined fortune was estimated at more than $133 billion.
KADIN is no ordinary chamber of commerce. Unlike most of its foreign counterparts, it is a statutory body representative of Indonesia’s private business sector and its official interface with the government. In that, it has lobbying power like no other.
Analysts said Widodo’s intervention underlined the importance of KADIN’s chairmanship following passage of the 2020 Job Creation Omnibus Law, which stipulates that foreign investors must partner with local businessmen who have the chamber’s endorsement.
Bakrie’s shadow has hung over KADIN since 1994 when, emboldened by his position as the country’s leading pribumi (indigenous) businessman, he beat president Suharto’s nominee, AR Ramly, former head of the state-run oil company Pertamina, for the chairmanship.
Suharto was furious, but state political sources knowledgeable about the era say secretary Moediono calmed him down and even arranged for Bakrie to fly to New Delhi, where the president was on a state visit, for a brief reconciliation meeting.
The latest controversy surrounding KADIN’s change of leadership has focused attention on what one analyst calls a “new-generation oligarchy,” which has emerged under the Widodo administration and will likely become a dominant force in the coming years.
The campaign to get Arsjad elected led to the congress being moved from Bali, the original site, to Kendari for reasons that may have had to do with reducing Bakrie’s influence, but which still baffles many observers.
It also reportedly involved the National Intelligence Agency (BIN), headed by Budi Goenawan, a close confidante of PDI-P leader Megawati Sukarnoputri, with several KADIN branch members saying they have been approached to vote for Arsjad.
Coincidentally, one of Arsjad’s business partners is Hapsoro Sukmonohadi, husband of Megawati’s daughter, Puan Maharani, the Speaker of the House of Representatives (DPR) and a prospective vice-presidential candidate in the 2024 elections.
Far from being enemies, Arsjad and Anindya are part of a group of friends and acquaintances, some of whom went to school together or are otherwise linked through university education in the United States or shared corporate interests.
Unlike his father, Anindya is generally a popular figure within KADIN circles after spending 15 years in management positions. Arsjad, for his part, has only been actively involved in the running of the chamber for the past five years.
Not everyone is convinced Bakrie will feel aggrieved by the election outcome. “It’s not a real fight,” said one former government official familiar with all the players. “It’s the same gang. I also don’t think it’s the final ending for Bakrie.”
Efforts to remove the tycoon’s hold on KADIN came with the appointment of Roeslani, a close Bakrie associate, to be the new ambassador to the United States, effectively stopping him from running for a second five-year term.
Roeslani and Tourism Minister Sandiaga Uno are co-founders of investment firm Recapital Advisers, which in 2011 sold a majority stake in PT Berau Coal to Bumi PLC, a joint venture between British investor Nat Rothschild and the Bakrie family that later came apart in a storm of acrimony.
The former chief of the Investment Coordinating Board (BKPM), Muhammad Lutfi, was initially favored for the KADIN post, but circumstances changed when the KADIN congress was delayed from June last year to March this year.
In the intervening period, Lutfi was made the ambassador to Washington, but he was only there for two months before being called home to become the new trade minister in Widodo’s reshuffled Cabinet last December.
That’s when Arsjad entered the picture. Insiders say he had been considered for state enterprise minister in the president’s second term cabinet in late 2019, but that key post eventually went to Erick Thohir, 51, chairman of a media and entertainment group.
The brother of Garibaldi Thohir, CEO of PT Adaro Energy, owner of Indonesia’s largest single coal mine, Erick had made it into Widodo’s good books when he was put in charge of staging the 2018 Asian Games in Jakarta.
Up until Arsjad declared his candidacy in late March, Anindya had looked a shoo-in, given his father’s influence and his long track record with the chamber, where he had been made deputy for membership and regional empowerment.
In fact, Anindya’s supporters told Tempo magazine that he enjoyed 70% of the support from all 34 provincial chambers. But that confidence began to wane when the conference was further delayed and then moved at the president’s request to Kendari.
Lutfi and Investment Minister Bahlil Lahadalia, a favorite of Widodo, openly supported Arsjad, but the government’s position became clearer when he was invited to join the president at a Covid-19 vaccination event in West Jakarta on May 18.
Under Arsjad, the links between the government and KADIN are likely to remain strong, underlined by the role Roeslani played heading a 120-strong task force that helped roll out the omnibus legislation, aimed at improving the regulatory framework for investors.
Under that law, Arsjad will enjoy a lot more political influence than he has now as a largely neutral figure. But a new presidential regulation also makes him second deputy in the National Economic Recovery Task Force, which is charged with formulating policies to bring Indonesia out of the Covid-19 crisis.
The relationship between KADIN and the government was strengthened during president Susilo Bambang Yudhoyono’s first Cabinet in 2004 when Bakrie was appointed economic coordinating minister, just a short time after completing two terms as the chamber chairman.
Likewise, real estate businessman Mohamad Suleman Hidayat, who after ending his single term as KADIN chairman in 2009 was promptly made industry minister in Yudhoyono’s second-term Cabinet.
Bakrie’s only political position now is as chairman of Golkar’s advisory council, a largely ceremonial post in a party headed by Economic Coordinating Minister Airlangga Hartarto, a Widodo confidante with ambitions of his own.
Businesswise, the elder Bakrie has always seemed to be on a roller-coaster, with the 1997-98 financial crisis driving him to the brink of bankruptcy before he pulled off an improbable refinancing act that saw him retain control of the conglomerate.
In 2006, just months after being replaced as chief economic minister over conflict of interest issues, he suffered a further setback when his Lapindo Bratas drilling firm triggered the eruption of the world’s biggest mud volcano in East Java.
The company blamed it on kickback in the exploration well caused by a 6.4 earthquake near Jogjakarta, 300 kilometers away, but the ensuing mud flow displaced more than 40,000 people, crippled factories and threatened road and rail links.
Although Lapindo claims to have spent $550 million to build protective levees and resettle residents, it still owes as much as $150 million in compensation to the victims for the loss of homes and productive land buried under the mud.
That wasn’t the end of his troubles. According to Forbes, the 2007-2008 financial crisis year saw his net worth plunge by 80% to $850 million in the space of a year as investors questioned whether he had the ability to repay $1.2 billion in debts.
In Indonesia, Bakrie subsequently became locked in a feud with Finance Minister Sri Mulyani Indrawati over her refusal in late 2008 to call a halt to the trading of shares in Bumi Resources, the reason for the huge losses he suffered.
The conflict was compounded by revelations two years later that the billionaire, then chairman of the Golkar Party, owed $1.9 billion in taxes, putting him among the Finance Ministry’s list of Indonesia’s 100 worst tax dodgers.
Four months later, Indrawati resigned under fire from Bakrie loyalists for causing state losses in the Bank Century bailout scandal – a charge that was clearly without foundation. But six years later, with the tycoon’s influence on the wane, she was brought back by Widodo to resume her old job, which she still holds.
While his son’s election defeat may have lost Bakrie his political edge, it isn’t the end of the world. His financial situation is more difficult to fathom, given his way of leveraging resource companies and then re-funneling the debt proceeds to other companies in the Bakrie stable.
Recent unconfirmed reports say his latest move has been to sell five of his producing oil and gas blocks to Anthoni Salim, Indonesia’s sixth wealthiest businessman who is said to have been a silent investor in many of Bakrie’s resource ventures.
Last month, rumors spread through the Jakarta Stock Market that the Salim Group plans to secure a stake in PT Bumi Resources Minerals Tbk through Singapore-based Hartman International Pte Ltd and Summer Ace Ventures Ltd.
But as always with Bakrie, there is also a hint of a lifeline. Only last month, US firm Air Products and Chemicals signed a long-term agreement with PT Bakrie Capital to supply the feedstock for a landmark $2 billion coal-to-methanol production facility in Bengalon, East Kalimantan.
Anindya has shown little interest in petroleum and mining, but like their competitors, the Bakries are diversifying into gold and other minerals, well aware that coal’s future in power generation looks increasingly bleak in a world increasingly fixated on climate change.