Ty­coon wants to make In­done­sia global player in food sup­ply

The China Post - - WORLD BUSINESS -

Peter Son­dakh, the In­done­sian bil­lion­aire, made his fame and for­tune turn­ing around sickly sta­te­owned en­ter­prises into hugely prof­itable com­pa­nies.

He launched in 1986 In­done­sia’s first pri­vate tele­vi­sion com­pany and rolled out Asia’s first pre­paid telecom­mu­ni­ca­tion ser­vices in 1997 — at the on­set of the Asian fi­nan­cial cri­sis.

He res­cued a cig­a­rette maker from the brink of bank­ruptcy and made Se­men Gre­sik — now Se­men In­done­sia — the num­ber one player in the coun­try’s ce­ment in­dus­try.

Now, the Ra­jawali Group chair­man and chief ex­ec­u­tive of­fi­cer has set his sight on mak­ing his com­pany a global gi­ant in the palm oil busi­ness.

His game plan may even help Felda Global Ven­tures Hold­ings (FGV) re­verse its own wan­ing for­tune.

“I am hop­ing that FGV will make a lot of money from this deal,” he told StarBiz at his of­fice in cen­tral Jakarta’s busi­ness dis­trict re­cently.

He talks about the po­ten­tial syn­ergy be­tween the two com­pa­nies. Ra­jawali’s Ea­gle High Plan­ta­tions Tbk has a lot of land, 425,000 hectares, scat­tered across In­done­sia, while FGV had the ex­pe­ri­ence in the down­stream side of the busi­ness.

“If not in In­done­sia where else can it (FGV) grow?” Son­dakh asked.

He also dis­missed claims that pro­ceeds from the ex­er­cise — FGV is pay­ing close to 2.8 bil­lion ring­git ( US$740.4 mil­lion) for a stake in Ra­jawali’s plan­ta­tion busi­ness — will be used to pur­chase as­sets from 1Malaysia De­vel­op­ment Bhd (1MDB) projects.

“I am not in­vest­ing in new prop­erty projects in Malaysia. Maybe in other things, but not prop­erty,” he said. His fo­cus is to build in In­done­sia. In Jakarta, near its head­quar­ters, the Ra­jawali Group is com­plet­ing work on its latest lux­ury ho­tel — the St Regis Jakarta — which is sched­uled to open next year.

Son­dakh is ranked sixth rich­est in In­done­sia by Forbes with an es­ti­mated net worth of US$2.3 bil­lion.

That gave him a lot of clout in a re­gion where busi­ness and pol­i­tics of­ten mix.

“I al­ways work with an in­sti­tu­tion in my joint ven­tures,” he said.

FGV on June 12 an­nounced it had en­tered into heads of agree­ment with Son­dakh’s Ra­jawali group to ac­quire a 37 per­cent stake in PT Ea­gle High plan­ta­tions Tbk for US$680 mil­lion.

It is also buy­ing Ra­jawali’s sugar cane plan­ta­tion for US$67 mil­lion.

Ea­gle High has a to­tal land bank of 425,000 hectares — in Kal­i­man­tan, Pa­pua New Guinea (PNG) and Su­lawesi. About 160,000 hectares of its land had been planted.

Son­dakh sees PNG as the game changer for the in­dus­try.

It’s huge land mass and prox­im­ity to China — the big­gest mar­ket for palm oil prod­ucts — makes the area the hottest plan­ta­tion spot for global play­ers.

Sime Darby Bhd in Oc­to­ber last year bought New Bri­tain Palm Oil Ltd, which has 135,000 hectares of plan­ta­tion land in PNG for US$1.74 bil­lion.

It was a missed op­por­tu­nity for FGV.

The com­pany, which had seen its prof­its tum­bling in re­cent quar­ters, said the part­ner­ship with Ra­jawali will trans­form the com­pany into one of the world’s largest fully in­te­grated oil palm plan­ta­tion com­pa­nies.

Pres­i­den­tial Bless­ing

Son­dakh said he had met Pres­i­dent Joko “Jokowi” Wi­dodo over the deal with FGV, and he said the pres­i­dent was keen on the tie-up as an op­por­tu­nity to im­prove the liv­ing stan­dards of more than 2 mil­lion In­done­sia farm­ers.

Son­dakh’s close re­la­tion­ship with the top of­fice in In­done­sia goes back a long way since the days of Sukarno.

“I know Me­gawati Sukarnop­u­tri since we were younger,” he said. Me­gawati was In­done­sia’s fourth pres­i­dent and a daugh­ter of Sukarno.

Son­dakh came from a fam­ily that had been in the com­mod­ity busi­ness since the 1960s.

They were first in the co­conut busi­ness, which Son­dakh took over in 1984.

Later in 1986, he started In­done­sia’s first pri­vate tele­vi­sion net­work Ra­jawali Ci­tra Tele­visi In­done­sia (RCTI) with Bam­bang Tri­hat­modjo, one of the sons of then Pres­i­dent Suharto.

Son­dakh no longer owns RCTI, but he is mak­ing a come­back in the broad­cast­ing in­dus­try with the launch of Ra­jawali TV in May this year.

His part­ner­ship with the pres­i­dent’s son brought him closer to the ad­min­is­tra­tion.

In 1991, Son­dakh was called in to take over debt-laden cig­a­rette maker Ben­toel Group from its pri­vate own­ers.

Re­luc­tant at first, Son­dakh de­cided to give it a go af­ter some per­sua­sion.

Ben­toel’s debt restruc­tur­ing process took six painful years, but by March 1997 the com­pany had paid off all its for­eign bor­row­ings.

That timely de­ci­sion spared the com­pany the worst of the wild cur­rency swings dur­ing the Asian fi­nan­cial cri­sis of 1997/98. Ben­toel was listed in 2000 and later ac­quired by Bri­tish Amer­i­can To­bacco for US$700 mil­lion.

While Son­dakh was keep­ing busy putting Ben­toel’s fi­nan­cials in or­der, he was again asked by the gov­ern­ment in 1996 to take over a fledg­ling telco.

Seiz­ing the op­por­tu­nity, he launched Asia’s first pre­paid ser­vices in 1997 and by 2002 had gained a 15-per­cent sub­scriber mar­ket share in In­done­sia.

In 2005, Son­dakh sold part of the com­pany PT Ex­cel­co­mindo Pra­mata (XL) to Telekom Malaysia Bhd.

The next year, he was tasked by then Pres­i­dent Susilo Bam­bang Yud­hoy­ono to buy out Mex­i­can Ce­mex Group’s 25-per­cent stake in Se­men Gre­sik — a listed ce­ment pro­ducer.

Son­dakh put down his own money and ended up with a 25-per­cent stake in Se­men Gre­sik, while the In­done­sian gov­ern­ment holds 51 per­cent of the com­pany.

He asked for full man­age­ment con­trol to turn around the com­pany and by the time he sold out his stake in March 2010 the stock had risen from 1,800 ru­piah (US$0.13) in July 2006 to 7,000 ru­piah.

The com­pany, which had changed its name to Se­men In­done­sia and con­trols a 42-per­cent mar­ket share in the coun­try, is cur­rently trad­ing at around 12,000 ru­piah.

“I be­lieve in cre­at­ing val­ues for our part­ners,” Son­dakh said.

In­done­sia, with its abun­dance of nat­u­ral re­sources and healthy de­mo­graph­ics, should be a mag­net for for­eign in­vest­ment, but a slew of ob­sta­cles make it a tough sell for in­vestors to come in.

For plan­ta­tion com­pa­nies, buy­ing huge tracts of land in In­done­sia is never easy nor cheap.

The law stip­u­lated that only listed com­pa­nies can own more than 100,000 hectares of plan­ta­tion land. This puts a huge val­u­a­tion pre­mium on listed planters.

First Re­sources Ltd., which has 190,000 hectares in In­done­sia, is cur­rently traded at about US$17,000 per hectare.


Thai dancers at­tired in tra­di­tional cos­tumes per­form a rou­tine dur­ing the launch of Thai Air Asia’s di­rect flights from Ban­ga­lore to Bangkok, in Ban­ga­lore on Mon­day, June 29. Air Asia, the low-cost air­line, is of­fer­ing an in­tro­duc­tory air fare of 3,999 In­dian ru­pees (US$62.63) each way to fly be­tween the Thai cap­i­tal and the south­ern In­dian city.

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