John McBeth, Jakarta – Tucking into a plate of fruit, a late-afternoon substitute for his missed lunch, Rizal Ramli laughs when asked if he's an economic nationalist. But he doesn't reject the label. It seems to have stuck since Ramli, a prominent American-educated consultant, led an Indonesian outcry over the giant Salim Group's decision to shift ownership of its crown jewel, Indofood Sukses Makmur, to Singapore.

Ramli says moving the headquarters of the world's biggest noodle-maker offshore amounts to capital flight–and he isn't worried about Salim's threats to sue him for that assertion. "Salim has had so many privileges over the past 20 years, it should be setting a good example," he argues, echoing a sentiment that's been widely expressed in the Indonesian press.

Out on the newsstands, the weekly Forum Keadilan magazine seemed to say it all for critics like Ramli. Under a cover picture of Salim founder Liem Sioe Liong waving out of his limousine's open window, it asked: "Is it true? Will Uncle Liem 'Flee' to Singapore?"

Well-founded or not, the criticism of Salim raises concerns that other Indonesian businesses seeking to extend their corporate reach overseas may get the same treatment. More and more Indonesian companies are making such moves, looking to tap opportunities abroad and avoid perceived political risk at home. The question of how far they can go may be tested again in the months and years ahead.

But businessmen, economists and analysts alike feel Salim is a special case because of its singularly high profile and the cosy relationship it has enjoyed over the years with President Suharto's government. After all, other Indonesian groups have gone overseas recently without being singled out. Forays into Singapore by conglomerates Sinar Mas and Raja Garuda Mas drew little public reaction. No one has batted an eye about the Lippo Group's newly forged corporate links with China Resources, a subsidiary of China's Ministry of Trade and Economic Cooperation. Not so long ago, an alliance like that would have been seen as almost traitorous in Indonesia, where the loyalty of the ethnic-Chinese business elite is such an extremely sensitive subject.

Ramli insists he isn't opposed to companies going offshore, and he doesn't seem too fussed about the government's encouragement of business links with China. "But the legal shifting of assets is a different story," he says. "Why can't Salim raise capital here? With an earnings growth of 25%-30%, Indofood is a good play. Indonesia is the largest market in Asean, and it's still growing. Why can't Indofood just set up marketing offices in the places it wants to expand into?"

The uproar began on July 15, when Salim's Indocement Tunggal Prakarsa announced it was spinning off its 50.1% stake in Indofood to QAF Ltd., a Singapore-listed food company. This wasn't a sell-off: Three Salim-owned companies hold a substantial majority of QAF, and Indonesian government officials say the move doesn't violate the country's foreign-ownership rules.

Anthony Salim, the group's chief executive officer, says the move will allow Indocement to focus on its core cement business while giving Indofood new opportunities throughout Asia. Instead of starting from scratch, Indofood can utilise QAF's existing network in Singapore, Malaysia, Thailand, China, the Philippines and India to expand sales of food, beverages and consumer goods in those markets.

The one real impediment could have been the August 14 flotation of the rupiah, which exacerbated Indofood's large, unhedged U.S.-dollar-debt burden. But Indocement expects the deal will be approved at a shareholders' meeting set for August 21. "The deal will go through as is," says company spokesman Simon Subrata, who describes the currency crisis as "only a short-term phenomenon."

Perhaps, but the political questions surrounding the transaction are more fundamental. Although Indocement waited until after the May 29 parliamentary elections to make its announcement, critics still linked its move with the increasing political uncertainties surrounding what many believe is the autumn of the Suharto presidency. As one Jakarta-based broker noted: "Because Liem is seen as a business partner of the president and his family, it now looks like the group is cutting away and hedging its risk."

Certainly, the strength of the outcry caught the Salim Group by surprise. "We expected there would be a comment," says Executive Director Benny Santoso, "but we were surprised at the reaction in the press. We believed this was purely a business decision–otherwise we could have done it a lot more quietly."

As it was, the biggest broadside came from Ramli's Econit Advisory Group, which argued that Salim's economic and political importance could lead other companies to follow its example, sending Indonesia's economy into free-fall. "You can argue it is business as usual with some companies," Ramli says, "but you can't make that argument with Salim."

Given the fact that the government owns 25.73% of Indocement and 10.18% of Indofood, the deal clearly had official sanction. And as the criticism mounted, Suharto unleashed two government heavyweights–Coordinating Minister for Production and Distribution Hartarto and State Secretary Moerdiono–to ward off accusations that Salim's move demonstrated a lack of nationalism.

Far from putting capital to flight, Hartarto said the deal would generate a capital inflow of 1.7 trillion rupiah ($658 million)–the difference between the 4.2 trillion rupiah Salim would make from the sale of Indofood and the 2.5 trillion rupiah it would spend to purchase new shares from QAF. Hartarto noted that on top of that, the Indonesian government would receive 122 billion rupiah in income taxes and 100 billion rupiah from dividend taxes as a result of the restructuring.

Some questioned the need to field top government officials to defend Salim. "What this showed was the direct intervention of the president," says Syahrir, managing director of the private Institute for Economic and Financial Research. Syahrir complains that Moerdiono tried to make Salim "look like a hero" by referring to the change of ownership as "new nationalism."

Djisman Simandjuntak, executive director of the Prasetya Mulya Management Institute, feels it's unfair for critics to single out Salim. "Somehow, Salim is always considered as the group which benefits the most from its connections with the government," he says. "But I think that needs to be analyzed in greater depth. All big business groups have benefited from the same privileges, especially when we had very inward-looking policies."

But the fact that it was Salim moving assets offshore clearly upset Indonesian sensibilities. The group has major interests in many of the country's key industries, from cement and food to property, chemicals, palm oil and other agribusiness ventures. And when many ethnic Indonesians question Salim's patriotism, they're expressing a deeper discomfort. After all, nationalism takes on a special meaning in a country where 70% of the economy–including Salim–is controlled by a tiny ethnic-Chinese minority.