Jakarta – Two years after former Indonesian president Suharto was ousted from office, large parts of the industrial empire that was forged by his family are still very much in business.
PT Bimantara Citra, a telecommunications and broadcasting group, remains under the control of his second son Bambang Trihatmodjo. PT Citra Marga Nusaphala Persada, a toll road operator partly owned by his daughter Siti Hardyanti Rukmana, or "Tutut," is in the running to win a coveted contract to manage a Jakarta toll road.
The beginnings of an economic recovery have muffled calls for the dismantling of the firms, while the family's ties to the military and government ministries remain too strong to allow such an outcome anytime soon, analysts say.
"The current leadership is indecisive on whether [a purge of Suharto's family from the corporate sector] would not upset a lot of people in their own ranks," said Manish Singhai, a vice- president at Alliance Capital Management in Singapore. Although the premium attached to the companies' connections evaporated soon after Mr Suharto was thrown out of power by popular discontent on May 21, 1998, the fortunes of Bimantara and Citra Marga are not entirely tales of a dynasty in decline.
"The system hasn't come down as hard [on these companies] as many people expected it would," said Calvin Ho, vice-president and senior portfolio manager with Citicorp Investment Bank (Singapore), which manages $150 million worth of Indonesian assets.
While calls now for Mr Suharto's prosecution on corruption charges make headlines daily and foreign firms steer clear of the former first family, many Suharto firms remain largely untouched.
Bimantara continues to run the country's most-watched private television station, RCTI, and owns stakes in the popular Jakarta shopping mall, Plaza Indonesia, and its most fashionable hotel, the Grand Hyatt.
Analysts also point out that the company is well-positioned to take advantage of growth in the country's telecom business through its 7 per cent stake in Satelindo – a mobile operator that also has a 14 per cent market share of international calls. Bimantara's loss narrowed 20 per cent to 218.4 billion rupiah (S$44 million) last year, thanks to foreign exchange gains.
Not surprisingly, its shares have done better than the Jakarta Composite Index in the two years since Mr Suharto's downfall. The shares have more than doubled compared with the index's 25 per cent gain in that period.
Citra Marga hasn't fared as well. The company reported a 61 per cent decline in 1999 profit. Still, it seems set to win a lucrative contract to manage the Jakarta Outer Ring Road, analysts said. It also continues to operate the toll road from the Jakarta airport to the city.
"The fundamentals of these companies are okay," said Steven Lim, portfolio manager, Daiwa SB Investment (S), which manages S$500 million of funds in Singapore. "However, institutional buying interest is low. The perception is that they are linked to Suharto and unlikely to be well-received. They're local favourites since the price is not too high."
Although these companies are no longer guaranteed government contracts and first go at lucrative franchises, they have shown greater resilience than had been expected of them, analysts said.
"These companies will carry on business as usual" because "the government has many problems to solve before" it can conduct "probes against them and possibly seize their assets," said Eric Poh, fund manager at ING Investment Management Asia Pacific (S) Pte, which manages US$1.2 billion worth of funds in Singapore.
Not all the six Suharto children are faring well. Youngest son Hutomo "Tommy" Mandala Putra, whose fortune was built on oil- delivery contracts he won when his father was president, was forced to sell his 60 per cent stake in Italian sports car maker Lamborghini SpA as his business empire collapsed. His Humpuss group is Ibra's third-largest debtor, owing it 5.5 trillion rupiah, and the Indonesian government is considering nationalising the company's unfinished US$100 million plant at Cikampek, near Jakarta. The plant, to build "Timor" model cars, was mothballed by the country's recession and by demands from the International Monetary Fund that the government retract favourable tax breaks given to the company.
Investors also warn that Bimantara and Citra Marga may be taken over by the government as pressure on President Abdurrahman Wahid's government intensifies to charge Mr Suharto and his family for the excesses of his reign.
After the probes, the first family will likely have "a minimal or no role in the companies", Mr Lim said. That may not be so bad for the companies, both of which have a lot of assets, and are "run by professionals", said Ahmad Munawar, Jakarta-based analyst with OCBC Sikap Securities.
For now, though, the Suharto family is sitting pretty. Mr Suharto and Mr Bambang still keep their homes in the wealthy central Jakarta neighbourhood of Menteng.