A fierce battle is being fought for control of Indonesia's influential chamber of commerce, pitting new generation candidates against figures with close ties to politicians seen as opponents of reform. Indonesia has become an investor favourite among emerging markets, approaching sovereign investment grade status thanks partly to economic and clean governance reforms implemented during President Susilo Bambang Yudhoyono's six years in power. That trajectory seems to have taken a dip in recent months as opponents to reform –businessmen and politicians with their roots in the era of former President Suharto, when cronyism was rife – have campaigned to oust key proponents of change and lobbied for more protectionist measures. The leadership vote in the Indonesian Chamber of Commerce and Industry (Kadin) will decide whether reformers or anti-reformers grab the tiller of one of Indonesia's most vocal and influential lobbying groups, and ultimately influence investment flows. Yudhoyono has targeted GDP growth of above 7 percent by 2014, a goal that requires a major jump in foreign investment. Indonesia needs about $150 billion in the next five years just for infrastructure development, and about 80 percent of that will need to come from foreign investors, economists predict. “The leadership makes a difference,” said Anies Baswedan, a political analyst at Paramadina University. In the past, Kadin was seen as a political vehicle that sometimes lobbied on behalf of vested interests at the expense of outsiders like foreign investors, he said. “This is where the younger candidates come in,” he said. A new leader lobbying for the broader interest could “promote ideas for change that are more business-friendly. That could benefit not only domestic investors but foreign investors too.” The contest for head of Kadin, to be decided by a secret ballot in August, is shaping up as a battle between the old guard and the younger generation, and between businessmen of varying degrees of closeness to politician and tycoon Aburizal Bakrie, the former Kadin chairman who now heads the Golkar Party and who is considered a powerful opponent to reform. The candidate who appears closest to Bakrie is Suryo Sulisto, 63. He is president commissioner of coal miner Bumi Resources, the crown jewel in Bakrie's empire. In the rival camp is Sandiaga Uno, 40, managing director of private equity firm Saratoga Capital and a former chair of the Indonesian Young Entrepreneurs Association, or HIPMI. “This is a contest that pits candidates who are very close to Bakrie versus candidates who are only somewhat close to Bakrie,” said Kevin O'Rourke, a Jakarta-based political risk analyst, adding little was known about the policy priorities of Sulisto. “Kadin has often supported the stances and business interests of the Bakrie group and also Golkar-owned businesses. Sandiaga Uno would have more potential to steer Kadin in a more independent direction,” O'Rourke said. Uno, with a net worth of $400 million according to Forbes, is also in the coal business, as Saratoga owns a hefty chunk of Indonesia's number two coal miner, PT Adaro Energy, and has done business with the Bakrie Group. Uno, a founding member of the Modernisator think tank, told Reuters that his priority would be to represent small businesses. “Kadin is famously known as a place to lobby the government by big businessmen but actually the majority of its members are small and medium-sized enterprises,” Uno said. But Kadin, a conservative organization, may view Uno as too young. Another contender for the job is Sharif Cicip Sutardjo, 61, who owns property, palm oil and mining group Ariobimo. “He would be looking at continuing business reform and improving the business climate. He will be looking a bit more to the West than the East,” said a source close to Kadin. Under Suharto, Kadin represented the interests of Indonesia's pribumi – or indigenous ethnic Malay – businessmen who lobbied against the economic might of the minority ethnic Chinese. For years, Kadin was closely linked to the Golkar Party, Suharto's political vehicle, and opposed any opening up of the Indonesian economy to competition. Today, its 80,000 members are a who's who of big business, including tycoons who have used Indonesia's unpredictable court system to fight foreign partners and creditors, while alumni include businessmen now in politics and wielding influence. For example, MS Hidayat, who gave up the Kadin chair following his appointment as industry minister, wants Indonesia to scale back its commitment to the China-ASEAN Free Trade Agreement because of concerns about competition. Kadin's current governing board includes businessmen James Riady, whose family owns Lippo Group, with interests in property, hospitals and media, and Franky Oesman Widjaja, whose family owns Sinar Mas, with interests in palm oil, pulp and paper. The recently published negative investment list, which determines the sectors that are open or closed to foreign investment, allowed more foreign investment in a few areas including agriculture and plantations. But it also showed how resistant Indonesia remains to opening up as limits on foreign ownership were maintained or tightened in sectors such as hydrocarbon exploration, construction, automotive retailing, logistics and telecommunications, analysts say. This has been particularly evident in the mining sector where Newmont Corp has had to divest shares in a local unit: the shares were bought by a Bakrie
