May 28, 2012 / 2:53 AM / in 6 years

Indonesian media mogul makes leap into politics

JAKARTA (Reuters) - Indonesian billionaire Hary Tanoesoedibjo already has over a third of the country’s TV viewers in his pocket. Now he wants the same share of votes in a general election, enough to clinch power for the political party he helps lead.

CEO of MNC Group Hary Tanoesoedibjo poses at the MNC editorial office in Jakarta May 25, 2012. REUTERS/Beawiharta

Tanoesoedibjo has built a $7.2 billion business empire in Indonesia in just 14 years, targeting the speedy growth in consumer demand among an emerging middle class in the world’s fourth-most populous nation.

But business isn’t the only thing on Tanoesoedibjo’s mind. While he insists he has no personal political ambitions, he says the reforms carried out in Southeast Asia’s biggest economy since the ouster of strongman President Suharto in 1998 have been too slow and his party could make a difference.

“The majority of people want a change,” said Tanoesoedibjo, 46, in an interview.

To answer that demand, push for legal and poltical reform and fight corruption, he says he took up a new role last November as chairman of the board of experts in the newly-formed Nasional Demokrat Party (Nasdem), one of the senior-most positions in the party.

Tanoesoedibjo, Indonesia’s 13th richest man according to Forbes, is not alone in using business as a base for a leap into politics.

Coal magnate Aburizal Bakrie, whose family controls a conglomerate, is now vying for the Golkar Party’s presidential nomination ahead of elections in 2014. Indonesia also holds parliamentary elections that year.

Tanoesoedibjo, however, is a controversial figure. He has been involved in a series of legal tussles over his business dealings, including one with Suharto’s eldest daughter over one of his TV units. Some investors say some of his businesses lack transparency.

He is also the first major Indonesian businessman of Chinese descent to become the face of a national political party. Many ethnic Indonesians resent the Chinese, who make up a just a fraction of the country’s 240 million people but dominate its commerce, and this anger flared into deadly riots in 1998.

“I never see myself as a Chinese, I‘m a true Indonesian .... That wrong mindset must be changed,” said Tanoesoedibjo.

“Our platform is to introduce strong legal reform and fight for anti-corruption ... I‘m confident that Nasdem Party will win the (2014) election with 30-40 percent of votes,” he said.

Indonesia’s political landscape is fragmented. In the 2009 parliamentary elections, President Susilo Bambang Yudhoyono’s Party Democrat was the leader with about 21 percent of the vote.

Recent polls by pollster Lembaga Survey Indonesia placed Nasdem with 5.9 percent of the vote, in fourth place behind the parties that for years have dominated Indonesia’s political scene: Golkar, Party Democrat and the Democratic Party of Struggle (PDI-P) of former president Megawati Sukarnoputri.

OWN TROUBLES

Tanoesoedibjo expects Nasdem’s numbers to rise to 15 percent this year and to that end he is criss-crossing the archipelego introducing the party to voters. He fronts publicity plugs for Nasdem that appear on his TV channels.

The party may be trailing others currently, but the others are facing their own challenges.

The Democrat Party has been mired in corruption scandals during Yudhoyono’s second and final term. Golkar, which was Suharto’s political vehicles, is for many voters still associated with the autocrat who ruled Indonesia for 32 years until 1998. The PDI-P is divided between Megawati and her daughter.

Tanoesoedibjo said he will not run for president or parliament and denied popular perceptions that businessmen who go into politics do so to help their business.

But his dominant position in the media could help push his party’s political future. Most of Tanoesoedibjo’s fortune comes from his media company PT Global Mediacom (BMTR.JK), which he took over from Suharto’s second son Bambang Trihatmodjo.

PT Media Citra Nusantara (MNCN.JK), which is controlled by Global Mediacom, owns the nation’s most popular television network, PT Rajawali Citra Televisi Indonesia.

Tanoesoedibjo’s free-to-air TV business is the market leader with 38 percent market share, ahead of Indonesian entrepreneur Chairul Tanjung’s Trans Media Group at 24.8 percent and the Sariaatmadja family’s Elang Mahkota media group at 23.8 percent, according to government data.

He also owns pay-TV unit PT MNC Skyvision, the largest pay-TV provider in Indonesia, with 1.4 million paying-subscribers as of May. It plans to launch an initial public offering in June.

INTERNET BUSINESS

The businessman is not limited to conventional media and plans to develop or buy local social media platforms as well as local online gaming to tap the growing domestic market.

    “We can’t underestimate the internet business... Indonesia’s internet market is currently like China in the early 2000s,” said Tanoesoedibjo, sitting on a sofa in a spacious 28th-floor office facing the presidential palace.

    “Look at Baidu and 360buy now ... We’re heading there,” he said.

    Baidu Inc (BIDU.O) is China’s largest internet search company; it has grown from a small internet search engine in the early 2000’s to have a market value of $40 billion. 360buy is one of China’s largest online retailers.

    Billions of dollars from advertising money will pour into new media businesses, though TV will remain the biggest attraction for advertisers in Indonesia, Tanoesoedibjo said.

    Net advertisement spending in media in Indonesia stood at $1.7 billion in 2011, tiny in comparison to China at $27.9 billion or India at $6.3 billion, according to a presentation by Tanoesoedibjo’s crown jewel Global Mediacom.

    SUHARTO LEGACY

    Under him, Global Mediacom has been transformed from an out of focus conglomerate into a media-focused group whose net profit jumped 47 percent to 1.07 trillion rupiah in 2011.

    The firm was previously known as Bimantara Citra when it was controlled by Trihatmodjo, Suharto’s son. After the Asian financial crisis it came under pressure from the Indonesian Bank Restructuring Agency to settle its debts.

    Tanoesoedibjo, who was running a small private equity fund at that time with hedge-fund legend George Soros as an investor, agreed to pay off the debt to the government in exchange for a 20 percent stake in Bimantara.

    He then bought shares on the market to build up to a 52 percent stake and took control of the company in the early 2000s.

    He said he got the money to buy Bimantara from the sale of a stake in Indonesia’s fourth largest cigarette maker, PT Bentoel Internasional Investama (RMBA.JK), to the Rajawali Group early last decade.

    Earlier, he made money from fees on his financial advisory firm and private equity fund.

    In March this year, Forbes said he had a net worth of $1.3 billion.

    Additional reporting by Andjarsari Paramaditha; Editing by Matthew Bigg and Raju Gopalakrishnan

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