Indonesia’s super rich are getting wealthier, as illustrated by this year’s GlobeAsia 150 Richest Indonesian’s list. Not only do we have more billionaires than last year, the total net worth has also risen. But while today’s billionaires have built their fortunes on natural resources, tomorrow’s ultra rich are more likely to be consumer kings.
In the world of the ultra rich, there is no better symbol of having arrived in the big leagues than owning a private jet. Over the past 10 years, a rising number of Indonesia’s super rich have taken to the skies in their own luxury jets, a powerful indication of the amount of wealth that is being created on the back of a sustained commodities boom.
Today there are about 20 private jets owners in the country. The price of a medium-sized jet? A cool $30 million and, according to Adil Hakim, founder of Jet Royal, a company dealing in private jets, the orders are rising.“The growth of private jets is not that significant but, having said that, there is strong interest amongst business owners to own one,” he notes. “More and more of them are realizing that owning a private jet helps them grow their business.”
With an economy growing at more than 6% per annum and commodity prices remaining robust, wealth creation is continuing unabated. This year’s GlobeAsia 150 Rich List clearly illustrates the point as more than 90% of our rich listers saw their fortunes rise over the previous year.
As in past years, most of the billionaires on our list for 2012 have built their fortunes on natural resources, in particular coal and palm oil. For the second year running, Eka Tjipta Widjaya, the powerful patriarch of the Sinar Mas Group, heads the list with a net worth of $13 billion, a whopping $1 billion higher than in 2011.
According to financial industry insiders, Sinar Mas deploys its enormous cash reserves like a hedge fund, seeking opportunities outside the group’s core businesses by funding acquisitions by other groups for hefty returns or part ownership.
“The group’s in-house hedge fund generates more than $1 billion in cash every year,” said one hedge fund owner familiar with the group. “Sinar Mas owns the world’s fourth largest pulp and paper company, the fifth largest palm oil plantation and, in property, they have the cash, land bank and expertise to expand aggressively.”
As a reflection of the strong wealth creation trend underway, this year’s billionaire club has now expanded to 30 with the entry of several new members including AHK Hamami, the 76-year-old founder of heavy equipment company PT Trakindo. His cash haul was achieved by listing his coal and energy company, ABM Investama.
Others who entered the exclusive club include Hary Tanoesoedibjo, who has made Global Mediacom Indonesia’s biggest media company. The share price of Global Mediacom rose by an incredible 120% over the past 12 months.
Media tycoons are very much the flavor of the year. Apart from Hary, the owners of television station SCTV, brothers Eddy and Fofo Sariaatmadja, also saw their net worth soar on the back of an even more spectacular 200% rise in the company’s share price.
The Sariaatmadjas and Hary represent the future as relative wealth creation is shifting from natural resources to consumer services, says Tom Lembong, founder of private equity firm Quvat Management.
“With a fast-growing middle class, advertising spend is growing by between 20% and 25% annually, a boom for media companies,” Tom notes. “This trend also applies to other domestic consumables such as property, retailing and financial services.”
“Commodities and natural resources have gone up very sharply over the past five years but will plateau for the next few years,” he adds. “There are questions over whether the commodities super cycle is coming to an end as a lot of investments are going into new sectors.”
The consumer boom is spreading across a wide swathe of industries, ranging from media to aviation and in the process new fortunes are being created. Rusdi Kirana, the founder of Lion Air has turned a travel company into the region’s largest low-cost carrier with the recent signing of a $22.4 billion deal with Boeing.
Finance, property, healthcare and education will be the sectors that are likely to create tomorrow’s billionaires. Those entrepreneurs who can best meet the needs and aspirations of the country’s growing middle class will build fortunes to rival today’s super rich.
Download 2012 GlobeAsia Rich List here .