Jose Manuel Tesoro, Batam – Before he ruled all of Indonesia's 13,000 islands, he was in charge of just one. B.J. Habibie came about Batam the same way he later got the country. It was handed to him by a patron high in government. Not Suharto but one of the ex-president's longtime cronies: Ibnu Sutowo, head of state oil company Pertamina, which once managed the island. Under Habibie (and helped in no small part by Southeast Asia's export and investment boom early this decade), the island gobbled up Suharto's New Order development – progress so fast its residents still gasp in wonder. Slick roads and bright new towns were sliced out of its forested hills. Mountains of red earth were tossed aside to make way for golf links, shipyards and electronics factories. The dust of construction sites was the fresh air of opportunity.

Through Batam soon ran a wonderfully numbing, bountiful flow of money. Total private investment, mostly from Singapore and Japan, reached over $5 billion last year. The island is home to manufacturing and ship repair, as well as a sizable tourist industry. In 1996 Batam was responsible for nearly a tenth of the value of Indonesia's non-oil and gas exports, which then totaled $38 billion. What is the secret of Batam's success? Simple. Its geography is its destiny. Singapore and its wealth are just 20 km away. Habibie embellishes that fact with his own special Balloon Theory. He says Singapore is like a balloon filling up with air. If the air does not find another container, the balloon will burst. Ismeth Abdullah, present chairman of the Batam Industrial Development Authority (BIDA), puts it less graphically: "If Singapore grows, Batam grows."

With the island destined to become rich, who could resist sating themselves on the flood of dollars? Certainly not Batam's laborers, who came from all over Indonesia to earn higher wages – at least 27% more than they would make in Jakarta today. And certainly not its prostitutes, taxi drivers and hotel workers, who await the weekend influx of lower-to middle-class Singaporeans who spend an average of $180 at the island's slick resorts or flashy discos. Last year more tourists went to Batam than to Bali, to enjoy such attractions as indoor skiing and seafood palaces in which over 3,000 people can gorge at one sitting. While the rest of Indonesia is reeling, Batam is still coasting.

The flood of money has not bypassed the island's bureaucrats. Last financial year the municipal government earned $2.8 million. That is well above the average in Indonesia, but the real money pot belongs to BIDA. Headed by Habibie from 1978 until he became vice president in March this year, BIDA oversees all of Batam's investments and land, as well as the real estate of the islands nearby. It leases parcels out to the factories and hotels, charging tariffs of up to $19 a square meter.

The money certainly tempted Habibie's own family. He made his brother-in-law Sudarsono Darmosuwito chief of BIDA's daily operations. The retired major-general soon built a small business empire. Among other activities, Sudarsono leads a consortium to develop some 350 ha of waterfront land, at the moment occupied by a stilt-and-wooden-walkway slum with a spectacular view of Singapore's towers. His wife, Habibie's younger sister Sri Rejeki Sudarsono, heads the Batam Family Foundation. In June, BIDA denied that her foundation held an informal monopoly over the operation of the island's schools and hospitals. But the Sudarsonos do have an interest in at least one monopoly: the island's water distribution company.

Other Habibie relatives have fed off Batam. Son Thareq Kemal and brother Suyatim "Timmy" Abdulrachman each won rights to build ship facilities on the island. They, and another Habibie son, Ilham Akbar, also have interests in the firm that manages the 320-ha Batamindo Industrial Park, the biggest of Batam's factory complexes. Another company partly owned by Timmy is involved in sea transport. The Habibie family's partners in their many Batam enterprises read like a who's who of the New Order: Suharto crony and tycoon Liem Sioe Liong and sons Bambang Trihatmodjo and Hutomo "Tommy" Mandala Putra.

Money, or even just the promise of it, was what brought them as well as nearly all of Batam's 400,000 people to a place that, for all its development, is desolately artificial, like a factory floor. It's the same money that satisfies citizens and muffles critics, as it did throughout Suharto's New Order. That is why, even now, echoes of the old days reverberate on the island. Don't blame Habibie's family for participating in booming Batam, says local religious leader R.D. Sulaeman. "If it's for the good," he argues, "then go ahead."

There was some change on the island when Batam's man Habibie became president. His brother Junus "Fanny" Effendy, whom he had appointed to succeed him at BIDA, resigned. And, surprisingly, in a place without activist universities or independent unions, there suddenly appeared a "Batam Reformation Committee." Its aim, declares chairman Bambang Sujagad Susanto, is to attack the system that gave rise to corruption, collusion and nepotism. The achievements it claims, though, are far more modest, such as the removal of a fee on exported sand and a 10% value-added tax on goods and services. Are these among the most worrying of Batam's failings? Susanto, sitting in his office under a wall-size picture of himself shaking hands with Suharto, explains: "Ninety percent of Batam's [issues] are economic."

For a reform movement, the group's members are very establishment. The commission includes bureaucrats from BIDA. Susanto, a travel-agent turned shipyard-owner, is the head of the chamber of commerce and a former chief of the local chapter of the ruling group Golkar. Both posts were once held by Habibie's brother-in-law Sudarsono. "If [these people] are there," says a local hotel consultant, "reform won't work on Batam. They will brake, brake, brake." Susanto and Sulaeman (who is not a committee member) explain what they are striving for is "peaceful reformation" – which sounds a lot like reform at a pace that does not shake the foundations of the rich and powerful. "Everyone has an interest," says a local journalist.

If there have indeed been cases where connections were misused, says BIDA's Abdullah, that "belongs to the past." He does pledge greater transparency (in, for example, how BIDA spends the land tariffs it collects) as well as less corruption. But he also has his mind fixed clearly on development and expansion. The island continues to gird itself with infrastructure. The latest, which Habibie inaugurated on August 10, is a lengthy road-and-bridge project connecting Batam with six neighboring islands.

Links are something the hundreds of unemployed young men and women at Batamindo Industrial Park wish they had. They come looking for jobs that no longer exist on their home islands. But unless someone they know gets them past a factory's gates, nobody who matters will see their applications. Just one name on the inside – the flimsiest of connections – can mean the difference between surviving on a paycheck or on handouts. Twenty-one-year-old Nita, from West Sumatra, has been waiting outside factory gates for two months. "This is still the New Order," she says bitterly. "When you see Habibie, tell him this."

Why hold Habibie responsible? Because he molded Batam in the image of the New Order. It is his past; he cannot escape it. The wider responsibility is still Suharto's. Under him, corruption, collusion and nepotism nationwide were not discouraged. The former president's system – in which development and stability took precedence over fairness and justice – would probably have shaped Batam anyway, with or without Habibie. But what is undeniable is that, right up till Suharto's inglorious end, Habibie never fought that system.