When autocratic president Soeharto fell in May 1998 after almost 32 years of rule with steady, robust economic growth, he left behind an economy in shambles floating on a corrupt bureaucratic system polluted by business cronyism and nepotism.
So fragile was the foundation of the economy that the crisis caused one of the most substantial wealth destructions in modern history. The rupiah melted from Rp 2,500 to the dollar in mid-1997 to as low as Rp 17,500 and pushed an estimated 30 million people into dire poverty as the economy contracted by 14 percent in 1998.
Soeharto's fall certainly set off a devastating backlash against Liem Sioe Liong (aka Sudono Salim), who had been the leader of Soeharto's business cronies and had owned the largest conglomerate in Indonesia and controlled the country's largest private bank; vast oil palm plantations; flour milling, cement, noodle and cooking oil businesses; and hundreds of other companies.
Most analysts and politicians then predicted that the tornado of anti-crony backlash would wrench away all Liem's assets and crushed the Salim Group as political pressure and demonstrations virtually demanded 'blood' in revenge.
Liem did lose most of his business assets, including Bank Central Asia (BCA), almost 300,000 hectares of oil palm estate, automobile and cooking oil companies and cement industries, as he had to pledge hundreds of companies, worth more than US$5.5 billion, to the government as security to cover debts incurred during the economic crisis.
But less than 15 years later, the Salim Group has not only survived but has grown to become one of the largest conglomerates in Southeast Asia.
Forbes magazine last year put Anthony Salim, Liem's youngest son, who replaced his father as the CEO of the Salim Group, at number three on its list of the 50 richest Indonesians, with an estimated $6.3 billion in assets spread out across Indonesia, Singapore, China, Australia, the Middle East and Africa.
The latest book on Liem and his business group by husband-wife authors Richard Borsuk and Nancy Chng, Liem Sioe Liong's Salim Group: The Business Pillar of Suharto's Indonesia, documents how Liem had gained Soeharto's trust since the 1950s and eventually became his most trusted business crony and financier for more than three decades.
Many books and articles have been written about Liem and other Chinese Indonesian businessmen who thrived during Soeharto's rule, but this book is quite special because it includes the results of many hours of interviews with Liem and Anthony between 2006 and 2007.
These interviews were the first time Liem, who died on June 10, 2012, and Anthony had talked to writers on a wide range of topics because the Salim Group had always been averse to publicity.
It is to the credit of Borsuk, who had more than 40 years of journalistic experiences in Asia, including in Indonesia as the Asian Wall Street Journal's correspondent from 1987 to 1998, and Nancy, a scholar and business analyst with experiences in Thailand and Indonesia, that their perseverance and good reputation enabled them to gain Liem and Anthony's trust.
Another factor that made the 573-page book rather outstanding and credible is that it is not an autobiography. The writing was, from the outset, undertaken as an independent venture. It was neither authorized nor financed by the Salim Group or the Liem family, the authors assert.
Further contributing to the book's empirical richness and analytical depth, is that the authors also conducted research in Jakarta, Singapore, Hong Kong, Fuqing ' Liem's hometown in China; Kudus ' his hometown in Indonesia; and Semarang, as well as interviewing Liem's business partners and rivals.
The authors also interviewed executives from the Indonesian Bank Restructuring Agency which, on behalf of the government, took over Liem's assets during the height of the economic crisis, business and political analysts and the executives of the International Monetary Fund (IMF), which gave bailout funds to the government and actively took part in supervising Indonesia's economic management from 1997 to the early 2000s.
The most interesting parts of the book, which reveals many new facts, are the last seven of the 22 chapters as they show blow-by-blow how Anthony's strategic business vision and acumen brought the group through the hostile political atmosphere and adverse business climate.
Describing how difficult and dilemmatic the problem he encountered in mid-1998 soon after B.J. Habibie replaced Soeharto, Anthony told the authors 'he [Habibie] hated me like hell' because the Salim Group CEO had urged Soeharto in early 1997 to give then vice president Try Sutrisno a second term.
The book provides insight into how Antony demonstrated his business skills and prowess in negotiating the settlement of the Salim Group's huge debts, incurred mostly through the failure of Bank BCA, with IBRA while many politicians, including several Cabinet ministers, simply demanded the dismantling or confiscation of the Salim Group's assets.
He showed his strategic business vision by striving hard to maintain Indofood (flour milling and noodle) as the only major enterprise within the Salim Group after pledging more than 105 companies to IBRA for its debt settlement.
The flour and noodle business turned out to become his main cash cow which greatly aided in the reacquisition of most the business assets he lost in 1998, and even aggressively expanding businesses in dozens of other countries.
The authors tell in a journalistic style the dominant role Liem's businesses played in the economy and on to describe how an emotional-based nationalization of the Salim conglomerate not only would wipe out any chance of the government to recoup the billions of dollars in central bank credits to BCA but also would cause severe economic disruptions.
Then president Habibie did face a delicate balancing act as he underwent tremendous time pressures to complete debt settlements with the Salim Group and hundreds of other big debtors, many of whom were the business cronies of Soeharto and his children or his relatives, before they tried to strip their assets.
The high-quality analysis and the depth of the material presented in the book rightly commend Liem's business acumen, skill, instinct, serendipity and networking skills, high talent in choosing the right business partners and ability to win the trust of people, including Soeharto's generals.
Liem, as Soeharto's most-trusted business crony, did receive favors and preferential treatment such as monopoly rights in many commodities and businesses, but all this also was related to Soeharto's mission to develop the economy out of the shambles left behind by Sukarno.
Liem and Soeharto, thus, were simply tied in mutually beneficial relationships. Soeharto needed seed money for economic development as the government was strapped in a liquidity crisis in the mid-1960s and for keeping the military loyal. Liem with his sharp business acumen and access to funds from overseas was well fitted to become Soeharto's best business crony who, being of Chinese descent, did not pose any political threat to Soeharto.
After the crisis, Liem and his successor Anthony have proven their business group can thrive without patronage. As Anthony once said he and his father did had good access to capital in the early days, but credit should not be given only to capital formation. The important thing is what happens after that.
True, during the Soeharto era, there were many people who had the same access to capital but they did not manage it properly.
Liem himself once told the authors that he was successful because things had fallen into place for him. He had been at the right location, at the right time and had the right connections.
In another quotation summing up the role of Liem, the book cites excerpts from an obituary article by Endy Bayuni, former chief editor of The Jakarta Post, on Jan. 12, 2012: 'For good or for bad, Liem is very much part of Indonesian history, just as Soeharto is. He just happened to be the right man at the right place and at the right time and used this historical destiny well in building his business empire.'
Liem Sioe Liong's Salim Group: The Business Pillar of Suharto's Indonesia
Richard Borsuk and Nancy Chng
ISEAS Publishing, 2014