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Lippo chief eyes digital as next phase of growth

TOKYO -- Major Indonesian real estate conglomerate Lippo Group will enhance its local e-commerce business while also casting an eye on the wider regional market.

In an interview at the sidelines of the 18th Nikkei Global Management Forum, James Riady, Lippo's chief executive officer, shared his group's expansion plan that includes building homes for the middle class domestically and hospitals abroad. The ethnic Chinese businessman also offered his views on succession, the advantages of a family business and his relationship with Bill Clinton, which resulted in Lippo paying a penalty for illegal campaign contributions.

Lippo Group includes Indonesia's largest listed property company, Lippo Karawaci.

Excerpts of the interview appear below.

Q: Where do you see growth coming from?

A: Today, Lippo has more than 1 billion visits to our assets of some 600 retail sites -- including malls, department stores, hypermarkets, supermarkets and drugstores-- as well as hospitals and housing estates.

Of the 120 million unique customers, only about 50 million are captured in our [financial services]. But we want to capture all into our e-money accounts, not only for payment services but for merchandise flow, asset management and other services we offer.

We earn $7 billion in annual revenue on about $30 billion in assets. But what matters is how we can capture the ASEAN population of 600 million into our e-money accounts and world of services.

Our group has gone from banking into property, but now it is a services business focusing on the consumer. The next phase will be the fourth industrial revolution. We must have inward creative disruption so that we can be transformed into a new area of growth, which is the digital economy.

The base will be our 120 million customers. We track each visitor at our malls using [systems that study consumer behavior patterns.] But beyond our assets, we must grow digitally.

We have just started in Indonesia. The first phase is to capture our 120 million customers and the same number of customers that are not in our system. Then automatically, with that kind of mass, we can go into other places. Singapore would be easy, as well as Hong Kong and other places.

While we think big, we have to act in our own local market first. Over the next months, we will be introducing more products. If we are successful, within one or two years, you will see tens of millions if not 100 million accounts being opened.

Q: As you go into new businesses, what plans do you have for your core business?

A: Property will still be the foundation of the group. Property is not just about a physical space. It is about humanity and living.

We love integrated developments, but we also love the idea of going into the next phase of building mass housing for the middle-income segment. We are thinking of building 10,000 to 30,000 houses a year. These will not be merely homes, but communities to live, work and play. We are building five to 10 schools and the same number of hospitals a year.

We are also looking at opportunities to build hospitals in ASEAN. We now have a joint venture hospital in Yangon, Myanmar. We are opening the second in Mandalay in March, and hopefully will build ten more in Myanmar. We are also looking at Vietnam, Cambodia and Laos.

Q: What is the advantage or disadvantage of running a family business?

A: Controlling families have the advantages of entrepreneurship and being able to make decision as well as take risks.

I believe the strength of Asia lies in its family businesses. But you also need to safeguard a business from the risks and mistakes that could destroy it. We must combine it with professional managers. 

For us, being a family business is a strength that we would like to keep.

Q: What about your succession plan?

A: We must be mindful of succession but it is not automatic that our family members are qualified to take the job. Many families are focused on their children becoming business people. By and large, they go to college to study finance or business. But in my mind, we should allow for every family member to focus on their own talent.

I tell my children that they cannot choose whatever they want [in terms of career]. They must not follow just what I want. So, you pursue your biggest talent, learn how to be responsible and professional. At the right time, when you have shown your accountability and maturity, you can participate in the board and be a leader. You must go through a process that is not automatic.

Q: What did you learn from your experience in the U.S.?

A: When I graduated, I went to Manhattan. I saw the big global banks, and the smartest, richest and most powerful people on earth, and they formed my ambition. I said I wanted to be like them. But what I learn is that money and power are both a blessing and a curse.

Q: Do you still maintain a relationship with the Clintons?

A: When I was young during my professional life, I lived in Arkansas. My father invested in a bank there with a partner. I came to know the Clintons quite well but in a professional relationship. We became involved in community activities, and in the U.S., community and political activities are connected. We participated in the same as many Americans and made contributions. Every contribution we made we reported without exception. I've learned that power is both a blessing and a curse. Money is both a blessing and a curse. Since that time, I have attempted with all my heart to avoid politics, especially the American politics.

Once in a while, I go to American to do business -- but no politics.

Interviewed by Nikkei staff writer CK Tan

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