September 3, 2001

INDONESIA'S FIRST HUSBAND

From Gas Station Czar to Megawati Power Broker

Observers hope that Taufik Kiemas won't return the country to Suharto-style cronyism.

By Eric Ellis

On a sodden afternoon, a muezzin's call to prayer echoes out over the Pertamina gas station on Jalan Lapangan Ros in the Jakarta suburb of Tebet.

But it's matters more Mammon than Mecca that concern the station's staff.

"It's been a good day," beams manager Gus Nam, as he packs the day's take into three suitcases. On a wall are smiling portraits of Indonesia's new President, Megawati Sukarnoputri, and her father, Sukarno, the country's founding President.

The station is the busiest outlet of a national chain owned by 59-year-old Taufik Kiemas, Megawati's husband--and now perhaps Indonesia's most powerful man. Although his fortune is small by the standards of the Indonesian elite, he is said to be worth $10 million. And his connections to some of the businessmen who profited during the Suharto regime have many worried about a return to crony capitalism.

When Megawati replaced Abdurrahman Wahid in July, Indonesia was in desperate need of a strong leader. After three inept Presidents in four years, its economy was all but bust. The currency was 75% off its historical highs, and international investors were treating the country like a pariah state. Megawati doesn't have much time to turn things around. "She has a brief window to act," says George Aditjondro, an Indonesian-born professor of sociology at Australia's University of Newcastle. "Otherwise she will lose the initiative."

It didn't look good when it took her two weeks to name her cabinet, but her selections, announced Aug. 9, were solid: respected technocrat Dorodjatun Kuntoro-Jakti as her Economics Minister; former banker Boediono in the Finance portfolio; and--this a first for Indonesia--a civilian, Matori Abdul Djalil, in Defense. The rupiah rallied to a ten-month high.

Indonesians accustomed to seeing presidential relatives in high office were relieved there was no formal job for Taufik, who nevertheless has played a key role directing his wife's rise to power. The couple acquired the Pertamina gas stations in the early 1980s, when then-President Suharto gave them to Megawati hoping to keep Sukarno's daughter out of politics. Instead, Taufik used the cash generated by the business to help build opposition to Suharto and push his wife toward what he convinced her was her birthright. While Taufik has never held office, he led a major faction of Megawati's Democratic Party of Struggle.

Today he is quite the power broker, juggling meetings with coalition members and a succession of fallen business leaders. Over the past few months he has met with heirs of the Salim group's Liem Sioe Liong; property developer Ciputra; timber king Prajogo Pangestu; the Gajah Tunggal group's Sjamsul Nursalim; and textile baron Marimuthu Srinivasan. Some of their businesses went bust in the 1997-98 financial crisis and were seized by the previous administrations. Now it looks as though they may have an opportunity to get them back.

Indonesians are watching for warning signs that crony capitalism, which has never entirely disappeared, could make a comeback. Aditjondro says the First Husband (actually Megawati's third) has already played a leading role in some big post-Suharto business deals while his wife was vice president. He says companies connected to Taufik's relatives are moving to develop resorts on the tourist island of Bali, a major foreign-exchange source for Indonesia and once a happy hunting ground for the Suharto clan. "If Megawati wants to make a clean slate," Aditjondro says, "she should ban her own family and her senior officials from becoming involved in business."

Despite much speculation, Taufik, who declined to be interviewed, has never been named in any official corruption probe. And he's been careful to publicly distance himself from his wife's cabinet deliberations, insisting they were her call. He recently assured Indonesia's Tempo magazine that he was "often invited to discuss many things [and] of course, I give some input. But are her decisions made based on my input? They aren't." If Indonesia is to escape its recent past, it needs Taufik to be as good as his word.