As head of a major family-owned conglomerate Shinta Widjaja Kamdani is well-placed to take a view on China's investment in her native Indonesia.
The archipelago nation of 260 million people is exactly the kind of country China wants to bring into its Belt and Road Initiative. It is geographically close, has a dynamic but underdeveloped economy and is in need of massive infrastructure investment to fulfil its potential. And, in April, Indonesian President Joko Widodo met his Chinese counterpart Xi Jinping in Beijing to seal five cooperation contracts worth some $23.3 billion.
Four of those deals covered the energy sector – one of four key business focuses of the Sintesa Group, of which Kamdani has served as chief executive since 1999. She holds the reins of a family-owned business that started in 1919 as a rubber plantation run by her grandfather, Oey Kim Tjiang.
After taking over from her father, Johnny Widjaja, Kamdani streamlined the family's 17 separate companies under a single holding company, which now employs more than 6,000 people. The group now has four core businesses – listed companies in the consumer products and industrials sectors and two unlisted businesses, in property and energy.
Kandani also serves as vice-chairwoman of KADIN, the Indonesian chamber of commerce and industry.
In this exclusive interview, she discusses how Belt and Road will affect Indonesia and her businesses, and sets out the future for the group's two unlisted entities.
Q How do you see China's Belt and Road Initiative working best for Indonesia?
A Well I think looking at Indonesia we are the largest economy in the Association of South East Asian Nations (Asean) but one of the challenges that we face in Indonesia is obviously infrastructure. We haven’t built enough physical infrastructure, and thus the connectivity on our very large archipelago is lacking. So it is very timely when China initiated Belt and Road because this is where Indonesia really needs support and the commitment of our president [Joko Widodo] to be a part of the initiative is really important.
Currently Indonesia is focusing on four geographic areas for Belt and Road investment – North Sumatra, North Sulawesi, North Kalimantan and Bali – and at the moment we have $200 billion in the pipeline.
Without this investment into infrastructure to create the connectivity, it will be very difficult for Indonesia to accelerate its growth. We need to spend around $350 billion for all our infrastructure projects, and government money itself will not be sufficient. So we need to get more financing from outside the country through foreign direct investment (FDI) and private-public partnerships (PPP).
Q There have been concerns around the region that countries are getting too heavily in debt to China. Why do you think that Indonesia is different to, say, Sri Lanka?
A Well, we are not just looking to China. We have financing coming from multilateral agencies, even from other bilateral countries and investors coming from various different countries and regions, so we are not just relying on China. We are not just solely relying on China, we have investors from many other countries, such as Japan, Korea and even European countries. So at this point I think we have a diversified source of funding and are not totally reliant on China.
We are now completing our comprehensive economic partnership agreement (Cepa) with Australia, and with that completed there will be much more investment coming from Australia.
We have properties in North Sulaweisi, and its becoming the northern gateway to Indonesia for countries like China, Korea and Japan. The airport is now an international one with direct flights from Singapore, Malaysia and now China. There used to be 12,000 passengers per year, now it is 12,000 a month. We have worked together with the local government to build a 700 hectare eco-resort which has been included in the special economic tourist zone in North Sulawesi. It is also a Belt and Road project, as we submitted the plans to the local government who then submitted it to the central Indonesian government who submitted it to the Chinese government, who then approved it and officially included it in the Belt and Road project pipeline.
In my role at the chamber of commerce, there is a recognition from our members that we need to be included in the Belt and Road projects, but there are concerns. Working with the Chinese there are some issues with restrictions that they have imposed on us for various projects, such as using their own labour, equipment and technology. So we have no other option but to use Chinese technology, which may or may not be the best. Quality, therefore, may be compromised, such as in power plants.
Q Which of your four businesses do you believe will benefit most from being part of the Belt and Road?
A Our property pillar will definitely benefit from it, as I mentioned earlier with the upgrading of the airport. The other main beneficiary I believe will be our energy division, especially our renewable energy efforts. We are working already with several Chinese companies and we can take advantage of their technology for our renewable energy projects. We have gas, solar and thermal power plants, and these will all benefit from Chinese technology.
So we are very keen to get involved with Belt and Road projects, and because we receive financing from many sources and not just from China, Indonesia is in a strong position to take full advantage of the infrastructure developments that the Belt and Road is bringing us.
Q Two of your group’s companies are listed on the Indonesian stock exchange. As a family company, what are your plans for the remaining two businesses?
A We are planning to bring the other two businesses into the market. The plan is the sub-holding should go public but the holding company should remain private. I am a big believer in going public, not just for fundraising purposes but obviously for better governance, and I think it is very important to create a very professional-looking company, which going public highlights.