Michael Shari, Surabaya – When Indonesia's President Suharto fell from power in 1998 and the business empires of his cronies melted down, young Hary Tanoesoedibjo saw a chance to snap up cheap businesses.

Four years later, the 36-year-old CEO of an obscure investment bank in the gritty East Java port of Surabaya has risen to prominence by using his brokerage fees to buy and sell companies that had been stripped from the cronies' shipwrecked conglomerates. The dairy concern Indomilk and the SCTV television station are among his holdings.

Then, in April, Tanoesoedibjo snagged the biggest prize of all: He took control of Bimantara Citra, the Suharto family's flagship holding company, buying most of the stock from Suharto's second son, Bambang Trihatmodjo.

Tanoesoedibjo is a leading figure in a new generation of young Indonesian tycoons. They took advantage of the crisis by betting against the crowd and investing in a diverse range of businesses, from media to finance, consumer goods to luxury brands. These men and women in their 20s, 30s, and 40s are hardly independent entrepreneurs. Most represent the second or third generation of conservative, ethnic Chinese family-run businesses. Many are based in Surabaya, a center of Indonesian manufacturing. Their families survived the Asian crash of 1997-98 with plenty of cash on hand, usually because they ran export businesses whose revenues were in hard currency. Unlike their parents, they were educated in North America and Western Europe, so they were more inclined to take calculated risks during the crisis.

Now this brat pack is picking up where the Suharto family and its ill-fated friends left off. The cronies, taking advantage of connections with the dictator who held power for 32 years, built their businesses with cheap capital and state-sanctioned monopolies. Members of the new generation are not free of the taint of influence-peddling, either. But they are bringing in foreign capital and expertise and are not so reliant on the old, insider ways that dominated the Suharto era.

In most cases, these younger scions are taking over businesses in a deregulated environment, restructuring them, and putting them on a sounder financial footing. "There is a new breed coming up," says Sofjan Wanandi, chairman of the National Business Development Council. "They have started to take over the assets of the conglomerates. I think that's good."

The undisputed leader of the new generation is Tanoesoedibjo, who was born in Surabaya in 1965, the year Suharto came to power. Through a business associate in Surabaya, Tanoesoedibjo developed a personal relationship with Abdurrahman Wahid, who then ran the powerful East Java-based Islamic organization Nahdlatul Ulama and served as President of Indonesia from 1999 to 2001. After earning an MBA from the University of Ottawa in Canada, Tanoesoedibjo returned to Surabaya in 1989 to set up Bhakti Investama, an investment bank. Bhakti's capital base grew with help from George Soros, whose Quantum Fund bought a 15% equity stake in the bank, which it sold back to Tanoesoedibjo last year. After Wahid's election, Tanoesoedibjo developed top-level political connections in Jakarta. He thus got first dibs on assets taken over from failed Suharto-linked companies by the state-run Indonesian Bank Restructuring Agency (IBRA) to cover their debts. "Doors opened for Hary," recalls a Singapore-based distressed-debt expert who follows Indonesian affairs.

Tanoesoedibjo's crown jewel is Bimantara, which gives him control of three businesses he intends to spin off in initial public offerings: the Jakarta television station RCTI, a digital CDMA cell-phone network, and a lucrative franchise that leases aircraft to the archipelago's oil and gas industry. Bimantara also includes real estate holdings and tourist resorts on Bali. The company reported $185 million in revenue and $38 million in profits last year, and its stock price has doubled since January. "There is a lot of hidden value here," says Tanoesoe-dibjo. "The company's existing infrastructure is excellent."

Other young managers have pushed old companies in new directions. Prakasa Alim, 45, is managing director of Surabaya-based kitchenware manufacturer Maspion Group. Maspion is thriving since it took over Revereware and started manufacturing for famous brands such as Dansk and Tupperware. The Hartono family, which owns the Djarum brand of Javanese clove-flavored cigarettes, emerged from the crisis with a healthy balance sheet. In March, Budi and Bambang Hartono, the sons of the founders of Djarum, who now run the company, put up most of a $539 million bid for a 51% stake in Bank Central Asia. BCA, Indonesia's biggest private bank when it was owned by the Suharto and Salim families, was nationalized in 1998. The Salims are longtime government cronies.

Another prominent young business mogul is Hanny Sutanto, 46, who assumed control over a Surabaya-based family soap and detergent business after his father's retirement. He has won admiration for his prudent but aggressive strategy. Late last year, Sutanto's Wings Group led a consortium of three Indonesian companies, including Djarum, that purchased the Salim Oleochemical plant near Surabaya for $120 million from Salim Group. The plant refines palm and coconut oil for use in shampoos.

Other young business titans prefer more glamorous trades. Soetikno Soedarjo, 45, took a big risk during the financial crisis and acquired exclusive distribution rights to a group of luxury brands, including Ferrari and Maserati sports cars, and Harley-Davidson and Ducati motorcycles. Known as the Brand King, he already owned the local Bulgari jewelry store before the crisis. "Everyone said we were crazy, but we made it," declares Soedarjo. Last year, MRA Co., Soedarjo's holding company, raked in $100 million in revenues.

Then there is Francisca Liem, the 24-year-old grandniece of Liem Sioe Liong, patriarch of the Salim Group. She had just got her degree in French literature from Washington University in St. Louis last year when her mother, Maggie Halim, the patriarch's niece, recruited her to run Marmitria Raya Tirta, a Jakarta-based luxury-brands retailer. In late June, Liem opened Indonesia's first Hermhs boutique, exercising an exclusive license that her mother and her "silent" business partner, Martina Sudwikatmono, a relative of Suharto, had acquired in 1998. "I'm the new kid in town," says Francisca. "I'm learning the business from my mother."

Shadowing these new players is Indonesia's reputation as one of Asia's most corrupt business environments. Rumors circulate in Jakarta financial circles that Tanoesoedibjo is acting as a proxy for the Suharto family, that Budi and Bambang Hartono are fronting for the Salim family at Bank Central Asia, and that Hanny Sutanto represented the Salims in the oleochemical deal. Tanoesoedibjo and Sutanto deny these allegations, and the Hartonos have signed statements promising not to sell out to the Salims.

"We will watch what they do next after taking all these assets," says Sri Gunawan, an economics lecturer at state-run Airlangga University in Surabaya. "At the grassroots, the people say we are going to make the same mistakes again." The challenge for the new generation is to avoid those old temptations.