Before We Forget Some of These Greats

 

A couple of months ago, I was catching up with two good friends, Yeow Teck Chai and Tan Koon San, over dim sum at a restaurant in Mutiara Damansara. Teck Chai is about my age, while Koon San is several years our senior. Both spent their careers in public service. Teck Chai rose to become Deputy Director-General of the Malaysian Industrial Development Authority (MIDA), while Koon San retired as Malaysia’s ambassador to a European country and as a representative of an international agency. He is also a prolific author and, although he didn’t say it, a Datuk.

As close friends often do, we exchanged stories and laughed over the idiosyncrasies of some of the movers and shakers we had known personally. I was particularly happy to share my experiences with several of my former bosses. During the conversation, I mentioned that I had once written a manuscript entitled On the Emperor’s Shoulder, but never succeeded in getting it published because it was deemed unpublishable by my most formidable editor and critic—my wife, Saw Hwa.

Naturally, they wanted to know about the title.

I explained that my late father was a devoted follower of spiritual Daoism. At the beginning of every lunar year, he would acquire the latest edition of the Tōng-shū (通书), the traditional Chinese almanac, and diligently study its many prescriptions, taboos, and cultural observances for the year ahead. Villagers frequently sought his advice when selecting auspicious dates for ceremonies, weddings, house-moving, or the commencement of important ventures.

According to my father, the almanac classified my birth under the category of being “on the emperor’s shoulder”. The interpretation was straightforward: I should never aspire to become a great lord or a powerful boss. However, I could expect a reasonably comfortable life.

There was, however, a caveat. The emperor’s robe, my father liked to remind me, was made of silk and therefore difficult to cling to. One could easily slip and fall. Looking back, his prediction turned out to be remarkably self-fulfilling. My career and life unfolded very much along those lines.

The stories in this proposed book are not all entirely factual. Like everyone else, I am susceptible to moods, biases, and the distortions of memory. Some episodes may have been embellished for dramatic effect, while others have been softened or abbreviated for reasons best left unsaid.

My intention is not to disparage anyone. Rather, I hope to share with readers both the greatness and the human quirks of a number of remarkable corporate leaders with whom I had the privilege of working. Yet beauty, as the saying goes, lies in the eye of the beholder. Some individuals may not appreciate my portrayal of them. For that reason, certain names and organisations have not been fully identified. Nevertheless, discerning readers may still recognise the fingerprints of people and institutions they know. I shall leave the guessing to them.

I remain deeply indebted to many of the personalities featured in these pages. I learned much from them—lessons in leadership, business, ambition, resilience, and, occasionally, human folly. Whatever modest successes I may have achieved owe something to their influence. Unfortunately, I could never quite rise beyond the limits that the Tōng-shū appeared to have ordained for me.

It is therefore fitting that I begin with one of the greatest entrepreneurs I have ever had the privilege to work with—the legendary Tan Sri Lim Goh Tong.

If readers are happy to indulge these recollections, I shall continue to share more chapters from this “unpublishable” book.

 

4

Genting Sempah

 

I joined the Genting Group in September 1977. It was already a formidable name by then. The name Genting was, and still is, synonymous with its founder, the late Tan Sri Lim Goh Tong. Moreover, its former general manager, Tan Koon Swan, had also made a name for himself in politics as well as in the corporate world. With the Supreme and Multi-Purpose groups, he was heading to big leagues as well. Tan became the president of Malaysian Chinese Association (MCA) but never made it to the cabinet. His saga is too well documented for me to bore readers here.

But few know how the name Genting came into being. In Chinese it reads 云顶or Ying Ding. Ying by itself means ‘cloud’ and ding means ‘top’, as in rooftop. It certainly sounds appropriate—with the resort sitting right at the top of Gunung Ulu Kali and clouds hugging it. So, Genting is ‘Cloud-top’ to those reading the name in Chinese. But I believe the name was derived from Genting Sempah. If you look at the Pahang map, you will find Genting Sempah right at the foothill of Genting Highlands. This name was in existence well before Tan Sri Lim developed Genting Highlands. I may be wrong, though.

But the pioneers of Genting should be saluted for choosing a very tasteful name for the resort. Whether in Romanised form or in Chinese, they sound good. They could have settled for ‘Silver-top’ or ‘Money-top’, for ying in Chinese can also mean ‘silver‘ (银, yin) or ‘money‘. Fortune is the obsession of many, but only those with wisdom know the value of subtlety.

 

Hello, it is Saturday

It was Saturday. I was ready to pack up for home when the phone rang. Silly me, how could I be so assuming?

“Yu Bok, we have to go Pahang to see the menteri besar today. Get ready.” The voice was distinctly that of the Old Man (no derogation intended; it was a just a way of showing respect when we referred to our ultimate boss those days.) He hung up as soon as he finished what he had to say. You were simply not given a chance to waste his time.

The drive to Kuantan was a pleasant one, especially if you were travelling in a big Mercedes. It still took a few hours, though. The sun had already set by the time we reached Kuantan. We called on the director of the Land and Mines Office and he was happy to receive us in his home. A few more meetings followed. By the time we checked into the Hyatt, it was already close to midnight.

My wife must have been concerned, as I did not have a chance to call her before I left the office (there were no mobile phones back then). But I have the most understanding wife. Saw Hwa always takes these things well. She was already fast asleep when I reached her.

After a quick bath, I headed for the bed straightaway. There was still some revelling going on in the hotel. Someone told me earlier that the sultan would be around. I was too tired for anything.

Few hotels were thoughtful enough to provide toothbrushes and toothpaste those days. The next morning, I had to use my fingers…

I had nothing clean to change into. I thought I would be able to pick something up from the arcade, but I had to wait, as the shops would only open at around 9 or 10 am. I bought a batik shirt, and I could not find any briefs. Too bad. I had to make do with the one I had been wearing.

 

* * *

 

Sunday was not an off day for some of us in Genting. It was the day Tan Sri Lim would go around inspecting all the civil and engineering works that were being carried out around the resort. As always, he started his day early. He would gather the key construction executives in the coffeehouse or the theatre restaurant, give a few instructions here and there, and jump into his waiting car. Everybody would scramble towards his vehicle to try to catch up with him. The resort is quite a sprawling mass of land but lose him at your own risk!

Wherever he went, you just had to follow, and make sure you brought a notebook along. By the time he headed for his suite, your Sunday was as good as gone. But Tan Sri Lim was not an inconsiderate man. You could take a day off every week if you wanted to, as long as it wasn’t a Sunday.

 

* * *

 

The resident architect CH and I decided to go up to Genting by helicopter one Sunday. We wanted to catch the first flight. But the weather was simply impossible. Segambut, where the helipad was situated, looked very sunny, but the traffic controllers at the resort advised us that visibility there was too poor. So, we waited.

The resort was staging a big show. It was one of the first big-money affairs for its very impressive new theatre restaurant. The girls were from France, all very pretty. Two of the showgirls were also waiting at the helipad to go up. CH and I chatted them up. They were very friendly. Weathermen at the resort continued to give ‘no-fly’ advice. Before long, we ended up having lunch with the two girls in one of the nice restaurants in town. By the time we finished lunch, it was too late to head up the hill.

The next day was Monday. Tan Sri Lim was early as usual. The phone soon rang. The secretary said, “Yu Bok, Old Man wants to see you. Where is CH?”

I never missed my Sunday outings with Tan Sri Lim again, no matter how bad the weather was.

 

* * *

 

“Yu Bok, ask Captain to bring a few 955s and RBs to the golf course. I want to do something there.”

The golf course at the resort was not very great then. Enthusiasts had it that the course was not well-designed. Some remodelling work was therefore ordered. Ron Fream, a leading golf course architect, was commissioned to do the job.

There was an undulating tract behind the clubhouse. Nobody had any earthwork drawings. But Captain Lim was one of the few who had the uncanny ability to do exactly what Tan Sri Lim had in mind as far as earthwork went. And the 955s and RBs just cut and cut…

Tan Sri Lim was like an army commander and I, his aide-de-camp, had no choice but to stand next to him. But I did not have the slightest idea of what he had had in mind for this battle front. A few colleagues who happened to come by asked me what was being built. A new swimming pool? A new clubhouse?

Honestly, I did not know. And none of the above.

After one week of sunbathing, I looked over-tanned. Tan Sri Lim had also run out of steam. Before he walked back to his car, I heard him telling Captain Lim, “Plant grass.” Or did I hear him wrongly?

 

955s, 977s and Alab-Bee

“I want you to buy some second-hand 955s, 977s and alab-bees, you see so-and-so.”

This was the instruction given to me by Tan Sri Lim. I was still quite new at Genting. Although I had some project management experience, it was basically on high-rise buildings. I had never done land development before. But how could I ask Tan Sri Lim what 955, 977 and alab-bee were? I would be out of my mind. Did I want to lose my job?

“977, 977, alab-bee” were exactly the figures and words I wrote in my notebook. They had had to do with earth-moving equipment, I was convinced. After the ‘class‘ had been dismissed, I took the company car, a Peugeot 503, and went around the grounds searching for these beasts.

I was not disappointed—Caterpillar 955 and 977 tractors were busily at work everywhere. And you could not possibly miss Captain Lim’s alab-bees either—the always reliable RB draglines.^[1]

 

* * *

 

When you have a boss like Tan Sri Lim, you learn to be very resourceful.

CH came to me one day, “Yu Bok, you know Chinese. Do you know what the Old Man wants?” It was Tan Sri Lim’s own handwriting, in Chinese of course. He wanted us to do some improvement to the 脚死诺 (chiao-sei-nor). What is chiao-se-nor? He had gone around asking; nobody could help.

That was easy. Without hesitation, I enlightened him. “Casino.” You have to be a Hokkien to understand another Hokkien. Tan Sri Lim was thinking in Hokkien when he wrote the three Chinese characters.

Leg in Chinese character is pronounced chiao in Mandarin, but when it is read in Hokkien, it becomes kar. 死 (se) is pronounced xi in Hokkien, which means ‘die‘ or ‘dead’. Nor (like in Mohamed Noah Omar) is more abstract, it formed part of the name of Tan Sri Lim’s Malay partner, written in Chinese. Taken together and read in Hokkien, it simply means ‘casino’.

I heard this from another acquaintance the other day. He also had the ‘privilege’ to be in Tan Sri Lim’s Sunday entourage when he went round inspecting works at the resort. Tan Sri Lim wanted some work to be done at “C 楼.” He wrote it clearly on a piece of paper: the letter ‘C’ and楼 (loah, for building, storey, or apartment block, depending on usage). Pronounced in Hokkien, it should mean ‘C Block’. Or so everybody thought! But there was no C Block there. What he meant was see lau—in plain Hokkien, the fourth level!

 

* * *

 

This also came from a colleague: After a visit to one of the work sites, Tan Sri Lim wrote 刘 (liu, surname), and 水 (shuĭ, water). In Hokkien, 刘水 is pronounced lau chwee.

Everybody was asking everybody else, “Who is this contractor Lau Chwee? Tan Sri Lim is looking for him.” Tan Sri Lim was furious; he had pointed out a water leakage problem at one of the sites and it had yet to be rectified after a whole week.

But he was not looking for a contractor named Mr Lau Chwee. He was saying that the place was 漏水 (lau chwee), or had ‘water leaking through’!

 

Oops, maybe?

All our architects, engineers and surveyors were a very qualified lot, but each time a plan was submitted to the Old Man, I noticed that he would for sure show some disapproval; few drawings survived without the need for amendments. This tendency of his did cause anxiety and uncertainty. I also observed that he did not bother to refer to the plans when he himself directed work at site, which he often did on Sundays.

Something did not look quite right to me; his dismissal appeared too sweeping. Maybe he didn’t really know how to read technical drawings? My team was asked to suggest how a parcel of a hillock had to be cut. That should be a fairly simple do; nonetheless, I asked for four sets of drawings to be prepared, with minor variations (in contours and colours). True enough, the Old Man expressed ‘concern’ over the first drawing.

“Never mind, Tan Sri, maybe you can take a look at the second proposal?” I asked.

Turning to the second drawing, he immediately said it was better. I asked him if he would like to see more. He signed on the third drawing! Onsite, none of the drawings were used when we did the actual cutting. And yes, I found a way to handle the Old Man!

 

5

What, the Old Man Wants to Change the Provincial Boundary?

 

I had a dream. I dreamt I worked for a company called Above-the-Clouds Berhad in a country called Bumiland…

 

* * *

 

The company was founded by a great entrepreneur Tan Sri Lin. Above-the-Clouds owned a hill resort that went by the same name.

“What, the Old Man wants to change the provincial boundary?”

This was CH’s reaction when I told him that Tan Sri Lin wanted us to realign the boundary of some of the lots in the Above-the-Clouds resort to make them more efficient in terms of land utilisation. CH was the in-house architect, and I was the development manager of the company developing the Above-the-Clouds resort, the most popular holiday destination in the country.

Tan Sri Lin originally had some 15,000 acres of land straddling two provinces in Bumiland—Gnahap and Langoser—alienated to him. He had to favour some friends and associates, but the bulk of the land, about 12,000 acres, still remained with Above-the-Clouds and its related companies, of which about 80 percent was in Gnahap, and the rest in Langoser.

In some parts of the country, watersheds determine provincial boundaries. This was apparently true in the case of the Above-the-Clouds resort, that sat smack on the Central Range of Bumiland. Looking in the northerly direction, you have Langoser if the rainwater flows westwards; otherwise, it is part of Gnahap.

The flagship hotel actually sat on two provinces. But both the provincial governments were very accommodating; they even formed a joint committee to administer the Above-the-Clouds resort. With the type of building by-laws we had in Bumiland, any building had to be hundreds of feet away from provincial boundaries. That meant that in the case of the Above-the-Clouds resort, you could only build in the ravines in most stretches.

Tan Sri Lin knew every square inch of the Above-the-Clouds resort. He had a vision of transforming the resort into a few thriving townships, one of which would of course be named after him. The ridges had to be flattened!

The telephone rang. It was the Old Man. We trooped into the meeting room equipped with many copies of the contour map of the resort. The inborn surveyor in Tan Sri Lin reached out for his favourite pencil—a hexagonal or octagonal rarity that was red on the one end and blue on the other—and began to draw a new provincial boundary…

The result looked very fair – and a little here to benefit Langoser, and a little there to please Gnahap, all very equitably apportioned. Neither Gnahap nor Langoser seemed shortchanged. But he did not realise that he was drawing a new provincial boundary…

You had to take Tan Sri Lin seriously. When he was drawing those lines, you could feel the intensity of his chi. This concentrated energy could melt all the reservations. You actually believed it could be done!

Tan Sri Lin did not wait for the drawings. The in-house draughtsman took too long to do even a simple thing like this. A day or so later, Captain Lin’s^[2] army of earthmovers and dump trucks began to storm the border. The commander was Tan Sri Lin himself.

 

* * *

 

My dream did not last long enough. Or maybe I couldn’t remember the ending. I am not sure if the provincial boundary had in fact been violated. But come to think of it, after the ridges had been flattened, how could you tell where the watersheds were? There was no GPS those days.

Not everybody has the opportunity to contemplate changing provincial boundaries. You have to be someone in Tan Sri Lin’s class to do that. He is indeed an extraordinary man. He makes the impossible happen. Even if you were afforded Tan Sri Lin’s opportunity, would you be able to do what Tan Sri Lin had done?

---

[1] Mechanised crawler-excavators manufactured by Ruston-Bucyrus.

[2] Tan Sri Lim’s cousin. 

China and Indonesia: The Sweet and Sour Relationship

 

This is a sequel to my previous article. I initially intended to include these thoughts there, but I feared burdening readers with too much at once.

I honestly think Indonesia's present situation reflects the return of a Suharto-era mindset – embodied by President Prabowo Subianto.

Prabowo's Suharto-Era Baggage

During the New Order, Prabowo was a star. As Suharto's son-in-law (he married Siti Hediati Hariyadi in 1983; they divorced in 1998, the same year Suharto fell), he enjoyed direct access to the centre of power and patronage. He was not merely a general but a member of the "Cendana" family—named after Suharto's residential street. That proximity, however, also became his vulnerability.

When Suharto collapsed in May 1998, Prabowo was dismissed from the military and briefly fled Indonesia.

The divorce itself is telling. It occurred during the chaotic months of Suharto's fall and is widely seen as a political necessity – the Suharto name had become toxic. This event forced Prabowo to begin his long, difficult rebranding as a nationalist leader independent of his former father-in-law.

Yet while the family tie is gone, the professional and psychological imprint remains.

Prabowo embodies the Dwifungsi (Dual Function) era, when the military held formal, powerful roles in politics, social affairs, and the economy. His nationalism is old-school: territorial-integrity-first. Authoritarian tendencies linger, as does economic nationalism. He has criticized the neoliberal, open-market policies that emerged after 1998, and his brand of resource nationalism – insisting on self-sufficiency, opposing foreign ownership of key assets – echoes the crony-capitalist, state-controlled model of the late Suharto years, albeit without the same family conglomerates.

Still, after the 2019 election, when he joined Jokowi's cabinet as Defence Minister, Prabowo began rebranding. He ran for president with Jokowi's son as his running mate, explicitly tying himself to Jokowi's popular, development-focused, democratic, and relatively moderate platform.

That calculation has since unravelled. After his election victory, Prabowo has become his own man. Much of the Jokowi influence has faded, including the sidelining of his vice president to politically insignificant roles. He is already restoring the military to a larger, more respected role in national affairs than it held under Jokowi.

Formative Years Abroad
Prabowo's father, Soemitro Djojohadikusumo, was a prominent opponent of President Sukarno and went into self-exile. The family moved frequently during Prabowo's childhood:

• Elementary school in Singapore (1957–1960)
• School in Hong Kong (1960–1962)
• Junior high at the Victoria Institution in Kuala Lumpur (1962–1964)
• Later schooling in Zurich and London
• As a young army officer, he attended the Singapore Institute of Management

His professional formation, however, remained tied to the Suharto era. He trained at the National Military Academy (1970–1974) and rose rapidly through the elite inner circle. In the 1980s, as a captain in Kopassus (the army's special forces), he attended the Special Forces Officer Course at Fort Benning, Georgia.

(Irony: Despite his American training, Prabowo was banned from entering the United States after Suharto's fall, due to alleged human rights violations related to the kidnapping of activists and events in East Timor. That ban has since been lifted—he has visited as Defence Minister and now as President.)

His formative years were international, yet the political and military culture that shaped his adult worldview remains rooted in Suharto's New Order. And like Suharto, Prabowo knows he can extract wealth from local Chinese for Indonesia – and believes he can also corner mainland China geopolitically.

Chinese Indonesians: Convenient Scapegoats, Convenient Suckers?
To assess this claim, we need history.

A Millennia-Long Presence
Chinese presence in the Indonesian archipelago spans over two thousand years. The earliest interactions were commercial, dating to the Han Dynasty (206 BCE–220 CE). The first documented Chinese arrivals were Buddhist monks traveling trade routes: Fa-Hien stopped in Java in 413 CE; I-Tsing lived in Srivijaya (Palembang) for years in the 670s–690s.

The first permanent Chinese settlement is believed to date from the late 13th century. By the 15th century, distinct, continuous communities flourished. According to a Sundanese manuscript, Chinese migrants arrived near the Cisadane River (present-day Tangerang) around 1407—the Benteng ("fortress") Chinese, one of the oldest continuous communities. Lasem in Central Java is another ancient site; a translator for Admiral Zheng He arrived there in 1413 and found a thriving Chinese community.

The Kingdom of Demak
The Demak Kingdom—the first Islamic sultanate in Java – was founded around 1478 by Raden Patah. Javanese tradition holds that he was a nobleman descended from the last king of Majapahit, granting Demak legitimacy as successor state. Some accounts, however, claim he was a remnant of Zheng He's entourage (Cek-ko-po) or a half-Chinese named Jin Bun, son of Majapahit's last king and a Chinese concubine. I tend to disagree: Raden Patah was thoroughly Muslim, not Hindu.

Regardless, his Chinese cultural connection is undeniable. The Wali Songo (nine saints) who helped establish Demak also had strong Chinese ties – one, Sunan Gunung Jati, journeyed to China, married a Ming princess, and founded the kingdom of Cirebon.

That said, Chinese heritage does not automatically translate into pro-China sympathies. The current leadership in Taiwan is a case in point. The historical detail above is merely anecdotal.

Colonial Era: Racial Hierarchy
The Dutch East India Company (VOC) transformed the Chinese community from independent traders into a managed, exploited colonial underclass. The Dutch encouraged Chinese immigration, viewing them as skilled artisans and crucial economic intermediaries between colonizers and native Javanese. Chinese were given roles as tax collectors, opium farmers, and monopoly managers.

Batavia (Jakarta) grew from a few hundred Chinese in 1619 to over 10,000 by 1740. Fearing rebellion, the Dutch ordered a massacre in 1740, killing an estimated 10,000 ethnic Chinese—their bodies dumped into the city's canals. In the 19th century, massive numbers of laborers (coolies) were contracted from southern China to work tin mines (Bangka, Belitung), gold mines (West Kalimantan), and sugar plantations.

Suppression Across Eras
The systematic suppression of Chinese Indonesians was deliberately engineered. The Dutch used divide et impera—a racial hierarchy with themselves at the top, "Foreign Orientals" (Chinese, Arabs) in the middle, and pribumi (native Indonesians) at the bottom. Chinese were confined to Pecinan (Chinatowns), forced to carry passes, and made visible agents of colonial extraction.

After independence, colonial structures evolved:

• 1946: Over 650 Chinese killed in Tangerang during the National Revolution.
• Sukarno era: "Ali Baba" policies forced Chinese owners ("Baba") to have native Indonesian ("Ali") as public-facing partners. In 1959, non-citizen Chinese were banned from rural businesses—tens of thousands relocated or left.
• 1965–66 massacres: After a failed coup, the military blamed the PKI and, by extension, China. Over 500,000 (some say 1 million) killed; an estimated 30,000–300,000 ethnic Chinese among them.
• Suharto's New Order: Forced assimilation (pembauran). Chinese-language schools and media banned. Chinese New Year (Imlek) forbidden. Chinese pressured to adopt Indonesian names and carry special citizenship booklets.
• May 1998 riots: After the Asian financial crisis, Suharto's dying regime scapegoated ethnic Chinese. Over 1,200 died (mostly in fires); over 100 Chinese women documented as victims of systematic rape.

Core causes across all periods boil down to economic envy (Chinese control ~70–75% of private economy despite being 2–3% of population). The other is political scapegoating. An unresolved debate over what defines an "Indonesian" – assimilation versus pluralism.

Post-1998 reforms repealed discriminatory laws, recognized Confucianism, and declared Chinese New Year a national holiday.

(When I was there in mid-2000 prospecting land for oil palm, native Indonesians had become welcoming to regional investors (Malaysians, Singaporeans). Mainland Chinese had not yet arrived in force.)

Prabowo: A New Suharto?
Indonesia's government is short of money. It is now promoting the Danantara Patriot Bond – trying to leverage longstanding relationships with the nation's wealthiest conglomerates to fund development. Ethnic Chinese conglomerates dominate the upper echelons of the economy. Naturally, they are the primary targets.

The bond carries an interest rate of just 2% (benchmark ~5.8%) to finance national strategic projects. In the first round, USD 3.1 billion was raised from 46 prominent tycoons—40 of them ethnic Chinese.

From Suharto's cukong system to Jokowi's requests for new capital (Nusantara), successive governments have relied on wealthy conglomerates to finance strategic projects. In return, these conglomerates receive political goodwill, protection, and privileged access to licenses and state contracts.

Why do they comply?

• Regulatory dependence: Their core businesses (pulp and paper, property, petrochemicals, consumer goods) operate in heavily regulated sectors. They need state approvals for land, environmental licenses, and permits.
• Political vulnerability: As a minority with immense economic power, Chinese-Indonesian tycoons have historically been scapegoated. Maintaining visible cooperation with the sitting administration is strategic self-protection.
• Pragmatic nationalism: Prabowo's economic nationalism is pragmatic, not ideological. He partners with the established capitalist class rather than seizing assets. 

Voluntary Investment or Coercion?
Officially, it is a patriotic call. But context suggests powerful expectation. In March 2025, President Prabowo met with seven of the "Nine Dragons" tycoons at the presidential palace to directly ask for their help. For business leaders whose empires rely on state goodwill, such a high-level request carries immense weight. As one analyst put it, participation is simultaneously an investment, a signal of loyalty, and a hedge against political risk.

The bond's 2% interest rate—far below market returns—confirms that primary motivation is not financial gain. This is a "soft, domestically sourced credit channel wrapped in nationalist symbolism."

Indonesia's Fiscal Squeeze
Based on official data from April–May 2026, Indonesia faces significant budget pressure from two major programs:

• Free Nutritious Meal (MBG) program: Prabowo's flagship initiative, allocated Rp 335 trillion for the year. Spending is front-loaded—Rp 36.6 trillion (USD 2.17B) absorbed by late February 2026 as beneficiaries surpassed 60 million.
• Energy subsidies and compensation: Rp 381.2 trillion (USD 22.61B).

Fiscal reserves (SAL) are only USD 25–27 billion. Finance Minister Purbaya Yudhi Sadewa has confirmed that even with oil at $100/barrel, the deficit can be kept around 2.9% by using reserves. But sustained high prices could breach the 3% ceiling – which is why the government is trimming MBG and asking all ministries to find efficiencies.

Conclusion: Where Else to Turn?
The pattern is familiar. When Indonesia faces fiscal pressure, it turns first to its ethnic Chinese conglomerates for capital – offering political protection in return. When the economy tightens further, and public frustration rises, those same Chinese Indonesians become convenient scapegoats. Prabowo has inherited Suharto's playbook, not just his worldview.

And what of mainland China? Prabowo believes he can extract investment and geopolitical deference while simultaneously playing the nationalist card at home.

Whether China will accept the role of "convenient sucker" remains an open question. But for Chinese Indonesians – caught between state extraction and popular resentment – the sour taste is already familiar.

End

Is Indonesia Turning Against China?

 

I wrote two articles on June 2, but decided not to publsih them at that time, out of respect for my friends in Indonesia. Having since watched developments unfold and reflected fruther on the issues, I feel that it may now be appropriate to share them.  

This is the first article.

Three recent decisions by the Prabowo government are likely causing concern in Beijing. The first two have military implications, while the third highlights the economic risks China faces when investing in countries it considers friendly.

A Realignment of Indonesia’s Foreign Policy?

A few months ago, Indonesia and the US discussed a proposal to give US military aircraft broader access to Indonesian airspace. Although Indonesia’s Defence Ministry claims the proposal is still under review and no binding agreement has been reached, it may effectively be a fait accompli.

When the news broke, I found it hard to reconcile this apparent shift with President Prabowo Subianto’s earlier rush to attend China’s September 2025 Victory Day Military Parade in Beijing — a trip initially postponed due to domestic unrest. That gesture had given China the impression that Prabowo is a geopolitical realist and a potential partner.

China will likely be unhappy about US overflight rights, but before Beijing could formally react, Indonesia announced another significant move. It has now agreed to a US request to establish a maintenance hub for US military C-130 Hercules aircraft on its soil. Prabowo has approved the plan, designating Kertajati Airport in West Java as the proposed location.

This decision followed the elevation of bilateral military relations to a "Major Defense Cooperation Partnership" (MDCP) in April 2026. The framework formalizes collaboration on military modernization, joint exercises, and logistics support.

Is Indonesia realigning its long-standing non-aligned foreign policy?

A key concern is that the facility could evolve beyond a maintenance centre. If the hub is exclusively for supporting US military operations in Asia, it could be perceived as a US military base in Indonesia, potentially dragging the country into broader geopolitical conflicts.

While the government insists the initiative aims to strengthen Indonesia’s domestic defence industry, the hub is a concrete outcome of the upgraded April 2026 defence partnership.

Indonesia straddles some of the world’s most important maritime chokepoints, especially the Strait of Malacca. Easier US military access to Indonesian airspace and deeper maritime cooperation could improve US monitoring and operational reach around the Malacca Strait and surrounding seas — developments China would view as threatening.

As US-China rivalry intensifies, Beijing is likely to be extremely unhappy with such hedging by Indonesia. From China’s perspective, balancing trade relations is one thing, but jeopardizing China’s military interests is a red line — much as with Japan and the Philippines. China expects neutrality from its neighbours.

Time to Squeeze China Economically?
On May 20, Prabowo claimed that Indonesia lost nearly US$1 trillion in resource wealth over 34 years due to deceptive trade practices. That same day, he unveiled a set of new export controls. A special state-owned enterprise named Danantara Sumberdaya Indonesia (DSI, a subsidiary of the sovereign wealth fund Danantara) has been appointed as the sole exporter.

From June 1 to August 31, 2026, companies must begin transitioning their transactions to DSI, which will handle all contracts with foreign buyers. Effective September 1, 2026, DSI assumes full responsibility and authority for all export activities of these commodities. Exporters will receive payment only after passing through a new state-controlled "gate", designed to allow the government to verify every transaction.

The government has outlined a two-phase rollout. But does DSI have the experience and financial muscle for such a task? One estimate suggests that managing Indonesia’s coal exports alone could require around US$31 billion in working capital.

Could DSI become another "clove" monopoly like those during Suharto’s era, where cronyism and corruption thrived?

The DSI policy appears noble in intent, but it also targets both Indonesian-Chinese tycoons and China. Of course, Indonesian-Chinese citizens must be loyal to Indonesia’s interests, and they will need to negotiate mechanics with the government if they find the policy counterproductive.

However, it is the new policy’s impact on the nickel industry that has shocked China. Chinese enterprises invested roughly US$14 billion to build smelting facilities in Indonesia in compliance with previous policies. Now they face a new policy that will not only increase ore costs but also affect production and export entitlements.

Indonesia is changing the rules again — a sharp reminder of geopolitical risk.

China is the primary, though unstated, strategic target of Indonesia’s new export controls, even if the policy is officially framed as domestic economic reform. While the government justifies it as an anti-corruption and revenue-collection measure, its design and timing suggest a desire to reduce China’s dominant hold over Indonesia’s most valuable resources. This move appears to be part of a larger geoeconomic strategy to rebalance Indonesia’s relationship with Beijing and possibly please Washington.

China is Indonesia’s largest trading partner and the biggest importer of its coal, palm oil, and nickel. More critically, Chinese companies control approximately 75% of Indonesia’s nickel refining capacity and dominate the processing of other commodities. This new export SOE gives the Indonesian government leverage over sales and pricing of products currently controlled by Chinese firms.

For the full year 2025, China imported about 41.4% of Indonesia’s total 505 million tonnes of coal, 18.5% of its 32 million tonnes of palm oil, and virtually 100% of its US$15 billion ferroalloy exports.

The announcement came just days after the China Chamber of Commerce in Indonesia sent a five-page protest letter to the government, mentioning Indonesian authorities of "excessively stringent regulation, over-enforcement, and even corruption and extortion" specifically targeting Chinese enterprises. The swift signing of the regulation is widely seen as a direct rejection of that complaint.

This "hostile takeover" of industries heavily financed by China aligns with latent anti-Chinese sentiment among some Indonesians and echoes US policies in Panama, Venezuela, and now Iran. The strategy appears to force a renegotiation of massive, China-dominated industrial parks like Morowali and Weda Bay. The scale of Chinese investment and import volume means the impact is disproportionately felt by Beijing. Indonesia appears willing to risk friction with China, even knowing that China harbours long memories.

Is Indonesia Alone in Such Policies?

While Indonesia’s new single-desk monopoly on palm oil, coal, and minerals is a bold move, it is not isolated. Egypt presents a close parallel with its rice export controls. The US, under the guise of national security, has aggressively restricted advanced technology exports to China. Beijing has retaliated by adding US and EU entities to its export control list.

According to the OECD, the number of export restrictions on critical raw materials has surged fivefold since 2009. State controls now affect a massive share of global exports for key minerals, including 70% of cobalt and manganese, 47% of graphite, and 45% of rare earth elements. For both China and the US, export controls are a primary tool of geopolitical leverage. In Indonesia’s case, however, the government has long forced foreign companies to build local processing plants in the name of resource nationalism — seeking to climb the value chain rather than just exporting raw materials. China gladly complied, thinking it a win-win, only to feel sidelined once everything was in place.

Is the New Export Policy Causing the Rupiah to Plunge?
The Indonesian rupiah fell to 17,720 per US dollar on May 26, making it one of Asia’s worst-performing currencies this year. The main stock index tumbled 3.46% the same day, deepening a rout partly triggered by the removal of several Indonesian companies from major global indices.

Officials moved quickly to reassure markets. Speaking to villagers in East Java, President Prabowo remarked, "Villagers don't use dollars. The ones who are having a headache are those who like to travel abroad." Such dismissiveness is typical of political leaders but often a prelude to more serious problems. Villagers may not use dollars directly, but many goods they consume are affected by exchange rates. Tempeh, for example, is made from soybeans, which Indonesia imports (about 2.4 million tonnes annually) and pays for in US dollars. The same applies to wheat and garlic.

Is Indonesia heading toward a repeat of the 1997 Asian financial crisis?

Total debt owed by Indonesians to online lenders reached 103 trillion rupiah (US$5.8 billion) as of March, reflecting that many households have exhausted savings trying to keep up with inflation. The manufacturing sector is also under pressure: roughly 90% of total imports consist of capital goods and raw materials. Industries will inevitably pass higher foreign-exchange costs on to consumers.

The Finance Ministry has stated it will help Bank Indonesia stabilize the rupiah through bond market interventions and curb foreign outflows, targeting daily injections of more than US$113 million to generate positive sentiment. The minister also stressed that Indonesia has multiple funding sources and that the issue is one of cash management. But this may be bravado. The rupiah is likely to come under further pressure. When investors lose confidence in a government’s credibility, they simply move capital elsewhere.

While the rupiah’s decline is not solely due to the new export policy, the policy is a major contributing factor. The situation combines global pressures with self-inflicted domestic uncertainty. The new policy has created market uncertainty, with foreign investors worried about its complexity and potential for creating an inefficient, costly monopoly. The surprise announcement has led to a sell-off in Indonesian stocks and bonds, with foreign investors recording a net sell-off of IDR 41.28 trillion since the start of the year. By keeping a lid on fuel price inflation to protect household purchasing power, the government has shifted much of the economic pressure onto the currency, making the rupiah’s weakness appear more pronounced.

Conclusion
China should beware: this trend may continue. We have already seen the seizure of two ports in Panama, Australia’s decision to exclude China from the Darwin port, and BYD’s experience with the Malaysian government — changing conditions after factory construction began. Similar two-faced dynamics exist with South Korea, Vietnam, the Philippines, Pakistan, Mexico, Argentina, Chile, and even eager small states in Polynesia.

Rather than only threatening retaliation, China might consider measured responses. Only credible consequences may convince these "banana governments" that China is not a paper tiger.  

Going forward, China should avoid pouring billions into solo ventures and instead seek strong local partners to mitigate risk.

End

PS: Indonesia appears to have backed down on some aspects by delaying or clarifying certain policies of the new policy in respect of Nickel – raw nickel ore is not among the commodities that must immediately go through DSI. The government has agreed to postpone planned increases on mining royalties and mineral export taxes. Despite the concessions, the strategic direction is clear: the government intends to tighten its control over the nickel sector and other critical minerals.