JAKARTA -- Mochtar Riady, Lippo Group's founder and chairman, recently spoke with the Nikkei Asian Review about doing business overseas and why he thinks Indonesia is the place to be.
Q: Where are you focusing your investments?
A: Japan, [South] Korea, China, India, Hong Kong, Taiwan, Singapore and Malaysia are all well-developed already. But in Indonesia, the only island that has a railway and good roads from east to west is Java. Sumatra has some railways, but they are not connected. The others have zero kilometers of railway. Indonesia is an island economy. We need a lot of harbors, ships and so on. This is a big opportunity -- to have good partners like Mitsubishi Corp. to work with in this area. Indonesia is still empty. The opportunity is in Indonesia, not outside Indonesia.
Q: How are your overseas operations going?
A: Our business outside Indonesia is very independent. We have public companies in Singapore and Hong Kong. So the capital is local, but we manage it. Since the very beginning, we have strongly believed Indonesia will [become] the giant in the Pacific Rim. The [optimal] time for Indonesia is now until 25 years from now. So we have to concentrate our efforts on Indonesia's economic development.
Q: What did you learn from your early foreign endeavors?
A: Our first investment outside Indonesia was in a bank in the U.S. I had an idea that the warehouse of money is the U.S., so if you want to have money, you have to go to the U.S., and through the banking system. And using the banking system in the U.S., [the plan was to invite companies] to Indonesia. So we had a joint venture with Tokai Bank, Daiwa, Long-Term Credit Bank of Japan, RBS (Royal Bank of Scotland), BNP and Stephens Inc.
Q: What about working with Chinese companies?
A: Many, many years ago ... I had an opportunity to work with Mitsubishi Electric in electronic devices, like televisions and refrigerators. They spent maybe six months to complete the negotiations. They sent a team of three people, bringing small televisions everywhere in Indonesia, just to test the market. They took so long to make a decision. Starting to work together [with Japanese companies] is not easy. But when they start, they are very ... committed.
At the same time, I also negotiated with an American [company]. We only took seven days to sign a contract. After that, I spent maybe 40 days planning factories. But with American companies, we have so many problems. And when they face a problem, they just say "bye-bye."
If you ask me about Chinese [companies, the result] may be the same. When we start to talk about business, things move very fast and easily. But whether it will be a long-term partnership is a big question.
Interviewed by Nikkei staff writers Sadachika Watanabe and Wataru Suzuki