The skyrocketing share price of Bank Central Asia (BCA), the country’s largest private lender and a prime asset of the Hartono family’s Djarum empire, has propelled brothers R. Budi Hartono and Michael, who have a controlling share, to the top of GlobeAsia’s Rich List this year.
Djarum made a move into BCA in 2001, as Indonesia was starting to recover from the 1997-1998 financial crisis.
BCA’s net income grew 8% to Rp11.72 trillion last year and the growth does not appear to be abating, with the bank recently posting a 26% year-on-year increase in earnings in the first quarter of 2013.
Net profit rose to Rp2.9 trillion in the January-March period from Rp2.3 trillion a year earlier on the back of higher-than-expected lending. BCA’s total assets grew 11.7% year-on-year in the same quarter to Rp447.4 trillion.
A simple start
The Hartono brothers have been a dominant force in Indonesian business for many years. Their father, Oei Wie Gwan, established cigarette-maker Djarum with a 10-person operation in Kudus, Central Java in 1951. Working closely together, they have developed it into one of the world’s biggest makers of clove cigarettes.
With the wealth accumulated from their core business, the brothers have ventured into new lines of business including banking, property, palm oil, electronics and telecommunications.
Djarum also taps the fast growing internet sector via Global Digital Prima, a private investment fund. Today, according to GlobeAsia’s calculations, Budi and Michael Hartono are sitting on a $15.5 billion fortune.
The Hartonos remain lowprofile and avoid the public spotlight. The company website offers only a glimpse into the secrets of their success: “Despite being one of Indonesia’s largest corporations and a global presence, Djarum is still a very personal place. People matter – very much so.”
As their ventures mature and grow, the Hartono brothers are slowly but surely preparing their successors. Budi Hartono, the chief executive of Djarum, has three sons, Victor, Martin and Armand.
Victor, the eldest, is the chief operating officer at Djarum. A search of his name mostly yields results connected to Djarum Foundation, where he is president director. The cigarette-mak-er’s corporate social responsibility arm champions initiatives in sports, farmers’ empowerment, education and cultural events.
Martin is the director for technology and human resources at Djarum. He married Grace L Katuari, a daughter of Eddy William Katuari, owner of consumer giant Wings Group and a frequent collaborator.
In 2000, Djarum, Wings and Lautan Luas, founded by businessman Adyansyah Masrin, joined forces to buy Ecogreen Oleochemicals. One of the biggest oleo-chemical companies in the world, Ecogreen produces hand and body soaps, detergents, food plastics and pharmaceutical products.
Ecogreen was controlled by the Salim Group before it was forced to sell it to the Indonesian Bank Restructuring Agency (IBRA) to cover the group’s debts.
Djarum and Wings developed Pulogadung Trade Center, a retail-commercial property in East Jakarta. The Grand Indonesia complex in Central Jakarta was reportedly developed by Djarum with co-operation from Wings. The two families also joined forces to establish Uni pack, a packaging company.
Despite being active in Djarum’s top ranks, Martin has also nurtured his interest in the information technology business. In 2011, Martin, who founded GDP Ventures, made headlines after reportedly pouring millions of dollars into local online community, Kaskus.
Established in 1999, the online community has garnered millions of users and hundreds of millions of page views, an achievement that no doubt attracted GDP.
Budi’s youngest son Armand will likely take the helm at BCA. Armand joined the third-largest lender by assets in 2004. He has taken on various positions since then, including a stint as the bank’s head of planning and regional advisory. Since 2009, he has served as director for operational and network development.
Armand earned his bachelor’s degree from the University of California, San Diego in 1996 and a master’s degree in engineering economic systems and operations research from Stanford University in 1997. For a year after that, Armand was an analyst at financial services firm JP Morgan in Singapore.
Little information is available about Michael Hartono’s four children.
While cigarettes remain the family’s core business, it has size able interests in other sectors. Through unit Cipta Karya Bumi Indah, the company owns the Wholesale Trade Center Mangga Dua building in North Jakarta, one of the busiest trade centers in the capital.
The Grand Indonesia hotel and mall compound is probably Djarum’s biggest property development, including more than 250,000 sq m of high-end retail space, Hotel Indonesia Kempinski, the Kempinski Private Residences and Menara BCA, a 56-storey office tower. Djarum secured a 30-year build-operate-transfer contract from the Indonesian government to develop the property.
The latest development in Djarum’s expansion into property comes via subsidiary Bukit Muria Jaya Estate, which has prepared more than Rp300 billion to develop a four-star hotel in Karawang, West Java.
Bukit Muria’s associate director Robbie Wiguna said the hotel is being built on 2.5 hectares of land, adding that it will help meet demand for higher-end accommodation in Karawang, where several large corporations have established factories in the city’s industrial parks. To be operated by Padma Hotel & Resorts, the 21-storey, 200-room building is scheduled to begin operations next year.
In the agricultural industry, the Hartono brothers control thousands of hectares of palm oil plantation in West Kalimantan province through Hartono Plantations Indonesia.
Djarum also controls local electronics maker Polytron. The company, in operation since 1975, recently made a move into mobile phone production, after years of recognition as a producer of air conditioners, refrigerators and multimedia products as well as home appliances like water dispensers.
The conglomerate has a telecommunications operator, Sarana Menara Nusantara, listed on the Indonesia Stock Exchange under the code TOWR. The company booked a 22.3% rise in net income last year, thanks to rising revenue from an increasing number of users of its telecommunication towers.
Net income for the operator rose to Rp346.8 billion from Rp283.9 billion, while total assets rose to Rp13.57 trillion from Rp8.57 trillion.
Despite having amassed a multi-billion-dollar fortune and a slew of successful enterprises, the Hartono brothers continue to be known as men who live modestly and dress simply.
Victor Hartono, in a rare interview with China Daily newspaper earlier this year, said that while his father and uncle are not involved in the group’s daily operations at Djarum and its companies, they remain the major decision-makers.