The purchase of shares in Bayan Resources by businessman Andi Syamsuddin Arsyad is an example of how oligarchic power operates.

Backed by political power, oligarchs conduct their business, even by stepping on others' toes. Andi Syamsuddin, popularly known as Haji Isam, is suspected of having received support from President Prabowo Subianto in acquiring another company with state assistance through financing from Bank Mandiri.

The acquisition of a 30.25 percent stake in Bayan Resources has further expanded Isam's coal conglomerate. This year, Jhonlin Baratama, Isam's coal company that purchased the Bayan shares, is extracting 60 million tons of coal. Combined with Bayan's production of 58 million tons, the scale of the business surpasses that of Bumi Resources and Adaro Andalan Indonesia, two of Indonesia's coal giants.

The purchase price for the Bayan shares was Rp26.1 trillion. When the transaction was completed on October 7, 2026, Bayan shares were trading at Rp12,550 apiece. At that price, the fair value of the 10.1 billion shares Isam purchased was actually Rp126.5 trillion. Yet Low Tuck Kwong, Bayan's Malaysian controlling shareholder, agreed to sell them for just Rp2,588 per share.

An investigation by this magazine has uncovered the dark side of an acquisition that appeared smooth on the surface. Low Tuck Kwong was struggling to operate Bayan as its production was projected to fall from 68 million tons last year to 38 million tons, following production quota cuts by the Ministry of Energy and Mineral Resources.

The cuts prompted investment rating agencies to downgrade Bayan's business outlook from stable to negative. Datuk Low needed a partner who could persuade the Energy Ministry to approve Bayan's work plan and budget. This was where Isam's offer came in. But Isam was suspected of lacking sufficient funds to buy Bayan shares, whose value had soared amid the coal industry's boom.

President Prabowo Subianto is suspected of intervening. Information obtained by this magazine indicates that Prabowo held a meeting at his private residence with Purnomo Yusgiantoro, a former energy minister and former Bayan commissioner who now serves as the President's Special Advisor on Energy. The two discussed Bayan's business prospects.

After the meeting, the acquisition plan moved forward. Subsequently, a financing option emerged from Bank Mandiri, currently the country's largest state-owned bank, in the form of a Rp40 trillion loan: Rp26.1 trillion to purchase the Bayan shares, with the remainder allocated as working capital for Jhonlin.

At Bank Mandiri, the massive loan approached the lending limit for a single corporation. Moreover, the collateral offered was not commensurate with the size of the loan. Isam pledged two companies, Pradiksi Gunatama and Jhonlin Agro Raya, whose valuations tend to fluctuate with their share prices on the stock market. To manage the risk, Bank Mandiri even had to issue US$750 million in perpetual bonds on the Singapore exchange, carrying a yield of 7.35 percent, to bolster its capital reserves.

The credibility of a state-owned bank is at stake. Prabowo is replaying an old New Order tune, when public funds held by banks were used to finance business projects affiliated with government officials and their cronies. When those businesses failed, the state bailed them out with hundreds of trillions of rupiah through Bank Indonesia Liquidity Assistance. The monetary crisis spilled over into an economic and social crisis as investors lost confidence in the management of public funds.

Now, with major banks owned by the state, the government, as their shareholder, is once again undermining corporate governance. The power play behind the Bayan share acquisition became increasingly apparent after the Energy Ministry approved an additional 20 million tons in coal production quotas for Bayan. The decision came shortly after Low Tuck Kwong signed the agreement to relinquish his Bayan shares on September 16, 2026.

It is hardly surprising that Morgan Stanley Capital International has warned that it may downgrade Indonesia's stock market to the standalone market category, the lowest tier in its global equity market classification. The organization cited not only rampant stock price manipulation in the financial markets but also the covert exploitation of investments through political power plays, as seen in the Bayan acquisition, which has eroded investor confidence.

This kind of state-capture corruption only undermines the credibility of Indonesia's economy and further erodes its integrity in the eyes of the world.

– Read the complete story in Tempo English Magazine

Source: https://en.tempo.co/read/2122353/the-power-play-behind-bayans-acquisitio