Starting from scratch
Ardhian Novianto | April 25, 2011

Kusumo A Martoredjo is in charge of more than 20 companies worth tens of millions, but he started out with nothing.

Kusumo Martoredjo first went into business out of necessity. It was 1965, one of Indonesia’s darkest political and economic times and his father’s civil-servant wage couldn’t support nine children. To help make ends meet, Kusumo would ngompreng: use his father’s jeep to transport passengers from Salemba to other parts of Jakarta.

During his second year of studying economics at the University of Indonesia, Kusumo was faced with the reality of the tough times. He chose to enter the workforce instead of finishing his studies and has never looked back. “I chose to start working and get into the world of business,” he tells GlobeAsia.

Food shortages in 1966 led the young Kusumo to start a business assisting the government in procuring food. As a government partner, he was responsible for distributing rice to Jambi in North Sumatra. In the precarious political climate, most economic activities were handled in conjunction with the government, he recalls. “For example, the government would just inform me that Medan was short of rice and would assign me to go to Hong Kong to buy it.”

Through his work with the government, Kusumo started to widen his business circles both at home and abroad and this eventually led him to start PT Catur Yasa, a construction company, together with a family member in Medan. One of Catur Yasa’s first projects was with state electricity company PT PLN. 

“The value of that project was very small, only between Rp500,000 and Rp1,000,000 to install a few hundred meters of cable,” he says. Despite small beginnings, the construction company continued to grow and in 1972 landed a project worth hundreds of billions of rupiah.

PT Telkom was building the trans-Sumatra microwave system, the most sophisticated communication system at that time and Catur Yasa nabbed the tender for the construction program from Medan to Sabang in Aceh. The project involved building 22 microwave stations, but did not go as smoothly as Kusumo hoped.

Economic conditions were still uncertain and when the oil crisis hit in 1973 development of telecommunications was delayed until 1978. Still, Kusumo’s contractors and energy businesses continued to flourish. When the World Bank began to cut aid for the construction of power plants in 1992, the government opened the doors to the private sector.

Together with Hashim S. Djojohadikusumo and Sidharta Martoredjo, Kusumo secured power plant projects for Paiton Energy 7 and 8, each plant with a capacity of 600 MW. The value of the projects was $2.5 billion, but would later be turned to zero by the Asian economic crisis. “What can I say? My partner Hashim was affected by the financial crisis and his company should have been included in the program of the Indonesian Bank Restructuring Agency (IBRA),” he says.

The key

Networking is the key to navigating the business world, says Kusumo, adding that he started out with little capital other than a broad network of friends. “When I first started my business, I recruited five Kenshi (people who practice the Japanese martial art Kempo) from Semarang. Quite simply, they are people who I can count on. They have a tradition of discipline.

Generally, they are impossible to cheat. In PERKEMI (The Indonesia Shorinji Kempo Federation) we have a very strong tradition of brotherhood. In almost every project I chose to recruit Kenshi,” he says proudly.

Kempo networking, says Kusumo, helped him secure projects and tenders and many of his Kempo friends were already well-established businessmen. Kusumo even decided to relocate from Medan to Jakarta in 1974 on the advice of his senior in Kempo, who told him the move would benefit his business. “Sensei Sidhartha asked me to open an office in Jakarta,” says Kusumo, today the chairman of PERKEMI’s executive board.

In addition to Kempo, networking with businessmen from the Indonesian Chamber of Commerce and Industry (Kadin) also played a large role in his success. Kusumo has also been active in the Indonesian Young Entrepreneur’s Association (HIPMI) since 1974 and in Kadin since the 1980s. Given the importance of networking in the business world, Kusumo is also a member of various associations, such as the Contractors' Association of Indonesia and the Association of National Telecommunications Companies.

Since moving to Jakarta, Kusumo’s company has been involved in major projects such as the construction of the liquefied natural gas (LNG) plant in Arun, Aceh, a refinery in Balongan and a petrochemical plant in Cilacap. Success, however, has not come without disappointments. His Paiton Energy project never made it off the ground and his coal terminal project in Pulau Laut, South Kalimantan, went bust in 1996.

The monetary crisis necessitated restructuring and wiped his share ownership clean. He had other work to fall back on: In 1996 he secured an operation maintenance contract with PT Freeport Indonesia for 30 years. In the same year, he obtained another 30-year contract with PT Newmont.  Nor did his problems during the economic crisis make him lower his sights: Most recently, Kusumo signed a MoU with partners in Japan and Brunei to build a petrochemical refinery valued at between $8 and 10 billion.

Outside of construction, Kusumo together with several friends has 10 gas stations and four LPG filling stations. “We diversified into various types of businesses, but they are all related to energy and mining,” he explains. Kusumo’s management strategy is to establish a new company for each construction business.

One of the reasons for this is to overcome the problem of large capital requirements. Every project, he says, attracts different investors and shareholders. For Kusumo, the most memorable experience as an entrepreneur is having the ability to rise after a fall, something he has done several times. His early days in his father’s jeep were character-building and his strong networks have always allowed him to bounce back. “I just need to blow the whistle and all my networks will come,” he says with a wide grin.  GA

Post a comment
Please login to post comment

Comments

Be the first to write your opinion!