The rich in Indonesia How do they live? How do they make their money?

How good are they for Indonesia? Gerry van Klinken

This is the first time Inside Indonesia has run a whole edition on The Rich. The poor have obviously been more prominent in our pages because there are still so many of them in Indonesia. But the few with money have a lot more clout in this world. And lets face it, we all enjoy the voyeurism of peeping into their lives. So how do you do a whole edition on the rich? We first wanted to take a look at how they live as human beings. Deasy Simanjuntak's light-hearted story about wedding preparations might ring bells with anyone who shares family with social climbers. Ben Knapens peek into the home of an ostentatiously wealthy lawyer beautifully illustrated by Ahmad deNy Salman puts on display an entire class of new money. Some of their lifestyle excesses produce serious health hazards, as Madarina Julia shows in her piece on the growing childhood obesity epidemic. Secondly we wanted to find out how they made their money. The overwhelming impression is that good political connections are a must for any aspiring tycoon in Indonesia. Akiko Morishitas portrait of a Kalimantan timber baron is a fabulous example, which incidentally also shows that you do not have to leave the provinces to get rich. When it comes to paying taxes, the rich get an easy ride from officials. Indonesia Corruption Watch advisor Yanuar Rizky explains to Simon Butt in detail how this is done. However, not all our authors agreed connections are still essential. Christian Chua argues that the ease with which many Chinese tycoons survived the fall of Suharto proves that their money alone is enough protection in todays rampant capitalism. Thirdly we stood back and put the rich back into their Indonesian context. Christian von Luebke demonstrates that Indonesia is a much more unequal society than official statistics have long pretended. It might be as unequal as China, which is now experiencing serious tensions as a result. Gary Gartenberg discovers the cultural roots of these tensions in a place millions of Indonesians still love but few outsiders bother to read the martial arts comic strip of the pre-electronic era. Much about this stereotypical image of rich villains is unfair, of course. We would have loved an article on one of the wealthy but selfless patrons of the arts for example, but couldnt manage it. Nevertheless, that the gap between rich and poor is bad for Indonesia remains a basic truth. No one could make that clearer than Jeffrey Winters, in his powerful lead article entitled Who will tame the oligarchs? As always, a word of thanks to all our contributors, illustrators, editors, reviewers, proofreaders, committee members, webmaster, and other workers, most behind the scenes. Believe it or not, each one is a volunteer. I hope you enjoy what we have produced.

Gerry van Klinken (klinken@kitlv.nl) is this editions guest editor. He is a senior researcher at the Royal Netherlands Institute of Southeast Asian and Caribbean Studies (KITLV) in Leiden. Inside Indonesia 104: Apr-Jun 2011

Who will tame the oligarchs? Not democracy but rule of law is Indonesias central problem Jeffrey A. Winters

There has been a steady, but misplaced, undercurrent of dissatisfaction with Indonesias democracy. Rampant corruption, elected officials who perform wretchedly, indecisive leadership, and a surge in fundamentalist and sometimes violent Islamic politics have been blamed on Indonesias democratic opening after 1998. It is not uncommon to hear Indonesians at all levels of society express nostalgia for the order of Suhartos New Order regime. Even some academics have added their voices to the democratic critique. Professors Ron Duncan and Ross McLeod, two Australian scholars, wrote in 2007 that economic growth rates were consistently higher under Suharto. After citing Churchills famous quote that democracy is the worst form of government except for all the others, they remarked that Indonesias post-dictatorship decline in economic performance calls this view into question. Indonesias problem is not poorly functioning institutions of democracy. If anything, its democracy works remarkably well considering the damage inflicted on the body politic for a decade by Sukarno and then three decades by Suharto. Indonesias problem is that the country is beset by a stratum of powerful oligarchs and elites who are untamed. Electoral democracy is not designed to tame these actors. Indeed, they actually captured and now dominate Indonesias vibrant democracy. It is a common error to blame democracy for the pathologies that result from a wild oligarchy. Instead of reverting to a dictatorship that tamed Indonesias oligarchs well, the daunting challenge that lies ahead is to constrain these powerful actors while maintaining an electoral democracy. Why oligarchs? Who or what are oligarchs and why does Indonesia need to focus on them? Every country with an extreme stratification of wealth has a group of actors at the top who are empowered by tremendous riches, which they deploy in defence of their fortunes. These oligarchs share the apex of the political, social, and economic realm with elites, who are powerful not because of wealth, but because of their positions, offices, or status. In places like Indonesia, there is a great deal of overlap between oligarchs and elites, with each group eager to join the other. The most enduring barrier in this interplay is for ethnic Chinese oligarchs, who are largely excluded from the elite category and have, instead,

redoubled their pursuit of material power. Unlike in the Philippines, where landed oligarchs arose during the nineteenth century under the Spanish, Indonesia had only elites and no oligarchs during the Dutch colonial period. Despite government programs designed to foster entrepreneurs, the Sukarno years were far too chaotic for a group of Indonesians empowered by concentrated wealth to emerge. It was during the sultanistic rule of Suharto that Indonesias modern oligarchs first arose. Wealth in Indonesia today is vastly more concentrated in the hands of a few oligarchs than it has been in over four centuries. Data from Capgemini and Merrill Lynch show that in 2004 Indonesia had about 34,000 people with at least US$1 million in non-home financial assets, 19,000 of whom were Indonesians residing semi-permanently in Singapore. Their ranks grew to 39,000 by 2007, and 43,000 in 2010. Their average wealth in 2010 was US$4.1 million and their combined net worth was about US$177 billion (US$93 billion of which was held offshore in Singapore). Although Indonesias richest 43,000 citizens represent less than one hundredth of one per cent of the population, their total wealth is equal to 25 percent of the countrys GDP. Although Indonesias richest 43,000 citizens represent less than one hundredth of one per cent of the population, their total wealth is equal to 25 per cent of the countrys GDP Just 40 Indonesians hold combined wealth equal to 10.3 per cent of GDP These figures tell only part of the story. Even among the rich, there is a relatively small number with very large fortunes. Just 40 Indonesians held combined wealth equal to 10.3 per cent of GDP in 2010. The following table presents comparative data on the 40 wealthiest citizens in four countries.

Forbes magazine 2010 40 Richest reports for various Asian countries and authors calculations. Two things are noteworthy. First, the 40 richest Indonesians are much more wealthy on average (at US$1.78 billion) than their counterparts in neighbouring countries. And second, the intensity of oligarchic concentration is extreme. The last column calculates a

Wealth Concentration Index by adjusting the total wealth of each countrys 40 richest oligarchs (column two) relative to per capita GDP. Indonesias score of 6.22 is three times that of Malaysia and 25 times that of Singapore. Unlike a Gini Index, which is a blunt measure of the wealth gap between the top and bottom fifth of society, this Wealth Concentration Index is far more sensitive to the gap between the richest layer of oligarchs within the top one per cent and the average citizen in society. The conclusion is clear. Indonesia has a significant and growing number of ultra-rich citizens. Among the 43,000 millionaires, there are several hundred citizens whose fortunes are US$30 million and higher (the level Capgemini defines as Ultra High Net Worth Individuals). Twenty-one of Indonesias richest 40 individuals or families were billionaires. The smallest fortune on the Forbes top 40 list for Indonesia in 2010 is US$455 million and the largest is US$11 billion (held by Budi and Michael Hartono). By comparison, Malaysia had the lowest top-40 threshold of US$110 million (though also the largest single fortune among the four countries compared US$12 billion). Running wild In every society money is a form of power. But in countries like Indonesia, the role of wealth as a source of power is amplified by the absence of constraints on those who can deploy money for political and other purposes. Indonesias experience with democracy and its oligarchs demonstrates that taming a nations oligarchs and elites is a very different matter from simply having a democracy. If allowed to run wild, oligarchs are capable of unleashing social, economic, and political damage far out of proportion to their numbers in society. The key question, including for achieving investment, growth, and job creation, is who or what constrains these oligarchs? Do they submit to a higher authority, or not? Having wild or tamed oligarchs is not a matter of democracy. In fact, it does not even seem to be related to the degree of freedom and political participation in a society. To understand this puzzle, it is useful to take a closer look at Indonesias democracy and how it has performed over the years. If allowed to run wild, oligarchs are capable of unleashing social, economic, and political damage far out of proportion to their numbers in society Indonesia has held three national elections since 1999, on time, every five years. It has also held hundreds of regional elections on a regular basis. Unlike in the Philippines, where election-related fatalities are high and candidates themselves are often assassinated, democracy is passionate but largely peaceful in Indonesia. Apart from the occasional irregularity with voter lists, Indonesians mostly follow the electoral rules, the parties take turns campaigning according to the published schedules, voters cast their ballots in secret, and losing candidates overwhelmingly step down without resistance. There is freedom of assembly, of expression, and of the press. Issues get debated as parties and candidates try to shape the discourse. This includes sometimes unleashing dirty tricks against opponents. Most importantly, the winners are not known in advance. There have been surprising and sometimes spectacular wins and losses. By these measures, Indonesian democracy is performing to a very high standard and the country has an increasingly vibrant civil society. It is true there is something very wrong and even dysfunctional in Indonesias political economy. But the new electoral democracy is not the problem. Likewise, and perhaps somewhat perplexingly, democracy

is unlikely to play much of a role in reaching a solution. Two transitions To understand what plagues Indonesia, including its worsening economic performance, it is important to recognise that two transitions occurred in 1998. One was the momentous transition from dictatorship to democracy that everyone talks about. The other was an equally important though much less visible transition from tamed to wild oligarchs and elites. Suharto not only created the countrys oligarchs practically out of nothing, but he controlled them like a mafia Godfather. No matter how big or rich you became, Suharto could break you. All issues of wealth defence, property claims, and contracts radiated out from the Don. This put a premium on the politics of proximity. The more that was at stake, the more vital it was to have access to the inner rings around the dictator, if not to the man himself. Suharto was first among equals. A key element in operating such a sultanistic oligarchy is that all competing bases of independent power must be blocked. Suharto and his cronies made sure this was so across the entire economy and bureaucracy. As a matter of historical accuracy, it is not Suharto who destroyed Indonesias legal system. The work of the American political scientist Daniel Lev makes clear that the relatively strong and independent legal system that existed in the early 1950s was subverted by General Nasution and President Sukarno. Suharto finished the job and made sure that the only recourse oligarchs had, and the only thing that could reliably tame them, was the dictator himself. Suhartos most significant contribution to Indonesias crippled system of law was to ensure it could not recover from the devastating blows it sustained during the Guided Democracy period. One of the most important factors that weakened Suhartos New Order is that once his children grew up, they disrupted the system of wealth defence and oligarchic taming based on the politics of proximity. Suhartos children rapidly became the most predatory and disruptive force within Indonesias oligarchy. It was no longer possible to turn to the Don to secure property, enforce contracts, limit predations, and manage risks. The New Order went from being a highly predictable and tame oligarchy, which promotes investment by wealthy oligarchs, to being a frustrating and increasingly difficult system for them to navigate within. Not only did Suhartos children engage in predatory behaviours that threatened oligarchs and the economy, but an entire cohort of actors linked to the children grabbed a piece of the action as well. When it became clear that powerful figures like General Benny Murdani and even General Prabowo could get in trouble with Suharto for speaking up about the disruption the children were causing, Indonesias oligarchs knew that the reliable system of security and response based on proximity was broken. The final straw came when Suharto started grooming some of his children for political succession. This ominous development occurred just prior to the onset of the financial crisis in 1997. It is not that Indonesias elites and oligarchs (and equally frustrated foreign counterparts in places like Washington and New York) brought Suharto down. Rather, they stepped aside as he faced his last crisis. Everyone, including the students in the streets, could see that Suharto was exposed. When the dust finally settled, and democracy took shape, all of the oligarchs and elites were still there. Virtually none had gone down with Suharto. Oligarchic and elite

continuity was nearly 100 per cent. But two things had changed. One was that the actors at the top had to adapt to the new democratic game. Not only did they do this with relative ease, but they were better positioned than anyone else to capture and dominate Indonesias electoral politics. Whereas oligarchs in the Philippines and some Latin American democracies are armed and can set their militias on each other, Indonesias oligarchs, for historical reasons, were disarmed from the start. This has facilitated the game of democratic spoils among them and kept the competition orderly. They had the money, the media empires, the networks, and the positions in the parties (or the resources to create new ones) that allowed them to dominate the new democratic system. To contend for office (or, for the ethnic Chinese, to fund indigenous Indonesians who ran), oligarchs had to deploy huge sums of money, down to the village level. The nub The other thing that changed, however, is that Indonesia turned overnight from Suharto as the source of oligarchic constraint to the countrys debilitated system of laws. This gets to the nub of the problem. There were and are no strong, independent, and impersonal institutions of law and enforcement to which Indonesias most powerful actors must submit. They participate with the rest of society in the processes of electoral democracy. But on matters of property, wealth, economy, corruption, and criminality of all kinds, the law bends to individual oligarchs and elites rather than the reverse. The simple reason is that they have the resources at their fingertips to buy the legal system, from the police and prosecutors up to the judges and politicians. Interestingly, large parts of the Indonesian legal system, in a mundane way, function routinely. It is not a lawless society. For the vast majority of Indonesians, the low rule of law operates. Where it dysfunctions, it is more a technical or professional matter than a reflection of the ability of people to intimidate it. It is only when one moves up the system and oligarchs and elites are involved what might be called the high rule of law that power defeats the legal system. This failure of the legal system to tame the most powerful players is where issues of governance truly arise. The epicentre of the struggle over the rule of law is where oligarchs and elites clash with the impersonal institutions of the state. This titanic confrontation of power is not amenable to repair by World Bank development loans to train judges. Technical fixes are relevant only as one moves down the power hierarchy toward the low rule of law. This struggle also has little if anything to do with democracy. Although often thought of as the same thing (or at least intimately related), democracy and the rule of law are quite distinct. This is not only apparent in Indonesia, where democracy is robust and yet captured by criminal figures the law cannot constrain. But it is even more evident in the case of Singapore, which has a strong and independent system of law but no democracy. By viewing democracy and the rule of law as distinct, it is possible to explain Indonesias criminal democracy and Singapores authoritarian legalism. It was not the absence of democracy that was important under Suharto, but rather the presence of effective constraints that tamed oligarchs and elites. This promoted capitalist investment and growth. And conversely, it is not the presence of democracy since 1998 that is the problem, but instead the absence of an impersonal system of constraints on

oligarchs (the rule of law) that could tame them as Suhartos personal system once did. One of the most important lessons from Indonesia is that transitions to electoral democracy are far easier to accomplish and sustain than imposing a system of laws to tame a countrys most powerful actors. As the Philippines, Indonesia, and Egypt show, eruptions of people power (including mobilisations of the last minute) can topple a dictator and usher in electoral democracy. But they have almost nothing to do with how the high rule of law gets implanted or grows. The problem is all the more daunting when it is oligarchs and elites themselves who capture and dominate the well-functioning democracies mass movements create. Jeffrey A. Winters (winters@northwestern.edu) is professor of political economy at Northwestern University. His new book from Cambridge University Press is entitled Oligarchy. This article is part of The Rich in Indonesia feature edition.

Inside Indonesia 104: Apr-Jun 2011

Inequality How much longer can elites hide their privileges from view? Christian von Luebke Indonesia is often touted as Asias next success story. Sound macroeconomic policies, resilience to the global financial crisis, and strong consumer markets, are attracting rising attention from foreign investors worldwide. In light of strong economic growth, combined with a youthful demographic profile and stable democracy, a rising number of analysts portray Indonesia as the next Asian tiger in the making. What usually escapes attention is that economic progress has trickled down very unevenly across groups and regions and often more unevenly than official reports would have us believe. Although Indonesia has embraced democratic and decentralised government, the disparities between socio-economic groups and subnational regions remain substantial. This essay traces the contours of economic inequality from three angles. It explores how accurately current survey measures of economic imbalances might be, how inequalities vary across sectors and space, and how they might affect Indonesian politics. The inequitable distribution of recent prosperity gains become evident only minutes after stepping out of Sukarno-Hatta International Airport. On the way to Central Jakarta, one can readily observe both ends of the social spectrum: shanty towns flanking the airport highway give way to urban settlements and then high-end shopping malls and five-star

hotels. Statistics An excursion through Jakartas neighbourhoods confirms the impression of social inequality. The plight of street peddlers, who offer songs and small items along trafficclogged roads, stands in stark contrast to the luxury cars, whose owners occasionally hand out alms through darkly tinted windows. Social gaps appear to be widening not only in Jakarta, but in many of Indonesias towns and districts. The number of Indonesian street children is large and probably growing; one report suggests as many as 230,000 in 2010. Meanwhile, luxury car sales have more than doubled over the last five years; and Indonesias top 40 entrepreneurs have built up assets equivalent to nearly one tenth of annual GDP. Official statistics paint a very different picture, however. Recent economic reviews state that Indonesias road to modernisation has been pro-poor, characterised by relatively low income disparities, declining poverty rates, and steadily improving per-capita incomes. Between 2000 and 2010, the Indonesian economy grew by 5.2 per cent per year, seemingly without inflicting higher levels of inequality. Indeed, the standard measure of economic inequality, the Gini index, has hardly changed in decades. Ranging from zero (perfect equality) to one (all income goes to one household), it has varied only slightly around a moderate level of 0.35 since 1980. At the same time, poverty rates were cut in half and per capita incomes increased three-fold. Mismatch While there is no denying that Indonesia has made progress in alleviating poverty, what explains this mismatch between observable and reported inequality levels? Existing reports hide a large part of the income and wealth of top earners. One possible explanation is that government elites, from the Suharto era to the present day, benefit greatly from concealing inequality problems. President Suharto had every incentive to underestimate social imbalances. Official confirmation of pro-poor growth served to legitimise authoritarian rule, reinforce Suhartos self-styled role as father of development, and conceal the fact that state elites absorbed a large part of Indonesias national income to sustain their patronage networks. Incentives for gauging the true state of inequality remain limited today. Old-regime officials still run the bureaucracy, and patronage still lubricates politics. Elites benefit greatly from concealing inequality problems Statistical surveys underestimate social disparities mainly because they partially exclude top incomes. As in many other countries, the Gini index is calculated on the basis of household expenditures. But in Indonesia the national household surveys (Susenas) focus on outdated commodity baskets. They cover basic expenses of rural households, but disregard non-food expenditures common in wealthier urban households. Payments for communication technology, cars, holidays, overseas education, and health care remain unobserved. Moreover, most well-to-do families markedly understate their personal consumption, saving, and investment; or alternatively, evade survey enumerators altogether. These problems have grown worse. A recent study by Harvards Kennedy School of

Governance compared Susenas figures with the national accounts data over time. In the early 1970s, Susenas household expenditures were comparable with private expenditures in national accounts. But in the 2008 Susenas round they only cover 35 per cent of them. Not all of these unobserved expenditures fall into high-income brackets, but clearly such imprecision undermines the credibility of current inequality measures. Labour The Indonesian government faces several additional challenges on its pathway to propoor growth. One is the creation of sustainable job opportunities for low-income families. The economy has expanded rapidly in capital-intensive sectors, whiles labour-intensive sectors have grown slowly. These sectoral imbalances will make Indonesias inequality problems worse, at least in the short to medium term. Economic sectors that require skilled labour and capital investments have experienced substantial growth. Relatively unaffected by the global financial downturn, Indonesias financial industry has increased annual earnings by 6.5 per cent between 2008 and 2010. Good results were also reported in other services (6.1 per cent) and trade (5.8 per cent). The most pronounced surge took place in the communications industry : 15 per cent per annum over the last three years. Indonesias deregulation policies in 2000 paved the way for a highly competitive telecommunications market and a rapid diffusion of mobile and internet technologies. Agriculture and manufacturing continue to absorb a large share of the labour force and, for that matter, most of Indonesias poor and unskilled workers. Yet manufacturing grew at a disappointing 3.3 per cent between 2008 and 2010, compared to double-digit growth during the Suharto era. Productivity in agriculture and mining grew only 3.9 and 2.8 per cent, respectively, over the last three years. Unless the sectoral growth pattern becomes more balanced, equitable employment and welfare will drift further out of reach. Regions Regional imbalances are another challenge. The national motto of unity in diversity is a reminder of the vast socio-economic diversity within a unified political system. Fiscal decentralisation after 1998 successfully contained separatist pressure, but it did this by favouring resource-rich provinces and thus accentuating regional imbalances. Indonesia continues to exhibit pronounced economic disparities across major island groups. In 2009, Papuas economy grew rapidly by 13 per cent, and Sulawesis by 7 per cent, primarily as a result of large-scale investments in cash crop plantations and extractive industries. Other regions, such as Bali, Java, and Sumatra, which are more reliant on trade and tourism, were affected more strongly by the global downturn and recorded low growth rates of between 3 and 5 per cent. Personal incomes vary strikingly as well. Average incomes in resource-rich regions such as Kalimantan, Sumatra, and Papua are three to four times higher than in resource-poor island groups such as Nusa Tenggara and Maluku. While residents in Kalimantan earn on average seven US dollars per day, their counterparts in Maluku have one and a half dollars at their disposal. These differences are even more pronounced when measured at the district level. The average income in Papuas best-performing district of Mimika is a

staggering 320 times higher than in Papuas worst-performing district, Tumbraw. Differences in poverty rates are another aspect of regional inequalities. In Papua, an exceptionally high poverty incidence of 36 per cent coexists with high per capita incomes. This outcome can be explained by Papuas reliance on capital-intensive, extractive industries (mining, forestry). These have produced few positive spill-over effects for local education and employment. On the other hand, the Balinese economy, which has complemented traditional agriculture with handicrafts and tourism, has cut poverty rates to less than 5 per cent.

Official statistics on pro-poor development (1980-2009). They look good on paper, but how real are they? Central Bureau of Statistics All in all, while post-Suharto reforms have produced sound economic growth on the national level, they have yet to tackle social and regional inequalities. Income distributions remain more unequal than official reports suggest. If the incomes of top earners were fully accounted for, and estimated along the lines of national accounts rather than of Susenas, the Gini index would rise well above 0.40. This would place inequality levels in Indonesia closer to those observed in China, Malaysia, Thailand, and the Philippines. Politics Yet, even if Gini estimates were corrected upwards, parliament would likely not take inequality problems seriously. Patronage politics continue to stack the cards against redistributive measures. An instructive example is the tug-of-war between finance minister Sri Mulyani and Golkar chair Aburizal Bakrie. Mulyani tried to force Bakries companies to settle national tax debts and compensate East Javanese communities for environmental damages. This prompted a series of political confrontations which culminated in Mulyanis resignation in May last year. Elite resistance has marred Yudhoyonos second term, exemplified in well-staged attacks against Indonesias

Corruption Eradication Commission (KPK), Indonesia Corruption Watch (ICW), and Presidential Reform Taskforce (UPK4). National and regional parliaments should be debating redistributive policies such as the promotion of labour-intensive industries, the introduction of progressive taxes, and the enforcement of minimum health and education standards. But status-quo interests ensure these debates remain muted. However, inequality discussions are bound to resurface in the run-up to the 2014 elections. Non-state actors cooperatives, unions, and student groups are increasingly making use of social media networks to launch collective petitions. These loosely structured groups need to develop coherent programmatic appeals and strategic partnerships. New opportunities for such alignments may come from revised Indonesian election laws. These will likely rule out political parties which obtain less than 5 per cent of the vote. Smaller parties, concerned about losing their parliamentary seats, will be inclined to respond to societal demands and promote economic redistribution. Changing political alignments and digital spaces will increasingly challenge entrenched interests and, over time, empower Indonesias youthful society to demand more equitable policies. Christian von Luebke (cvluebke@stanford.edu) is a DFG research fellow at the AsiaPacific Research Center, Stanford University.

Taxing questions If the Indonesian government wants more people to pay tax it should improve public services and stop tax evasion by the rich Simon Butt Taxation revenue comprises only around 13 per cent of Indonesias Gross Domestic Product (GDP) and only 14 per cent of Indonesians are registered to pay tax. In comparison, Australian tax revenue runs at 30 per cent of GDP and in Sweden it is 48 per cent; nearly all adults are registered taxpayers in both countries. Though Indonesias low figures can be partly attributed to its very large informal economy, significant revenue is lost through tax evasion by the rich. Simon Butt spoke about some of Indonesias tax problems with Yanuar Rizky, analyst and managing partner of Aspirasi Indonesia Research Institute (AIR Inti) and advisor with Indonesia Corruption Watch. Why is tax revenue so low in Indonesia? Indonesias tax revenue has not increased at the same rate as its economic growth, which shows that the system does not work properly. There are several reasons for this. One is that the system requires self-assessment and many people and businesses underreport their tax liabilities. Another reason for the failure of the system is that the tax office often fails to detect tax evasion, so lost tax revenue is very rarely identified, let alone recovered. The tax office often fails to detect tax evasion, so lost tax revenue is very rarely identified, let alone recovered

All this creates few incentives to comply with tax laws. A critical factor is that Indonesias informal economy makes up 70 per cent of Indonesias national economy. In this informal economy, very few financial records are kept, making taxable income difficult to estimate among the millions of ordinary Indonesians who make their livings there. But there is leakage even when detection should be easier. For example, the export and import of goods incurs 10 per cent value-added tax (Pajak Pertambahan Nilai, or PPN), but you just need to look at the volume of imports and exports to see that this tax is not being collected properly. What are some of the main modus operandi for tax evasion, particularly amongst the rich? There are many too numerous to mention. Most involve financial engineering, cooking the books, so that income is underreported and excessive tax deductions and refunds are claimed. One of the most significant problems to emerge in recent years has been transfer pricing. [Transfer pricing involves companies reducing their tax liability by shifting profits to related entities, such as subsidiaries, located in jurisdictions with lower tax rates]. Lots of companies are doing this. The technique received significant publicity in 2010 in a case involving Aburizal Bakrie, businessman and Golkar chairperson. The case involved PT Kaltim Prima Coal (KPC) and PT Indocoal Resource Limited in the Cayman Islands, both subsidiaries of PT Bumi Resources, controlled by the Bakrie Group. KPC sold coal at a heavily discounted price (the transfer price) to PT Indocoal, which then on-sold the coal to a buyer at market price. The idea was to accrue the profit from the market-price sale of the coal in the Cayman Islands rather than in Indonesia, because company tax rates are lower in the Cayman Islands. Obviously, Indonesia lost its cut of tax revenue from the profit that KPC would have obtained had it sold the coal in Indonesia at the market price. KPC then attempted to claim back around Rp 30 billion in overpaid taxes for the 2007 financial year, pointing to its smaller than expected taxable profits in Indonesia. This triggered a tax office audit, which uncovered that KPC in fact owed around Rp 1.5 trillion in unpaid taxes from 2007, and revealed that KPC had manipulated the price of the coal a criminal act. Bakrie complained to the taxation court, which found that the tax office had violated some of its own procedures during the audit. The Supreme Court upheld this decision on final review. The tax office is still pursuing the case, but Bakries success has encouraged lots of other companies to try the same thing as KPC. The recent infamous case involving Gayus Tambunan exposed corruption in the tax office. What are the entry points for corruption there? There are, of course, significant corruption problems in the tax office. Gayus Tambunan worked in the Appeals Directorate at the Taxation Office and made millions of US dollars in return for giving favourable tax treatment to many companies. But Indonesias Tax Court (Peradilan Perpajakan) presents bigger problems. In this court, taxpayers can appeal tax office decisions and rulings. Actually, it is not really a court, but rather a tribunal because, unlike other Indonesian courts, it falls under the administrative authority of the Finance Ministry, not the Supreme Court. [In 2004 the constitutionality of the Tax Court was challenged in the Constitutional Court on the grounds that it exercises judicial powers and that therefore the Supreme Court should administer it in the interests of judicial independence. The challenge failed.]

The tax court provides a forum for many games the judicial mafia is alive and well there Many disputes between taxpayers and the tax office are appealed to the tax court these days. And the tax court provides a forum for many games (permainan) to be played the judicial mafia (mafia peradilan) is alive and well there. The court actually has a lot of power because its decisions are not subject to the appeals process of the ordinary courts. Its decisions are final and binding. There is a right to a Supreme Court review but this is limited. Indonesian income tax rates are around 10 per cent for most Indonesian citizens. This is low, at least compared to developed countries. Why do you think the rate is so low? The cost of living for many Indonesians is still too high. To live adequately in Jakarta, in my opinion, one needs Rp 3 million per month. Yet the minimum wage in Jakarta is around Rp 1.3 million. Thats a pretty big gap. So, if tax rates were to increase, people would undoubtedly complain that they no longer had economic freedom. In developed countries such as Australia, there is more likely to be a correlation between the taxes citizens and businesses pay and the government services they receive. In Indonesia, we have none of these services. If you get sick or become unemployed, the government doesnt help you out. There are no unemployment benefits as in developed countries; theres no government health fund. The Indonesian government wants to increase the ratio of tax income to GDP from 13 per cent to 19 per cent within five years and is aiming to increase its tax revenue to about $US90 billion in 2011. How can the government encourage more Indonesians to pay tax? Fix the system first. Simply reminding people to pay tax, or trying to build awareness about paying tax, will not change anything. The government needs to give taxpayers something in return for paying their taxes.

KPP (Kantor Pelayanan Pajak) Pratama Jakarta Jatinegara In Indonesia there is a social security net, but the government doesnt contribute to it employees do. Tax revenue is used to pay the salaries of public servants and to repay debts. Indonesians hear about leaks in the tax system and about big companies evading their tax obligations and getting big refunds. They also read about the Gayus case. Citizens dont want to pay tax when they hear these stories. Theres a difference between the rich and middle and lower classes in their respective approaches to tax. Many rich people play the system by using transfer pricing or by seeking a refund exceeding their entitlements. For them, it is certainly not a matter of a lack of awareness about tax. Politicians dont set the best example. In fact, they are amongst the worst offenders in using the tax mafia. They are not disciplined. When the very rich see this, they have little motivation to pay tax themselves. On the other hand, many rich people actually want to help the nation. If they saw that their taxes were used to fund public services, they would be much more likely to pay them. Increasing overall prosperity also helps the rich because it increases their customers.

The state forcing citizens to pay tax without keeping its end of the bargain is tantamount to extortion As for the middle and lower classes, many know they are obliged to pay tax, but are reluctant because they lack purchasing power and they dont see what they will get out of it. All they see is government money being spent on new government cars and ministerial salaries. There is no such thing as a free lunch, but many in the middle and lower classes ask what theyd get for lunch if they did pay tax. The state forcing citizens to pay tax without keeping its end of the bargain is tantamount to extortion. In this context, attempts to encourage more people to obtain a tax file number and to lodge tax returns will have little or no effect. The government needs to provide more services and give more incentives. If, for example, the government allowed everyone who had registered to pay tax to leave the country without paying fiscal tax, or to receive particular public services, then more ordinary people would pay tax. Simon Butt (simon.butt@sydney.edu.au) teaches at Sydney University Law School. The views expressed by Yanuar Rizki (rizky.elrizky@gmail.com) in this interview are his own, and are not necessarily the official position of Indonesia Corruption Watch (www.antikorupsi.org).

BE RICH STAY RICH Why are the New Order billionaires still doing so well? Christian Chua The young IT specialist working for a multinational company in Jakarta has plenty to pride herself on. Her monthly pay packet of US$2,000 is bigger than that of 99 per cent of her fellow Indonesians. A first class international education, an excellent command of English and long office hours she has worked hard to achieve her position. But how hard must one work to accumulate US$1 billion? Hardly possible, one might think. Yet, there are a few Indonesians whose fortunes outreach that amount. Twenty-one persons up from twelve the year before are on the 2010 Forbes Asia Indonesian billionaires list. And many of them are familiar faces from the rankings of conglomerates in the mid1990s, during the final years of the Suharto era. Hard work might be fundamental to draw an income of US$2,000. But it cannot explain the extraordinary wealth of a billionaire in Indonesia. So what can? One convenient answer lies in the dominant ethnicity of Indonesias capital class. Indeed, of todays 21 billionaires at least half are Chinese, though the label is imprecise and controversial. How did Chinese come to dominate the very apex of the economy in Indonesia? And why have they been able to hang onto and perhaps even strengthen their position in postauthoritarian Indonesia? Racial clichs One common explanation is that Indonesias Chinese are so successful because of their legendary Chinese business acumen. They are supposed to be intelligent, diligent, competitive, and so forth. For a long time, economic backwardness in China itself

contradicted this explanation, but that no longer holds, to the relief of those who believe in it. This ethnic approach is pervasive especially in the business world itself. But a closer look at history will cast doubt on these racial clichs. Ethnic traits are always socially constructed, and this is especially true of the so-called Chinese Indonesians whose ancestors came to Indonesia generations ago. Before the eighteenth century, traders migrating from southern China to Southeast Asia integrated smoothly into local societies. This changed with the arrival of the Europeans. The colonialists needed middlemen who could mediate with people they regarded as indigenous. Who was more appropriate for this role than the settlers from China? They had already established extensive trading networks across the islands and into the interior. Moreover, they could be easily defined as foreign orientals and thus separated from the people who, in theory, owned a claim to the land they were living on. At least half of Indonesias billionaires are Chinese Thus some Chinese businesspeople became compliant collaborators with the colonial Dutch. Accordingly, after the end of colonial rule, there was no political space for the Chinese minority in the new nation of Indonesia founded in 1945. But when General Suharto took over power in 1965, he revived many colonial principles. His New Order regime implemented a whole range of policies meant to marginalise and discriminate against Indonesians of Chinese origin, and indeed to stigmatise the whole ethnic minority as rich. Yet at the same time the New Order coopted selected ethnic Chinese families as exclusive business partners for its political elite. There was a clear rationale for this double-sided approach. These businesspeople, even though they had nothing in common with the small Chinese shopkeeper or pharmacist, were seen to belong to the same ostracised ethnic group. They became the perfect partners for the new rulers: obedient, grateful, loyal, and quiet. This constellation hardly changed over the decades. Big business became synonymous with large Chinese corporations. In the 1990s, 26 of the 30 biggest conglomerates in Indonesia were owned by Suhartos Chinese cronies. None of them did anything to soften their marginalised status; the ties were too profitable. Fear also played a role. AntiChinese riots were regularly instigated, and officials issued statements against the conglomerates. Although neither the riots nor the admonitions had practical consequences for the very richest Chinese entrepreneurs, these events kept them on a short leash. Power and money, usually a close combination, were thus effectively separated. Crisis The conglomerates were a specific formation of the New Order. Most people reckoned they could only survive in an alliance with those who had brought them into being. When the 1997 financial crisis ended the Suharto regime, not just expert observers but even the tycoons themselves believed this would also mean the end of Chinese big business. But it did not. More than a decade later, most of the businessmen successful under Suharto are still around. Indeed they are thriving, as the latest Forbes list demonstrates. How can this success be explained? Does it mean that 1998 really brought no change? Or did they become real capitalists, who could sustain themselves without political protection? The answer lies somewhere in between.

Immediately after the fall of Suharto the Chinese conglomerates did indeed tumble. Their licence to print money was revoked, as the banks that they founded to fund the enormous expansions of their business activities went bankrupt. Other concessions they had obtained over the years even for ventures typically in the hands of the state such as infrastructure projects were taken away from them. Monopolies were annulled. Undertakings requiring enormous patronage were no longer possible in this more democratic, decentralised, and deregulated environment. It was the market that was expected to rule, and not a tiny clique of generals with their Chinese clients. More than a decade on, most of the businessmen who were successful under Suharto are still thriving Many tycoons did indeed re-align their businesses as a result of the increased scrutiny by regulatory boards, public interest watchdogs, the media, and some reform-minded politicians. For instance, Mochtar Riady, founder of the Lippo Group, became a point of attack for the newly articulate and assertive public. Riady symbolised for them the murky practices of the old system. It took massive financial engineering and some effective lobbying with regulators and politicians for him and his son James to prevent the loss of their conglomerate. Today however, the Riady family remains among the 30 richest in Indonesia, with a net worth of US$730 million. Or take Anthony Salim, who heads the Salim Group of business ventures, founded by his father Liem Sioe Liong, President Suhartos closest crony. His conglomerate used to include BCA (Bank Central Asia), the biggest private bank in Southeast Asia. After Suharto was deposed in 1998, Salim was accused of corruption, taken to court, and had to settle enormous debts. He lost the BCA, and the whole group was about to break apart. At the time, no one would have placed even a small bet on its survival. However, Anthony Salim is today fifth on the Forbes list, with a net worth of US$3 billion. This does not exactly correspond with the common definition of crash. It looks like a remarkable survival. Continuity Together with Mochtar Riady and Anthony Salim, no less than 12 other owners of conglomerates listed in the last top 30 ranking before the 1997-98 financial crisis have made it into the current top 30. This is significant continuity. Within Indonesia, the previous transition, from Suhartos predecessor Sukarno to the New Order, produced a more substantial reconfiguration of the business class. The present continuity points to three characteristics of post-authoritarian Indonesia. First, the political regime in reality only underwent minimal, superficial change. The underlying structures were not dismantled. The new regime needed quick economic recovery. Chinese Indonesian businesses were its indispensable pillar. Rapid reconstruction of the economy without their capital was no option. Second, old political forces proved to be rather resilient. Personnel continuities in the legislative, executive, and judiciary branches of government allowed corrupt practices to continue. The conglomerates had had many years of experience here. They were experts. Capital

But third, a slow yet steady turn to a more market-based economy is definitely taking place. This helped the Chinese capitalists emancipate themselves from their former patrons, making them less dependent on political patronage. In post-crisis Indonesia, their capital alone provides plenty of protection, especially since their ethnicity cannot be used as a justification to shackle them any longer. So in the end, as the country gradually leaves behind its authoritarian, centralised, protectionist past and moves towards a democratic, decentralised, deregulated future, the old conglomerates are well prepared to flourish under any regime that might come. After a few worrying years, today they feel on top of the world. A glance at the business sectors in which the billionaires make their money speaks volumes: palm oil, coal, and tobacco. In other countries, many corporations steer clear of these activities, because they are so contentious. The political lobbying they require is just too difficult. But in todays Indonesia there seem to be few limits for capital. For those who had a good start under the New Order, the accumulation of extraordinary wealth is easier than ever. Christian Chua (christian.chua@gmail.com) works for Deutsche Bank and lectures at the University of Frankfurt. He is the author of Chinese Big Business in Indonesia: The State of Capital (Routledge, 2008).

Prosperous in the provinces Friends and connections hold the key to riches in Kalimantans Barito region Akiko Morishita Business is booming in Indonesia and not just in Jakarta. In the regions, the last few decades of economic growth saw the slow emergence of a new breed of politicallyconnected local businesspeople who sometimes achieved extraordinary wealth, especially in resource-rich provinces. With the new era of democracy and decentralisation, such people have come into their own, using their political connections to increase their wealth, and their wealth to buy political influence. One such provincial strongman is Haji Leman, a wily timber baron and coal miner who has become the power behind several thrones in South and Central Kalimantan. Kalimantans rich forest resources have long invited extensive logging and continue to do so. Huge tracts of land have been opened for oil palm plantations in the last decade. During the Suharto era the central government exercised complete control through Forest Concession Rights (Hak Pengusahaan Hutan, HPH). It handed them out to state-owned companies, the military, and Jakarta-based conglomerates close to Suharto. In Central Kalimantan, many large-scale logging concessions went to the state-owned enterprise Inhutani III and to well-connected Jakarta-based private timber conglomerates such as Barito Pacific Timber, PT Sari Bumi Kusuma Kalteng, and Djajanti Djaja. However, local businesspeople also benefited, through subcontracts. They were given jobs ranging from recruiting and supervising workers to managing logging operations. They transported timber from site; they conciliated or intimidated locals who opposed logging. It is common knowledge that many also engaged in illegal logging. The latter was a cooperative effort that allowed contracting companies to meet shortfalls in their

annual work plans. Getting locals involved reduced the risks of getting caught, while allowing local partners a chance to accumulate their own capital. Local entrepreneurs secured their positions by building personal connections with the most important local government figures: bureaucrats, politicians, military personnel, and police. Local businesspeople also benefited, recruiting workers, managing operations, transporting timber and intimidating locals who opposed logging After the fall of Suharto, Indonesias central government transferred much authority to the regional governments. Democratisation brought about free and fair legislative elections, and regional heads were soon directly elected by the people, rather than appointed from above as under Suharto. One outcome of these political shifts was that local contests over government positions and economic resources became fierce. Wealthy local businesspeople were prominent in these contests, alongside well-entrenched bureaucrats. They had made their money during the Suhartos New Order regime by colluding with local allies in government in exchange for protection. Democratisation offered them the opportunity to expand their influence in the regions. One such local businessman is HA Sulaiman HB, known to locals as Haji Leman. He operates with significant influence in the Barito region in Kalimantan. The Barito River flows from the northeastern part of the province of Central Kalimantan to Banjarmasin, the provincial capital of South Kalimantan. Building on the money and connections he had accumulated under the New Order, democracy permitted him to expand his influence dramatically. Haji Leman Haji Leman was born in 1948 in Marabahan, capital of South Kalimantans Barito Kuala district. He is not from a rich family his father was merely a soldier in the national army. Haji Leman is now big in river transportation, dockyards, shipbuilding, pharmacies, coal mining, and oil palm plantations, all in Central and South Kalimantan. In the middle and upper Barito, local residents are mainly Dayaks, a loose generic term for the indigenous communities of Borneo. Banjarese, Malay descendants of the aristocrats and subjects of the Banjar Kingdom (1526-1860), live mainly in the lower Barito region. Haji Leman belongs to a Dayak ethnic subgroup known as the Bakumpai, a major indigenous peoples living principally in the middle Barito River basin. Bakumpai people converted to Islam under the strong influence of the Banjar Kingdom, while many other Dayaks converted to Christianity or continue to practice varieties of animism. This ethnic background permitted him to communicate smoothly with both the upstream Dayak communities and with the downstream Banjarese. At the age of 18, he began a small business in his home area. Using leased riverboats, he purchased commodities in Banjarmasin for resale in upstream towns. For the return trip he bought forest products like rubber and resins and sold them to brokers in Banjarmasin. When the timber boom started in the late 1960s, Haji Leman worked for the Jakarta-based and military-backed timber conglomerate PT Djajanti Djaja, which owned around 280,000 hectares of logging concessions in Central Kalimantan. The company valued his experience and detailed knowledge of local society, and made use of his distribution networks in the region. They put him in charge of shipping logs from timber camps along the upper Barito to Banjarmasin. My local informant told me Haji Leman also paid

people for logs they had cut down without official permission, and covertly transported these together with legal timber. With the capital accumulated from the formal and informal trade in timber, Haji Leman expanded into coal mining in the early 1990s. Obtaining the required Coal Mining Agreement (PKP2B) from the central government was not easy. During the Suharto era these normally went only to multinational companies and a few Jakarta-based domestic companies. But with the help of his political connections, he managed to seek the permit. Once he had it, however, he had problems entering the foreign market. A Taiwanese buyer refused to accept 60,000 tons of coal after it had been shipped on the grounds of poor quality. Haji Leman tried hiring an international consultant to deal with the case but abandoned it due to the high cost. After that he decided to look for a strong, established business partner. A large Jakarta-based conglomerate would have the advantage of financial clout and closer access to national authorities. In turn such conglomerates needed local partners to expand their operations in the regions. In the mid-1990s Haji Leman entered into a joint venture with the timber conglomerate PT Barito Pacific Timber, which had also moved into coal mining. In 1997, his company became a 10 per cent shareholder in a BPT-affiliated coal company. A few years later Boy Garibaldi Thohir, owner of the big Jakarta-based coal corporation PT Adaro, also sought out Haji Leman for a joint venture. Thohir needed an experienced local partner with a mining permit. Through these joint enterprises and his own mining company, Haji Leman now holds major coal-mining stakes in four districts in Central Kalimantan, and five in South Kalimantan. Favours Ever since the Suharto era Haji Leman has nurtured links with local officials, in order to obtain favours and protection. Such officials ranged from heads of local government, top bureaucrats in the regional forestry office, local legislators, and military and police officers. In Central Kalimantan in the early 1990s he built close ties with Asmawi Agani, then district head (bupati) of South Barito, by contracting coal haulage to Asmawis trucking company. Both men are of Bakumpai descent. Asmawi reportedly became a board member for Haji Lemans company after retiring from public service. Haji Leman joined the government party Golkar and became its South Kalimantan provincial chairperson in 1998. Golkar Kalimantan Selatan After the fall of Suharto in 1998, much central government authority was transferred to the district level. Bupati could issue small- and medium-scale logging concessions and provide approval for plantation development. (In 2002 their authority to approve logging concessions was reduced again, due to their over-issuance.) These shifts created tremendous opportunities for local elites, and triggered fierce contests for power. In 2000 Haji Leman helped finance the Central Kalimantan gubernatorial election campaign for his business partner Asmawi Agani, the former South Barito bupati. At this time governors were still elected indirectly within the provincial assembly. He allegedly provided 100 million rupiah (roughly US$12,000) to each member of the assembly, enough to buy Asmawi the job. Haji Leman and the governor then put forward their

ethnic, political, and business associates as candidates for bupati in each of the districts throughout the entire Barito region. In 2000 Haji Leman helped finance the Central Kalimantan gubernatorial election campaign for his business partner Asmawi Agani Owing in large part to their financial and political support, these friends won the indirect elections for bupati in South Barito in 2001, East Barito in 2003, North Barito in 2003 and Murung Raya in 2003. All four were re-elected in the 2006 and 2008, this time through direct popular elections. They in turn helped Haji Leman boost his business in the region even after the governor, his provincial collaborator, was defeated in the 2005 gubernatorial election. His company has developed oil palm plantations in Murung Raya since the late 1990s, and was granted a timber concession in South Barito in 1999. It also operates coal mining business in South Barito, North Barito, Murung Raya, and Gunung Mas. His local allies have continued to smoothe the way for him. Golkar In South Kalimantan Haji Leman has relied on Golkar for his power base. He has remained the provincial party chairman since 1998, and became a regional representative in the nations highest legislative body in 1999-2004, the MPR (Peoples Consultative Assembly). Although Golkars candidates were defeated in the 2000 and 2005 gubernatorial elections, they won the elections for bupati in Tabalong in 2004; Hulu Sungai Tengah in 2000 and 2005; Hulu Sungai Utara and Tapin in 2002 and 2007; and Barito Kuala in 2007. Haji Leman has coal mining businesses in all these districts. His company was also granted timber concessions in Tabalong in 2001 and has developed 12,000 hectares of oil palm plantations in Tapin since 2008. However, the flipside of greater opportunity is increased uncertainty. Haji Lemans allies in government are mostly in their second term. They are not allowed to run again in the next elections. So he will need to put forward other friends. It is also impossible to predict how well Golkar will do. If his friends and connections go down, Haji Leman will go down with them. But in that case others will replace him. There are many other local power brokers like Haji Leman competing for the spoils in the provinces. Akiko Morishita (akikomori77@gmail.com) is adjunct research fellow at Monash University Malaysia, in Petaling Jaya.

Fascinated by Versace Beautiful living in Indonesia is possible if you are superwealthy Ben Knapen Indonesia is a poor country, at least on average. But there is also a small rich upper layer of the exhibitionist kind. That Warsito Sanyoto lives here is beyond doubt. His name appears in large letters on the pedestal of one of the statues in the driveway. And that man underneath the pillars and the

Arcadian dome standing before his front door, with his striking silk shirt, the gold chains and the rubies in his rings, waving affably that man we know from the photo. Warsito Sanyoto (62) is a lawyer of the exhibitionist kind. And superwealthy. He has lived in his dream home three years now, with his (third) wife Nila (32), and for some time now also with their child of 18 months. Warsito is fascinated by Versace and by Italy. Why Italy? Because of the mafia, he answers with a laugh. Extravagant is an understatement of his preferences. Domes with Arcadian scenes, pompous sofas with built-in remote controls, classical statues, huge lamps covered in leaf gold, curly balustrades, cupid angels, a fake open hearth, chandeliers, glazed porcelain, a stuffed tiger. And then his Roman swimming pool in the middle of the house, and high above it a sliding roof. Female statues with naked upper torsos pour water into the pool like lusty fountains. Flown in from Italy. I played with the idea for a while of becoming mayor of Solo, thats when I covered the breasts with veils. Otherwise it might go a bit too far for a would-be politician in a prudish Islamic country. But in the end he dropped the political career. Trust me, I am a lawyer, is written in big letters next to the swimming pool bar. Trust me, I am a lawyer, is written in big letters next to the swimming pool bar A painting a metre and a half wide and three metres tall depicts a Javanese scene. Half naked nymphs descend from heaven. One is losing her dress to the hands of the man who will marry her. That man is Warsito. Each of the six nymphs represents his wife. Nila: I had to pose for days, not with naked breasts, mind you! They also have their own mosque in the house, good chilled wine, and a weights-training gym. I work out three times a week, an hour and a half. Warsito wants to stay young. His adrenaline also rises for cars. He has everything a boys heart could desire: BMW, Jaguar, Mercedes, Porsche, etc, etc. Warsito loves to talk about Solo, where his family is of royal blood. His own mausoleum is ready there, with a cupid in the corner, wearing a little loincloth for any possible sensitivities. But I will not make further compromises. Ahmad deNy Salman (reachdeny@gmail.com) On the bedroom wall are two plasma flatscreens. One is connected live to the neighbouring childrens room. Flatscreens Bang & Olufsen are for that matter everywhere. Wherever you are with Warsito and Nila, you can always hear the noise of the same old Rambo film. But then Warsito disappears behind a small glass door in their bedroom. It turns out to be a lift that takes him to his walk-in-wardrobe-cum-dressing-room above. So he produces his own epiphany, time and again. A carpet lies there, made of the hides of 200 koala bears. That is how the conversation turns to animals, environment, good causes and what have you. Where do your own philanthropic interests lie? I have for years been a member of The Lions Club.

Ben Knapen was NRC Handelsblad correspondent in Jakarta. He is now state secretary for Europe and development in the Dutch cabinet. A version of this article first appeared in NRC Handelsblad, 16 April 2007, the fourth in a ten-part series. Translation by Gerry van Klinken. Used with permission.

Lifestyles of the rich These newsbriefs present snapshots of how the rich live . . . and die Gerry van Klinken Wealth managers Standard Chartered Plc plans to hire 100 relationship managers for its onshore wealth management business in Indonesia over the next one or two years. We believe the Indonesia onshore market is big, said Lanny Hendra, general manager for wealth management in Jakarta, in an interview on Friday. Standard Chartered is targeting onshore wealth starting from the priority banking level of $50,000 in assets and upwards. The bank has been marketing its services at shopping malls, looking for those who may never have used a wealth manager. A global and domestic crackdown on tax evasion could encourage new money to be invested in the country, while some clients were moving funds back to Indonesia from offshore centres to invest in the countrys surging bond and stock markets. (Neil Chatterjee, Interview - Stanchart hiring Indonesia wealth managers, Reuters, 29 January 2010) Luxury cars The trend of purchasing luxury cars started when the government allowed the import of completely built up cars in 1997. The moment to realise their dreams was welcomed by the superrich of the country. PT Grandauto Dinamika sold 157 Jaguars in 2002, up 50% from 2001. Ferraris are produced in limited quantity and Indonesia gets a quota of only eight cars a year. All eight Ferraris were sold out almost instantly, including the rare, extremely exclusive Ferrari Enzo, as only three were allotted here out of the 300 worldwide. The number of Bentley cars in Indonesia is less than the number of fingers of both hands, said Tryfena Sri Rahayoe, marketing communications specialist of PT Grandauto. She said that only about 150 Bentleys were produced for the entire world and most Asian countries were allotted only a small number, sometimes even only one Bentley for Indonesia. Another challenger in this high-end segment is one of the world's extremely luxurious brands, Maybach. Only five Maybachs will be available this year due to its exclusivity. (Burhanuddin Abe, Reflection of achievement, prestige and status, The Jakarta Post, 27 January 2004) Singapore shopping sprees

Wealthy women from Singapore are being outnumbered in their own backyard by their well-heeled sisters from Indonesia. Singapore has some 16,000 women millionaires worth an average of US$4.2 million, a survey by private bank RBS Coutts has found. These Singaporeans own a combined US$71 billion, and represent a huge potential market for the private banking industry in Asia. If that is impressive, then cast an eye on the bankable and wealthy Indonesian women in Singapore. They number 20,000 and hold in their manicured hands some US$93 billion an average of more than US$4.6 million each. That makes them more numerous and somewhat richer than their Singaporean counterparts. (Siow Li Sen, Reaching out to manicured millionaires, The Business Times (Singapore), 25 April 2009) Recreational cemetery Here on the outskirts of Jakarta, an Indonesian developer is taking a very American idea in real estate -- the exclusive, upscale cemetery and adding a twist: a country club, complete with swimming pools, a boating lake and a big Italian restaurant. San Diego Hills is based on the renowned Forest Lawn cemetery in Glendale, Calif. Banking tycoon Mochtar Riady saw Indonesias middle class balking at putting loved ones to rest in overcrowded government-managed cemeteries, and sensed a business opportunity. We're giving families another reason to keep coming back to visit their departed loved ones, manager Mr. Francisco says. In addition to paying their respects they can be entertained, too. Developers have earmarked 500 hectares of rolling tropical countryside for the project equal to the combined land area of Jakartas 95 crowded public cemeteries. Lippo executives say up to one million people could be buried here. Mr. Francisco says he is aiming for $19 million in sales in the first year. (Tom Wright, Death takes a holiday: a recreational cemetery, The Wall Street Journal, 14 February 2007)

http://www.forbes.com/lists/2010/80/indonesia-billionaires-10_rank.html