Adapting to a changing world economy
The Bakrie Group will continue to play an active role in contributing to the Indonesian economy as it has done over the past 70 years, says the heir apparent of the group, Anindya Novyan Bakrie. Experiencing the ups and downs of the Indonesian economy under various governments since the Japanese occupation, Bakrie has done its fair share in building the Indonesian economy.
How far does a single business group determine the direction of a national economy? While the Bakrie Group doesn’t want to claim such a formative role, it does see itself as a critical element.
“We continue to feel that we are a proxy of the Indonesian economy. And for us, a rising Indonesia as shown by the current economic indicators would mean a rising Bakrie Group as well,” Anindya Novyan Bakrie told GlobeAsia on the eve of the World Economic Forum to be held in Davos, Switzerland.
Anindya, the third generation of the Bakrie family, said Bakrie Group wants to lead in two categories. The first is domestic consumption, which makes up two thirds of GDP, with a presence in telcoms, media, property, toll roads and infrastructure and exports, and second through the commodities sector – coal and minerals and agribusiness.
“All these constitute competitive-edge investments. If the economy of the country is getting better, the companies will also get better,” he stated.
Anindya, 37, said the investment grade awarded to Indonesia by Fitch Ratings in December was a very important achievement and a benefit for public companies. “In this regard, Bakrie Group owns the largest number of listed companies in Indonesia. We have ten listed companies and one listed in London.”
The oldest son of Aburizal Bakrie, Indonesia’s eighth richest man whose net worth is $3.8 billion according to GlobeAsia’s 2011 Rich List, said the Bakrie Group the success of the companies depends on a number of factors. “We have to add the number of good human resources. The businesses must include a process which gives added value. For example not just exporting the coal but building power plants. Telcoms not just the services but also the content provider,” he said.
Touching on whether Indonesian business brands can become world icons, Anindya cites the examples of Komodo, the Raja Ampat islands, batik, coffee, cocoa, the bamboo musical instrument angklung, all strong brands despite the lack of promotion. “It’s all a matter of marketing and promotion. We can learn from the Americans on this,” he said.
Anindya commented on the World Economic Forum theme “transformation through collaboration.” He noted that the Bakrie Group has adapted to the changing world economy and business by what he calls “re-inventing ourselves.”
“During the past 10 years I personally experienced three major changes, democracy replacing authoritarian rule, decentralization as our commodities go beyond the regions and deregulation which we saw as changing to a free market. And Bakrie Group ensures professionalism in business. Although the group now owns an average 35% stake of the companies, good management and governance have been achieved.”
“Then it’s internationalization. Bakrie Group has traded coal and telecommunication products with China while using Western technology in building toll roads. The last factor is regeneration. Top-level management are people in the average mid-forties although the group is 70 years old. We call all this “reinventing ourselves.”
Anindya adds that the world has changed and therefore collaboration is needed. While global growth is 4%, the United States and Japan 2%, Europe 0.5%, Indonesia is experiencing 6% or more.
“Still there must be collaboration. No matter how well we are doing, we still have to rely on financing and technology from others. WEF chairman Prof. Klause Schwab was right about hosting the annual World Economic Forum in Davos and then splitting it once every six months with a WEF in other parts of the world. He is aware about the need for such collaboration,” he said.
On Bakrie Group’s strategy for the next decade, Anindya said the group will remain as the proxy of the Indonesian economy, aiming to raise the current $700 billion economy twofold and double income per capita from $3,000 as well.
Bakrie Group will also aim for internationalization with a regional base and make investments outside the country such as in Mauritania, Nigeria and Australia, where the group is discussing tie-ups in energy and agriculture.
Anindya, a deputy chairman of the Indonesian Chamber of Commerce and Industry (Kadin), said the group has teamed up with UK Ernst & Young Entrepreneur Award winner Ladi Delano, who set up a joint venture based in Lagos with an investment of $1 billion to do business in Africa.
Touching on his initiatives to develop the Nusantara Fund to assist ‘technopreneurs’ and Nusantara Venture for small and medium enterprises, Anindya said the schemes are working.
“Nusantara Venture deals with business ideas and software. We aim to focus on six start-up companies a year. There have been a lot of requests but we need to be sure the money will be paid back so it can be used for other investments. As for Nusantara venture, it’s also very promising and we are allocating Rp100 billion for now.”
The group originally known as Bakrie Brothers was founded as a general merchant and commission agent by Anindya’s grandparents back in 1942. It has now grown a host of assets. There is the coal business, operated through Bumi Resources, whose core business includes coal exploration, mining and sales in Indonesia and overseas. Bumi mines account for 23% of the country’s total coal production.
The group also owns Bakrie Sumatera Plantation, one of the fastest-growing crude palm oil plantation companies in Indonesia. It has Energi Mega Persada, an active upstream oil and gas company, which operates 10 oil, gas and coal bed methane assets. In 2004, under Bakrie Telecom, it launched a Code Division Multiple Access (CDMA) telecommunications service with the brand now popular as Esia.
One of its infrastructure arms, Bakrieland Development, has turned into a property company with one of the highest levels of market capitalization in the Indonesian Stock Exchange. Its portfolio ranges from city property, landed residential developments and hotels and resorts in strategic locations. GA