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SHELL INDONESIA • HONG KONG’S 50 RICHEST FEBRUARY 2018 • VOLUME 9 ISSUE 2

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E-CONOMY 2018

THE RISE OF A ROBIN LO

LEI JUN

DAVID SOONG

KUSUMO MARTANTO

DIGITAL ECONOMY J&T EXPRESS

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Contents

FEBRUARY 2018

E-CONOMY 2018

E-CONOMY:

THE DIGITAL MAINSTREAM

24 | ONE-STOP MALL

Blibli’s Kusumo Martanto says acquiring Tiket. com was just one step in its expansion plans. BY ARDIAN WIBISONO

28 | AGGRESSIVE VALUE

Lei Jun wants Xiaomi to be the best-selling smartphone in Indonesia. BY YESSAR ROSENDAR

30 | SERVING THE UNDERSERVED

Kioson becomes the first tech startup listed on the IDX.

34 36

BY SHINTYA FELICITAS

32 | SWEET MEMORIES

David Soong’s Sweet Escape is making highquality photography accessible. BY ARDIAN WIBISONO

34 | EXPRESS AMBITION

J&T Express aims to become the country’s top express courier. BY ARDIAN WIBISONO

36 | A BOT FOR EVERYONE

Diatche Harahap’s BJTech is developing homegrown chatbots for Indonesia. BY SHINTYA FELICITAS

38 | SPACE RACE

The e-commerce boom has sparked an unlikely real estate revolution: Urban warehouses are now gold mines, and Prologis is sitting on the mother lode. BY SAMANTHA SHARF

40 | MONEY MOVER

Max Liu’s EMQ comes to Indonesia to grab a slice of the global remittance market. BY AASTHA SABOO

42 | GUEST COLUMN // Will Ongkowidjaja Outlook for the E-conomy 2018

44 | DELIVERING THE GOODS

When his top rival bought his largest customer, Instacart’s Apoorva Mehta cheered. It turns out he wasn’t crazy. BY BIZ CARSON

48 | BIG DATA FOR BIG CITIES

30 2

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FEBRUARY 2018

Moovit has created the Waze of public transit. Is this the app that can beat urban congestion? BY ALAN OHNSMAN

FEBRUARY 2018

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Contents

FEBRUARY 2018

8 | FACT & COMMENT // Steve Forbes The Forbes 2017 All-Star Eateries In New York

14 | TOPICAL SUBJECTS // Jusuf Wanandi

China and U.S. Relations in Defining East Asia

15 | GLOBAL VIEWPOINT // Jennifer Xue Cryptocurrencies, staying or not?

16 | UPDATE

Kalbe Enters Clinical Laboratory Business and Google Invests in Go-Jek

ISSUE & IDEAS 20 | CANCER IMMUNOTHERAPY: ITS TIME HAS ARRIVED

A revolutionary cancer treatment is showing promising results.

BY AASTHA SABOO

22 | INVESTMENT IDEAS // Teguh Hidayat Value Opportunity in Alam Sutera Realty

COMPANIES & PEOPLE 50 | GROWTH STRATEGIES // Quah Mei Lee

HONG KONG’S 50 RICHEST 60 | IT’S RAINING MONEY

Towards Cashless Societies

The top 50 added a record $60 billion to their piles last year.

52 | PLAYING THE LONG GAME

61 | THE LIST

BY ADI WICAKSONO

FORBES LIFE

Darwin Silalahi wants Shell Indonesia to be a long-term and trusted firm in the country.

54 | THE LAST COAL TYCOON

Dark days ahead for coal? Don’t tell that to billionaire Chris Cline, who’s convinced the dirtiest fuel still has a bright future and is building what he believes will be the last mine standing. BY CHRISTOPHER HELMAN

68 | ARTSY AUSSIES

There’s a multimillion-dollar museum boom Down Under. BY OLIVER GILES

70 | ASPIRATIONAL LUXURY

Lexus Indonesia has succeeded by offering highend services for its customers. BY YESSAR ROSENDAR

72 | TIMELESS DYNASTY

Pio Boffa’s family-owned Pio Cesare winery is one of Italy’s best boutique producers. BY JUSTIN DOEBELE AND NATASHA STEVEN

74 | THE SWEET SPOT

Despite little name recognition, San Francisco chocolate maker Guittard has managed to survive competition from both the Davids and the Goliaths. BY STACY PERMAN

76 | THE EYE

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FEBRUARY 2018

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SIDELINES

Digital Realities

EDITORIAL DEPARTMENT CHIEF EDITORIAL ADVISOR Justin Doebele EDITOR-AT-LARGE Taufik Darusman SENIOR EDITORS Ardian Wibisono,

Ulisari Eslita, Yessar Rosendar WRITER Shintya Felicitas SENIOR GRAPHIC DESIGNER Hidayat Abubakar GRAPHIC DESIGNER Dennis A. Pratama EXECUTIVE ASSISTANT Hanna Azuraa PHOTO EDITOR Ahmad Zamroni CONTRIBUTING WRITERS Aastha Saboo, Anton Muhajir, Miri Hwang BUSINESS DEPARTMENT PUBLISHER Jusuf Wanandi EXECUTIVE DIRECTOR Tanti Jumiati DIRECTOR Ryan Wiranata SENIOR SALES & EVENTS MANAGER Rafki Ismael ASST. MANAGER EVENTS & COMMUNICATIONS

Rio Zikrizal MARKETING SUPPORT Josephine Hanna M. CIRCULATION DIRECTOR Seli Widiati CIRCULATION MANAGER Habibie Hasanuddin CIRCULATION EXECUTIVE Dahlia Komala Sari PRODUCTION MANAGER Mudafid Riyanto ACCOUNTING MANAGER Indrawati Sonjaya ACCOUNTING SUPERVISOR Inge Stephanie ACCOUNTING EXECUTIVES Tjhin Anna ACCOUNTING STAFF Aldina Anggraini PT WAHANA MEDIATAMA PRESIDENT DIRECTOR Millie Stephanie Lukito VICE PRESIDENT DIRECTOR Dewi Victoria PRESIDENT COMMISSIONER Jonathan Tahir FORBES MEDIA LLC EDITOR-IN-CHIEF Steve Forbes CEO & EXECUTIVE CHAIRMAN Michael S. Perlis PRESIDENT & COO Michael Federle CEO / ASIA William Adamopoulos EDITOR, FORBES ASIA Tim Ferguson

FEBRUARY 2018 — VOLUME 9 NUMBER 2 FORBES INDONESIA is published by PT Wahana Mediatama under a license agreement with Forbes LLC, 60 Fifth Avenue, New York, New York 10011. “FORBES” is a trademark used under license from FORBES LLC. ©2010 PT Wahana Mediatama • ©2010 FORBES LLC, as to material published in the U.S. Edition of FORBES. All Rights Reserved. ©2009 FORBES LLC, as to material published in the edition of FORBES ASIA. All Rights Reserved. FORBES INDONESIA is published monthly, 12 times per year. Copying for other than personal use or internal reference or of articles or columns owned by FORBES INDONESIA without written permission of FORBES INDONESIA is expressly prohibited. CONTACT INFORMATION Forbes Indonesia: Mayapada Tower 1, 8th Floor, Suite-03 A Jalan Jendral Sudirman Kav. 28, South Jakarta 12920. Tel: (021) 522 6828, Fax: (021) 522 7208. Website: www.forbesindonesia.com : Forbes Indonesia Magazine : @forbes_id : forbesindonesia Subscriber Enquiries: Please contact Circulation Division. Email: circulation@forbesindonesia.com. Or visit www.forbesindonesia.com to subscribe or advertise. Single copy price Rp 50,000, local subscription rate Rp 480,000 + postal fee (Jadetabek) for 12 issues.

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BY JUSTIN DOEBELE

justin@forbesindonesia.com

he country’s digital “e-conomy” no longer exists only in the realm of cyberspace—it is starting to have a measurable impact on the real economy. Finance Minister Sri Mulyani estimates the digital economy will account for 8.5% of Indonesia’s GDP this year, up from 7.3% last year—to put that into perspective, that’s slightly more than half the contribution of agriculture (around 14%) to GDP. While agriculture’s share has been declining, the digital figure continues to climb, and may surpass agriculture. The impact of an increasingly “e-conomy” is profound for everyone. It promises dramatic changes in the way everyone lives, works and plays. The two spheres, online and offline, are merging, giving rise to new companies that bring new efficiencies and innovation to the broader economy. Go-Jek is one firm that has done this, giving it unicorn status, and the entrepreneurs presented inside this issue are also prime examples as well. They are adopting AI, logistics, financial services and photography services to a new connected reality, utilizing the strengths of digital technologies to offer real-world goods and services. These trends are being made possible by several interlocking developments, such as Telkom’s push to develop digital technologies (covered in last month’s issue) along with the spread of smartphones, which offer increasing bandwidth and computing power, along with more laptops, desktops and tablets everywhere. The ability to connect to the Internet improves daily, turning the e-conomy into a widespread reality to power innovation and growth. To the credit of the current administration, the government has been farsighted in its support in developing the digital sector, as it fully appreciates the tremendous value it brings to national growth. It is not just more and better growth, it also growth that moves Indonesia up the technology ladder—from high tech to even higher tech. It’s clear that the country’s entrepreneurs and government officials have taken this lesson to heart and are moving in the right direction. F

AMENDMENTS: In last month’s issue, in the profile of UBS, the company requested the following amendments to the articlet: 1 UBS maintains a theoretical production capacity of maximum two tonnes of gold jewelry monthly, not four tonnes, with around 2,000 staff. 2 Depending on the price of gold, the weight, the design of jewelry, the price of UBS jewelry may have a wide range from hundreds of thousands rupiah to tens of millions rupiah, not between Rp 200,000 to Rp 50 million. However, the thin profit margin of the gold business means the company must focus on high volume to grow profits. 3 Revenue of UBS has to be calculated not solely on the tonnes, but also carat. Therefore, UBS emphasizes that its revenue is less than reported in the article. 4 In 2011, UBS started the gold coin service, while the gold bar service only started last year, not the gold bar service starting in 2011. The editors thank UBS for these amendments.

FEBRUARY 2018

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FACT & COMMENT BY STEVE FORBES, EDITOR-IN-CHIEF

THE FORBES 2017 ALL-STAR EATERIES IN NEW YORK The only thing hotter than big tech stocks this year has been the New York restaurant scene, with countless—and some astonishingly creative—eateries opening and so many established ones reaching new heights of excellence. Of course, no industry is immune to creative destruction, and a number of once outstanding gastronomical meccas have either slipped or disappeared from our firmament. Our stellar team of ever-discerning tasters—Forbes editor Randall Lane, Forbes contributor Richard Nalley and preeminent media maven Monie Begley, as well as brothers Bob, Kip and Tim— herewith unveil their list of where you can enjoy the city’s most savory comestibles. Aska Atera Bâtard Blue Hill

HHHH Daniel Del Posto Eleven Madison Park

Gotham Bar and Grill Gramercy Tavern The Grill

Jean-Georges La Grenouille Le Bernardin

Majorelle Marea The Modern Per Se

discovered the fountain of youth. It’s dinner as theater: suDaniel is still stunning and hard to beat in a town of experb food that doubles as outstanding art. Like the musical ceptional dining. At Majorelle you will be served—impecHamilton, this show is expensive—and worth every cent. cably—one of the best meals you’ve had in ages, traditional An additional choice for those who are not cost-conscious French fare with Moroccan influences and a contemis Eleven Madison Park, which has undergone a total renoporary flair, in a classically appointed dining room with vation. The result is simply stunning, architecturally and magnificent floral arrangements in the Masson family tragastronomically. The Modern is another exceptional culidition. Forget dieting—desserts here are an absolute must. nary temple that closed down operaAnother new source of a most memotions for several months for a highly rable meal is The Grill, which occusuccessful renovation. The tasting pies part of the space of the old Four menus here combine the artful and Seasons. Walking into this landmark the sophisticated. is like seeing an old friend who’s These enduring epitomes of eating excellence have been crucial Majorelle Gotham Bar And Grill in establishing New York as the cuisine capital of the world.

CLASSICS

The Grill

Aquavit Nippon Nobu Downtown/Nobu 57 One if by Land, Two if by Sea Peter Luger Steak House The River Café Shun Lee Palace ‘21’ Club

The Modern

ERIC LAIGNEL; ADRIAN GAUT

Nobu Downtown

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FACT & COMMENT BY STEVE FORBES, EDITOR-IN-CHIEF

HHH Gabriel Kreuther Il Buco JoJo Junoon Keens Steakhouse La Vara Le Coucou Maialino Marc Forgione The Mark Restaurant

After two decades, JoJo closed for a year-long renovation, its antique setting replaced by a new, sparkling, cool, intimate version. Beloved traditional dishes have become nightly specials. The new menu soars, creating course after course of American classics with a masterful mix of ingredients. Fusco is chef Scott Conant’s tribute to his Italian grandmother. And what an homage it is—the room’s beauty enhanced by softly lit chandeliers and banquettes encircling the space. The food is bewitching—the diver scallops are perfection, the desserts divine. La Vara uniquely and delicately combines Spanish, Sephardic and Moorish influences, which make a meal here a must for any who savor innovative culinary excellence. Reopened in a big, new and beautiful location, Union Square Cafe’s take on its classic dishes—as well as many new ones—is just as scrumptious as ever. Reservations made well in advance are a must. Keens Steakhouse deservedly remains

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FEBRUARY 2018

Michael’s Momofuku Ko Monkey Bar NoMad Perry St Porter House Bar & Grill The Simone Union Square Cafe Vaucluse

a magnet for red-meat eaters. The plentiful servings and big-pour cocktails are enhanced by the dark-wood, 1880ssaloon vibe and the famous clay-pipe-hung ceiling. Il Buco is a cozy, faux-rustic, tin-ceilinged artisanal Italian eatery that has been attracting downtown scenesters for years with its flavorful offerings and noteworthy wine list. Another enduring member of the Three Star firmament is Aretsky’s Patroon with its always enticing American-based menu headlined by New York’s tastiest crab cakes. Dark and sexy, with the aroma of a wood-burning grill, Marc Forgione may be one of the Big Apple’s most underrated gems. The selections from its farm-, ocean-, forest-to-table kitchen pack in the patrons. Gabriel Kreuther serves up creative and superb dishes, such as a sturgeon-and-sauerkraut tart topped with caviar. The setting is an airy room with some delightfully eccentric touches. Perry St’s deliciously diverse menu of new American cuisine is perfectly complemented by the understated modern decor and friendly, low-key ser-vice. Among NoMad’s delectable delights is the glistening roast chicken for two, with foie gras and truffles rubbed under the skin. Created by master chef Daniel Humm, this is one of the city’s signature dishes.

EMILY ANDREWS; CONNIE ZHOU; ELLEN SILVERMAN

ABC Kitchen Ai Fiori Antonucci Cafe Aretsky’s Patroon Avra Madison Café Boulud Carbone CUT by Wolfgang Puck Fusco

FEBRUARY 2018

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FACT & COMMENT BY STEVE FORBES, EDITOR-IN-CHIEF

abcV with Jean-Georges—Leonardo himself couldn’t render these vegetarian dishes more vividly and artfully— or deliciously. Al Vaporetto—Venetian classics with a flair served in a romantic, cozy setting. Save room for the perfect crème brûlée or the Italian version of a floating island. American Girl Place Cafe—Young girls and their dolls, perfect together. BBQ ROUNDUP: Dinosaur Bar-B-Que / Fette Sau / Hometown Bar-B-Que / John Brown Smokehouse / Mighty Quinn’s. Benoit—Beautiful bistro, fantastic fare. Café Centro—Grand Central location and tip-top food have made this the perfect place for business breakfasts. Also busy at lunch and increasingly so at dinner. Center*Bar—The nearby Christopher Columbus statue is under assault, but no one can fault the fine wines, imaginative cocktails and delightful smallplate fare found here. Chinese Tuxedo—The jewel of Chinatown, set in a former opera house. The flavors of each dish are amazingly unique. Chumley’s—Some of the best American bar food on offer at this restored speakeasy, which in the 1920s boasted a glittery literary following. Cote—Outstanding Korean steak house KOs the competition. Guests cook meat over in-table grills, but waiters will swoop in quickly if it looks like a beautiful piece of beef might be ruined. Cowgirl—Funky, fun West Village spot offering some mouth-watering Western/Southwestern cooking. Grünauer Bistro—Provides a variety of wondrous Wiener schnitzels, goulash, red cabbage and other authentic Austrian classics. Elegant setting, impeccable service. Hao Noodle—Turns traditionally pedestrian streetfood dishes into fine dining. I Sodi—A Tuscan treasure set in the West Village. Il Cantinori—Another Village institution serving first-rate Tuscan fare. Patrons anticipate the long list of daily specials.

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FEBRUARY 2018

Italienne—Sensationally and successfully blends northern Italian and southern French cuisines. Decor combines old-world charm with a modern aesthetic. L’Artusi—Tough to get in. And no wonder, what with its wondrous wine list and out-of-this-world Italian comfort food. Maison Pickle—Excels in classic American favorites. Final excess: heavenly 24-layer chocolate cake. NO-BULL BURGERS: Aureole’s Liberty Room / bar Sardine / Black Tap / burger joint / Corner Bistro / Ear Inn / The Happiest Hour / J.G. Melon / Minetta Tavern / Shake Shack / The Spotted Pig / Tetsu / Upland. Nur—Eye-opening newcomer from Tel Aviv’s celebrity chef Meir Adoni. Tantalizingly tasty food exudes high energy. Most dishes are served on platters, family-style. Everyone is soon reaching, passing and spearing. PIZZA PERFETTA: Bleecker Street Pizza / Di Fara / Emily / Joe’s / John’s of Bleecker Street / Kesté / Lucali / Louie and Ernie’s /Marta / Martina / Pizza Beach / Prince St. Pizza / Roberta’s / Table 87 / Waldy’s Wood-Fired Pizza & Penne. The Polo Bar—Equine artwork is no match for the scene of people who come to be seen here, and neither can hold a candle to the great cocktails and fine fare. Quality Eats—All offerings are generous and delicious, and, best of all, the steaks and fish are priced at or below $31. Sides are not to be missed; desserts are outstanding, especially the crème brûlée cake. Sadelle’s—Unbeatable bagels, unsurpassable salmon salad, great grilled-cheese sandwiches and fabulous French toast are among the gems on this matchless menu. St. Anselm—Outstanding steaks and sumptuous seafood washed down with unconventional yet highquality wines and cocktails are yours to be had at this rustic Williamsburg grill. White Gold Butchers—This butcher-shop-cum-restaurant offers the most magnificent meats imaginable.

PIERRE MONETTA; SARAH VAN LIEFDE

SPECIAL

FEBRUARY 2018

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COLUMN

TOPICAL SUBJECTS

JUSUF WANANDI

JUSUF WANANDI IS VICE CHAIR OF THE BOARD OF TRUSTEES OF THE CSIS FOUNDATION AND THE PUBLISHER OF FORBES INDONESIA.

CHINA AND U.S. RELATIONS IN DEFINING EAST ASIA

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FEBRUARY 2018

the U.S. must have a regional presence, and maintain the balance of power—but Trump’s policies are not encouraging (despite comments that he has “great chemistry” with Chinese President Xi Jinping). In the end, East Asia must protect itself and its countries should cooperate to fill in the vacuum if the U.S. withdraws from East Asia’s international trade, climate change or common security arrangements. So far, U.S. has had ambiguous policies towards China, but recent new developments could bring more confrontations in East Asia’s development. More certainty is needed about U.S.’s stance to future relations with China. In the U.S. government’s official National Within the next 30 Security Strategy, released in Decemyears, China will ber 2017, published become even more every several years, both China and Ruspowerful.

sia were called revisionist states seeking to oppose U.S. supremacy. Simultaneously, both side should nurture cooperation. Yet the U.S.’s now ambivalent policies towards China are in danger of turning more antiChina, not only on North Korea’s nuclear problem, but also Taiwan, the South China Sea and trade relations. To prevent more tensions or potential conflicts, the U.S. and China should try to stabilize bilateral relations. F

ADOBE STOCK

ALTHOUGH the Korean nuclear proliferation has grabbed the limelight, and rightly so, but digging deeper, it can be seen as a symptom of the region’s uncertainties, which is the new normal. Since the Cold War’s end in 1991, East Asia has undergone dramatic changes. First, it lived through a short era of the U.S. reigning supreme as a global superpower, after the demise of the Soviet Union. This era didn’t last long. The 2008 global financial crisis badly weakened the U.S. economy just as other powers, particularly China, were rising, marking the beginning of a multipolar world. China, meanwhile, was catching up fast. China has transformed in the last four decades, not only the economy, but also in politics, society and culture. Within the next 30 years, China will become even more powerful. Its strategic vision is to build a socialist system with Chinese characteristics, moderate and prosperous in all fields, and actively pursuing modernization. China will become a large modern socialist state, in all its dimensions. Another development is the role that President Trump seeks for America. Trump is creating a new challenge for East Asia with his policy of putting America’s interests ahead of everything else, thus effectively withdrawing his country from global leadership. During his East Asia trip in November, which included China, Japan, South Korea, Vietnam and the Philippines, Trump was willing to follow the advice of his aides during summits in Vietnam and in the Philippines, but it’s possible he will return to his earlier positions. He may have adjusted his policies with the reality on the ground, but he remains single-mindedly a unilateralist. East Asia must see positive growth and stability based on shared prosperity. The U.S. remains a powerful force, particularly its military, and still has a major regional role. There are strong arguments why

COLUMN

GLOBAL VIEWPOINT

JENNIFER XUE

JENNIFER XUE IS A BILINGUAL AWARD-WINNING AUTHOR, COLUMNIST, AND SERIAL ENTREPRENEUR BASED IN NORTHERN CALIFORNIA. HER BLOGS ARE JENNIFERXUE.COM AND JENNIEXUE.COM.

ADOBE STOCK

CRYPTOCURRENCIES, STAYING OR NOT?

DESPITE BITCOIN surpassing $10,000 per coin, there remain many pros and cons on cryptocurrencies—especially on their staying power. Let’s the facts. Bitcoin’s current market cap of about $180 billion is comparable to Coca-Cola’s. It has increased ten-fold, which sounds enormous, but it’s not much in the global financial market. More than 400 stocks had more significant gains in 2017 than Bitcoin. Can cryptocurrencies be compared to real currencies? No, according to many economists. With a cap of only 21 million Bitcoins that can be mined, it’s incomparable to fiat currencies. Bitcoins and other cryptocurrencies’ prices are very volatile, which undermines their use as a currency. As to the “actual value” based on the usage of cryptocurrencies, there is some value but not much. While the underlying blockchain technology also be used for fiat currencies, making the benefit of cryptocurrencies harder to define. That said, blockchain technology promises to have many real-world applications.

European Central Bank President Vitor Constancio stated that Bitcoin posed a threat to global monetary policy, comparing it to the tulip bubble of the 17th century. Nobel Prize-winning economist Joseph Stiglitz argued that Bitcoin reached its high price due to its potential for circumvention of oversight. Without “actual value,” investors simply expect of what it will become tomorrow. Paul Krugman, another Economics Nobel Prize winner, argues that there is no anchor for Bitcoin and other cryptocurrencies’ value. While U.S. dollars are no longer backed by gold, the value is based on the trust in the United States’ global leadership. With cryptocurrencies, in addition to no anchor, its price is tied up to the Libertarian philosophy of oversight. Initial Coin Offerings (ICO), which work similar to an IPO, takes cryptocurrency euphoria to another level. It’s changing how businesses raise funds, but it lacks oversight. Thus, ICOs are hotbeds for scams. While some say ICOs are just another form of fund raising, like crowdfunding, they aren’t the same. ICOs are unregulated, thus pose a risk to investors. Bitcoins and other cryptocurrencies will remain the native of technological derivatives. However, it would take a massive combination of global political and monetary power to take it to the next level and be used as exchange currencies. Hope and hype are parts of bubble behaviors. When price skyrockets simply because of future expectations, it’s time to be cautious. Remember, the price isn’t identical with value. When you must buy something, buy for its value. In conclusion, until Bitcoin and other cryptocurrencies can find price stability and be regulated on a worldwide level, they will continue to perform as failed currencies and belong to a small class as assets. Whether you’re comfortable enough to take the risk of investing in them is your call. F FEBRUARY 2018

FORBES INDONESIA

Update

BY ARDIAN WIBISONO

KALBE ENTERS CLINICAL LABORATORY BUSINESS

GOOGLE INVESTS IN GO-JEK 16

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FEBRUARY 2018

GOOGLE has reportedly invested $100 million in tech company Go-Jek. Reuters reported that other investors taking parts includes Singapore’s Temasek and China’s Meituan Dianping, although some reports say it may not be a new investment, but followup funding from an investment made last year. Go-Jek’s existing investors such as global private equity firms KKR & Co LP and Warburg Pincus are said to participate in the round that opened last year and is expected to close in a few weeks. “The funding deepens Google’s commitment to Indonesia’s Internet economy,” said Caesar Sengupta, a vice President at Google in the company’s blog without disclosing figures. The Go-Jek investment would mark a deepening of Google’s bet on Asia. In September, it agreed to acquire 2,000 engineers from Taiwanese smartphone maker HTC Corp for $1.1 billion. It also launched a localized payments app for India as it tries to gain a foothold in the country’s rapidly growing digital payments space. This year, it joined an investment in Chinese live-stream mobile game platform Chushou, which followed a minority stake in Beijing-based artificial intelligence startup Mobvoi in 2015. Go-Jek itself has transformed itself from just a ride hailing company to a multi-service provider. The company also has a big appetite in acquiring other potential startups, and over the past year has invested in ticketing platform Loket and fintech companies Kartuku and Midtrans.

COURTESY OF GOJEK; ADOBE STOCK

PT KALBE FARMA has entered the clinical laboratory service business through a joint venture with two Japanese companies. The venture is the first foreign JV in clinical laboratories between Indonesia and Japan, with Japan’s Health Science Research Institute (HSRI) and Toyota Tsusho Corporation (TTC). Kalbe owns 60% of the JV and the rest is equally shared with the two partners. The JV is expected to contribute up to 10% of Kalbe’s revenue in the next five years. “Through partnership with these reputable foreign partners, we hope to ensure a high standard laboratory services on par with Japanese standards, and to gain access and leverage on their existing networking,” said Vidjongtius, president director of Kalbe Farma in a published statement. “We will perform a benchmarking process and technology transfer to improve the quality of laboratory services.” The JV hopes to tap into a growing demand for high quality clinical testing and other laboratory services.

FEBRUARY 2018

FORBES INDONESIA

PURE FLOW

Nu Skin launched the EcoSphere, a cutting edge water purifier to improve a healthy lifestyle

From left: Dr. Mark Bartlett, Shita Laksmita and Kany Soemantoro

o help people to have healthier lives, Nu Skin recently launched its first water purifier exclusively for the South East Asia region with the EcoSphere. Inline with the brand endless pursuit for innovations, the product features an array of cutting edge technology. The product will enhance Nu Skin portfolio of products in Indonesia that

has been successful with its anti aging and other supplements products. “EcoSphere expanded our portfolio of products to healthy lifestyle, now we can accommodate more needs of our customers,” Kany Soemantoro, President of Nu Skin Indonesia & Philippines says. Nu Skin itself in Indonesia has grown favorably in the recent years amid the slowing economy growth in Indonesia. Last year the company noted

the retail value of Rp 1.5 trillion that is an increase of 10% compared to the year before, that reflected the products are sold well by the company and its members that has reached more than 30,000 active members nationwide, “We hope EcoSphere will contribute around 3 to 5% to our revenue,” Shita Laksmita, Vice President of Sales & Marketing for Nu Skin Indonesia says. To protect you and your family’s health

SPECIAL ADVERTISING SECTION

with clean, safe water that is free from everyday toxin, contaminants and pathogens, the EcoSphere has a four-stage filtration process that eliminates 99.9999% of harmful materials which is usually present in water that packaged in a neat and easy to install 3 in 1 filter. For a peace of mind the product also has a UV light at the end of the process to help eliminate bacteria and for the feast of the eye, the product also has a simple and modern design with minimal footprint and has a touch activated switch for added practicality. “Water is a basic human needs and an absence of it can drastically impact human lives, through the EcoSphere we want to help to improve human lives by presenting a good technology that is easy to use and have a reasonable price”, says Dr. Mark Bartlett, Vice President of Global Research and Development for Pharmanex says. As Vice President of Global Research and Development for Pharmanex In his position, Dr. Mark Bartlett oversees research and development for all Pharmanex products. Mark’s research experience includes work in the area of cardiovascular disease with an emphasis on the role of free radicals and antioxidants, transplant research and human autoimmune in amatory diseases. He has published more than a dozen papers on this work in various scientific journals. Bartlett’s research led him to the United States’ National Institutes of Health where, as a visiting scientist at the world-renowned National Cancer Institute, he investigated the interaction of T cells with the blood vessel wall. Mark’s interest in the role of nutrition in human health and disease led him to join the company in 1996 as a technical specialist and scientic advisor. He has since formulated many supplements and sports food products for the United States, Japan, Taiwan, Korea, Hong Kong, and Australia. Bartlett holds degrees in biochemistry and organic chemistry from the Australian National University and a Ph.D. in Immunology and Cell Biology at the John Curtin School of Medical Research in Canberra, Australia. According to Mark, a water purifier is a substantial item as South East Asian countries especially Indonesia is still racing between the population growth and the development of infrastructure. Many tap water in Indonesia besides having bacteria still has harmful substances such as heavy metals and pollutants. If you think tap

water is definitely safe to drink after boiling, think again! The fact is, though boiling can eliminate microbiological contaminants such as bacteria and viruses, other dangerous contaminants may still remain. What’s even worse — boiling actually increases the chemical toxicity of these stubborn contaminants by evaporating away pure water. The Ecosphere eliminates and purifies away all these dangers in your tap water to ensure clean, safe drinking water to protect you and your family’s well being. The product

“Water is a basic human needs and an absence of it can drastically impact human lives, through the EcoSphere we want to help to improve human lives by presenting a good technology that is easy to use and have a reasonable price”, is also more environmentally friendly as it don’t waste any water compared to other water purifying system that can waste up to 3 gallons of water in the process. Through a cutting edge and innovative filtering technology called the i4 Ultrapure Technology, the product has a four stage filtering process to ensure a purified tap water. The first filter is the pre filter that is good for getting sediments and protecting the other filters, the second filter is a compressed activated carbon block that is a foam that force the water through to filter harmful substances such as chlorine and lead, it is more expensive but more effective that other similar filters. The third filter is the Ultra Filtration Membrane that designed like a human kidney and has a huge filtering area. The last filter one is the ultra violet light to make sure that everything is clean, “Our 4-stage ultra purification technology is representative of our commitment to superior water purification. It makes regular tap water exceptionally clean and safe so that you and your family can drink healthy,” Mark says. Aside from the cutting edge technology, the product has a clean and modern, userfriendly design. Its sleek modern design sits on a space that is just half a standard-sized

A4 paper. It can be installed in less than five three minutes and its 3 filters that can last to up to a year is integrated into one piece that is easy to install and replaced. To complement all the features, the product also has a user friendly control, where there is a touch sensitive panel to switch between purified water and tap water that installed in your faucet for a hassle free operation. The EcoSphere has been in research for five years to search for the best technologies available, “It’s a combination of complexity and simplicity, putting all these tech in one package was a big challenge but the end result is something unique and better,” Mark says. This year Nu Skin also aims to reach more area in Indonesia such as Kalimantan and more in East Indonesia. It is also in progress in launching a better commission scheme called the velocity plan that allows the commission to be disbursed to members in two weeks and later on daily basis. The plan has been approved by the related government ministries and will be launched in July this year, “We want Nu Skin to be a business platform that is well suited for every segment, from matured segments to millennial that wants freedom while having a decent income,” Kany says.

FORBES INDONESIA

ISSUE & IDEAS

CANCER IMMUNOTHERAPY

Cancer Immunotherapy: Its Time Has Arrived A revolutionary cancer treatment is showing promising results.

BY AASTHA SABOO

rom many years, cancer has been treated by radiation, surgery, chemotherapy, hormonal therapy and later targeted therapy, from the 1990s. A few years ago, scientists developed a new treatment called cancer immunotherapy that had a significant impact on survival rates in cancer patients across many cancers. Cancer immunotherapy has been hailed as the new revolution in cancer treatment and for good reason. Just before an international symposium last November on immunotherapy, organized by leading pharmaceutical firm Kalbe Farma and the Stem Cell and Cancer Institute in Jakarta, Forbes Indonesia interviewed several top international medical professionals about the cancer immunotherapy’s potential. They discussed recent medical breakthroughs in immunotherapy, and how it could be used in developing countries. What is immunotherapy? Immunotherapy is a treatment which enables the body’s own immune system to attack cancer. These types of treatments have shown to have especially dramatic benefits against such cancers as melanoma (skin cancer), leukemia and lymphoma. Previously melanoma patients in an advanced stage had very limited treatment options. With immunotherapy, some patients who were considered terminally ill can now potentially return to normal 20

FORBES INDONESIA

FEBRUARY 2018

Dr. Boenjamin Setiawan, Founder of Kalbe Farma

Cancer immunotherapy has been hailed as the new revolution in cancer treatment and for good reason. health. “This is a big revolution, that the body’s immune system is being used to fight cancer. It is only recently that we have found a number of treatments where the immune system is able to attack the cancer,” says Dr. Stephen Russell, a professor of medicine at the famed Mayo Clinic in the U.S. Various types of immunotherapies that can be used alone or in combination, like antibodies, vaccines, viruses and cell therapies, especially T cell

therapy. Many immunotherapy treatments are well tolerated with modest and manageable side effects, if any at all. “One example of immunotherapy making a real difference is the use of immune checkpoint inhibitors,” says Dr. Stephen. Cancers protect themselves by hiding from and evading the immune system. One way that cancer survives is by sending a signal not to be attacked to immune cells, mainly the T cell (the leading “killer cell” that protects the body from disease and infection). The immune checkpoint inhibitor antibody breaks this signal, so the T cell “wakes up” and is unleashed to attack the cancer. As of 2018, immune checkpoint inhibitors have received U.S. FDA approval in many cancers, including melanoma, lung cancer, oral cancer, Hodgkin’s lymphoma, bladder cancer, kidney cancer, stomach cancer and colorectal cancer. CAR-T cell treatment was the remarkable frontrunner of the cancer immunotherapy revolution. In 2017, two CAR-T cell therapies were approved by the FDA, one for the treatment of children and young adults with relapse acute lymphoblastic leukemia (ALL) and the other for adults with advanced lymphomas. In landmark studies, CART cells were able to achieve complete cancer remission in over 80%, and even up to 90%, of ALL patients who had mostly not responded to conventional treatments and were thus deemed terminal. In another historic report, over 50% of relapsed lymphoma went into complete remission with CAR-T cell therapy. These results have been hailed as major breakthroughs. Another recently FDA approved cutting-edge immunotherapy is oncolytic viruses, a field which Dr. Stephen has pioneered. For this treatment, a herpes virus, measles virus and even an HIV virus is genetically modified to fight cancer as oncolytic viruses. These modified viruses then enter and selectively multiply in cancer cells, while sparing normal cells. When the cancer

AHMAD ZAMRONI / FORBES INDONESIA (2)

From left: Dr. Malcolm Brenner, Dr. Stephen Russell, Dr. Aru Sudoyo and Dr. Soo Khee Chee

cells die from having too many oncolytic viruses inside, the dying cancer cell products are released to stimulate an active anti-cancer immune system, and also release more viruses, which then infect more cancer cells, setting up a potent multiplier effect. “While blood cancers are the easiest to treat with cancer immunotherapy, these treatments have also been shown to be effective against melanoma, and even cancers such as lung, some colorectal, liver, and a specific type of breast cancer. However, even in cancers that are vulnerable to immunotherapy, there are also patients who don’t respond,” says Dr. Malcolm Brenner, a professor of pediatric medicine in Baylor College in the U.S. “Combinations of immunotherapies can further improve the benefit of each individual drug against cancer. For example, the combination of an immune checkpoint inhibitor antibody and oncolytic virus in melanoma patients doubled the response rate against this cancer.” This kind of rational drug

combination approach can be seen as the future of cancer treatment. Dr. Malcolm is one of the founders of cellular immunotherapy since the 1980s. “Apart from high costs, the challenge is also to find patients who best respond to these sophisticated treatments,” says Dr. Roy Soetikno, adjunct professor of medicine at the Universitas Indonesia. “Therefore, patient selection is an important issue as it will avoid unnecessary treatment-related toxicity and added cost for patients.” The big question is how soon these treatments will be available in developing countries such as Indonesia and elsewhere in Asia. “Currently only the U.S. and Europe are announcing drug approvals for these immunotherapies. In other countries, it is a long drawn out process— even resistance—to regulatory approval. Many immunotherapy drugs are expected to reach countries like Indonesia only after several years,” says Dr. Aru Sudoyo, professor of medicine at the Universitas Indone-

sia and chairman of Indonesia Cancer Foundation. “The reality of expanding beneficial cancer immunotherapy to reach Indonesia’s many cancer patients must include developing local expertise, establishing strong partnerships with international academic hospitals, biotech and pharmaceutical industries and committed support by the government,” says Dr. Toh Han Chong, a medical oncologist and deputy director of the National Cancer Center, Singapore. “In countries like Singapore, the work has started. We are potentially going to collaborate more with Indonesia’s academic and private industry,” says Dr. Soo Khee Chee, a director at the National Cancer Center in Singapore. Dr. Khee Chee agreed that the government and private sector should work together to help bring down the cost of such cancer treatments. The hope is that any cancer patient who needs essential, sometimes life–saving, immunotherapy treatments can receive them. F FEBRUARY 2018

FORBES INDONESIA

COLUMN

INVESTMENT IDEAS

TEGUH HIDAYAT

TEGUH HIDAYAT IS AN INDEPENDENT INVESTOR IN INDONESIAN STOCKS, AND FUND MANAGER. SINCE 2009, HIS SPECIALTY IS VALUE INVESTING, TRYING TO FIND PROSPECTIVE INVESTMENTS AT THE LOWEST POSSIBLE PRICE. TEGUH IS ALSO A REGULAR COMMENTATOR IN THE MEDIA, HAVING APPEARED IN BISNIS INDONESIA NEWSPAPER, KONTAN NEWSPAPER, IDX CHANNEL, AND METRO TV.

ONE MEMORABLE expeto dampen speculation, Bank Indonesia (BI) launched rience was when property a loan to value (LTV) policy, requiring a down payment stocks, previously devastated of at least 30% prinicipal to qualify for a property loan. in the 2008 crisis, gained in This policy, along with higher rates, ended the boom, line with a property boom, and ASRI’s net profit dropped to just Rp 877 billion in with a return on equity 2013. I sold my shares at about Rp 800. above 20%. Back then, deSince then, property has suffered as the economy velopers could purchase slowed down with the commodity slump. ASRI had a land at a bargain price, decline in net income, booking only a net profit of Rp build high-end property on 519 billion in 2016. The stock dropped to only Rp 300 it, and then sell for handsome profits. per share, or about 30% of its market value in early 2013. Developer Alam Sutera Realty (ASRI) also enjoyed Now, growth and commodity prices are recoverthis boom, controlled by tycoon The Ning King. As the ing, the rupiah stable, and inflation under control, owner of township Alam Sutera in Serpong, while the BI said it would have a Assuming normal it started growing rapidly in 2009 after an more flexible LTV policy. In the growth of about 5%, third quarter of 2017, ASRI’s net exit on the Jakarta-Merak toll road opened, and no tightening providing a direct connection to Jakarta. profit already surged to Rp 1.1 trilThus, ASRI posted a net income of Rp 94 lion. Thus, in August 2017, I decided by the BI, ASRI billion in 2009, and by 2012 net income had to buy ASRI again. Just think: In should be able to already exceeded Rp 1 trillion. book record profits 2013, ASRI was Rp 1,000 per share, ASRI shares also skyrocketed at the same with a book value of only Rp 5.1 trilthis year, and its time, from a low of Rp 50 per share in 2008, lion. Today ASRI’s shares are about shares continue then breaking Rp 1,000 in early 2013. I bought Rp 370, or only a third, while the to rise. ASRI at about Rp 220 in 2010. In mid-2013, book value is Rp 8.2 trillion. Yes, ASRI’s equity has kept growing, and its outlook is good. In addition to Alam Sutera, the company has been developing Township Pasar Kemis in Tangerang, with 2,600 hectares, from 2013, as well as major assets such as Bali’s Garuda Wisnu Kencana Cultural Park and Jakarta’s Centennial Tower. So assuming normal growth of about 5%, and no tightening by the BI, ASRI should be able to book record profits this year, and its shares continue to rise. F Disclosure: When this article was written, the author is in a position of ASRI at an average purchase price of Rp 358 per share. This position can change at any time without ASRI development in tangerang prior notice. 22

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FEBRUARY 2018

COURTESY OF ALAM SUTERA REALTY

VALUE OPPORTUNITY IN ALAM SUTERA REALTY

E-CONOMY:

THE

DIGITAL

MAINSTREAM

The digital e-conomy has become more mainstream than ever, gaining wide acceptance in the society. This trend is driven by the rising use of smartphones, with the increasing bandwidth and computing power, as well as more traditional laptops and desktop computers. The masses now have tools that can easily connect them to the Internet and the e-conomy. The companies selected for this issue demonstrate the seamless integration of offline and online in much wider spheresâ&#x20AC;&#x201D;and with a deeper impactâ&#x20AC;&#x201D;than traditional sectors such as e-commerce and social media. Entrepreneurs here are developing AI, logistics, financial services and photography services, all arising from the wide adoption of the Internet as a fundamental technology to power growth and innovation.

SPECIAL FEATURE E-CONOMY

ONE-STOP MALL Blibli’s Kusumo Martanto says acquiring Tiket.com was just one step in its expansion plans. BY ARDIAN WIBISONO

Kusumo Martanto in Blibli’s Jakarta office

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FEBRUARY 2018

-commerce competition in Indonesia is very tough with multiple players. Backed by Martin Hartono’s GDP Venture, Blibli.com is among the earliest and has survived to become one of the largest e-commerce companies. Founded in 2010, the company recently made a significant venture into the online travel industry by acquiring Tiket.com, one of the largest online ticket vendors in the industry. “Being an archipelago, there is a huge demand for travel and also with low cost carriers coming in. We also see a trend of the younger people who like to travel,” says Blibli Chief Executive Kusumo Martanto about the acquisition.

took over Indonesia Flight, an application based online travel agency. In 2016, the app booked a gross transaction value of $37 million. The association between Indonesia Flight and Tiket.com goes back to before the latter’s acquisition by Blibli. Indonesia Flight was launched in 2012 by venture builder Ticket Solutions, with an app built using the Tiket.com API. Kusumo says Blibli has no plans to merge all the travel business instead keeping both separate as additional channels to the already existing travel services in the company. Blibli could also do cross selling by offering related goods with travel needs. “We see that the customer overlap is minimal, so it adds more opportunity for us,” says Kusumo, adding that the e-commerce and online travel agency businesses

AHMAD ZAMRONI / FORBES INDONESIA

The numbers confirm this. Inbound tourism continues to rise in Indonesia. After reaching over eight million visitors in 2015, the number grew by another 9% the following year, and a target is 15 million foreign visitors in 2017, expected to bring in Rp 172 trillion. Indonesia is also globally the fifth largest domestic travel market. In 2015, an estimated 255 million trips were made. Kusumo, who has been with the company since its founding, says GDP Venture’s intention from the beginning was to have a site that combined e-commerce with online travel, but GDP decided to focus on e-commerce first. The opportunity came when the Tiket.com founder looked for a partnership, but instead Blibli convinced him to sell the company last June for an undisclosed price. Later in November, Blibli also

FEBRUARY 2018

FORBES INDONESIA

SPECIAL FEATURE E-CONOMY

have similar characteristics to succeed: good service. With that focus, Blibli sticks to its B2C business model as an online mall providing selected quality items and tenants, despite the rising popularity of C2C markets such as Tokopedia and Bukalapak. Kusumo believes good service and customer satisfaction will win the market, rather than just offering the lowest prices. The company is also maintaining a simple business model of collecting commissions from sellers, with From left: Kusumo Martanto, George Hendrata and Gaery Undarsa a variable fee that depends on the partner and goods G-class and BMW motorcycles. As one example, Blibli category, but starts with a once sold Cleveland motorcycles over the site, and sold minimum 5% fee. out all the units within minutes due to huge demand. So far this business Kusumo is also aware, however, that a one-stop online model seems to be working, mall offering a wide range of products and services also as Blibli has posted tremenneeds all the supporting ecosystem, especially in logistics. dous growth. The company Kusumo says Blibli is addressing this bottleneck by adding now has 35,000 stores commore warehouses and hubs. Blibli has 12 logistics centers pared to just twenty when in major cities such as Jakarta, Bandung and Surabaya, and it first opened. There are more are coming. “To build this ecosystem, we are open to nearly three million SKUs joint ventures and alliances. We can’t do it all by ourselves, listed in the mall from just since we don’t have all the capability,” Kusumo says. 3,000 five year ago. KusuBesides that, Blibli, as a local champion, also wants to mo claims Blibli’s transhelp local businesses to grow. Kusumo knows that many action value had grown goods sold in Indonesia are imported. Thus, Blibli has 1,000 times in the past five been trying to help local SMEs compete in the digital years with 11 million active users. Despite being an early economy. To that end, last year it created an entrepreplayer, Kusumo knows Blibli needs to keep innovating neurship competition called the “Big Start Indonesia,” to stay competitive. As an example, Blibli pioneered the modeled after talent shows, in which startup and SME so-called “Blibli in Store” program to bridge the offlinecompanies compete before a panel of celebrity judges for online and online-offline stores, as many Indonesian the top prize of Rp 1 billion in cash. All the participants customers remain reluctant to buy online. With this proin the competition, broadcast online, also get coaching gram, a customer could come to Blibli’s partner offline and training. This competition, now in its second year, atstore, see the goods they want to buy, and purchase it tracted 15,000 applicants in its first year. “We see that the through the Blibli platform with all the benefits such as interest is huge but the capacity for these SMEs to enter promotion prices and installment purchasing. e-commerce is still very low. Only few are ready, but by Blibli also pioneered selling new vehicles online. giving training we hope they could share knowledge to “Some said that it was a ridiculous idea to sell cars onother SMEs. It’s hard work to improve the local players line, but turns out we got a good response,” says Kusumo. but that’s our goal,” Kusumo says. F Blibli has even sold premium vehicles such the Mercedes

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FEBRUARY 2018

COURTESY OF BLIBLI.COM

“WE SEE THAT THE CUSTOMER OVERLAP IS MINIMAL, SO IT ADDS MORE OPPORTUNITY FOR US.”

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Semua itu tidak terlepas dari kepercayaan Anda, para pembaca setia Bisnis Indonesia

Terima Kasih

kepada seluruh narasumber, kolumnis, pembaca dan para pemangku kepentingan lainnya atas kerja sama yang terjalin selama ini, sehingga Bisnis Indonesia meraih berbagai penghargaan dalam mengomunikasikan kebijakan dan mendukung pertumbuhan ekonomi nasional.

FEBRUARY 2018

FORBES INDONESIA

SPECIAL FEATURE E-CONOMY

AGGRESSIVE VALUE Lei Jun aims Xiaomi to be the bestselling smartphone in Indonesia.

BY YESSAR ROSENDAR

iaomi is one of the rising smartphone brands from China. It currently ranks as the fifth largest global brand for smartphones in terms of volume, and as just started an aggressive strategy in the low-end segment. Last December, it launched the Xiaomi 5A, a low-end smartphone costing only $75, half the price of what others charge. Billionaire Lei Jun, Xiaomi founder, made a rare visit to Indonesia and gave Forbes Indonesia one of a limited number of interviews. For Jun, nothing less than number one is good enough for him. Last year the brand sold 90 million smartphones worldwide and this year it aims to increase that to 100 million units. â&#x20AC;&#x153;This year we aim to sell 10 million Xiaomi smartphones in Indonesia, and in two to three years we can be the number one in Indonesia,â&#x20AC;? says Jun.

FORBES INDONESIA

FEBRUARY 2018

GILLES SABRIE FOR FORBES

The Indonesian smartphone market recorded a shipment of 7.2 million units in the third quarter of last year, down 9% from the same period last year, according to researcher IDC. In this flat market, Indonesia consumers are moving to Chinese smartphones, which are now among the bestselling brands. Samsung leads with 30% market share, with Chinese brands Oppo holding 25%, Vivo 8% and Xiaomi 6%, in the third quarter of last year. Locally made brand Advan also holds 8% share. In Indonesia, low-end smartphones that sell from $100 to $200 still dominate half of the market with a 47% share, while midrange smartphones between $200 to $400 continued to grow with a 32% share. “We project that the smartphone market will grow another 6% this year. The difference from last year—where first-time smartphone buyers boosted the low-end segment—this year the growth will be supported by the replacement market with people who want to upgrade their phones to accommodate their need for social media, streaming music or videos,” says Risky Febrian, associate market analyst of IDC Indonesia, in an email. Xiaomi is still relatively new to the market. It sold its smartphones officially in Indonesia back in 2014 with the Xiaomi Redmi 1S for the lowend segment. Now the brand has quickly has strengthened its presence in Indonesia as it increased its local office staff from only three to 44, and is also building a research center. The government requires a smartphone sold in Indonesia

“WE HAVE TO GAIN TRUST AND LOVED BY OUR CUSTOMERS.”

to have 40% local content, or that the brand have a research center here. To help meet the local content regulation, the brand also started to locally assemble its phone. Xiaomi 5A also is the first locally produced smartphone, assembled in collaboration with PT Erajaya Swasembada, PT Sat Nusapersada, and TSM Technologies, after all of them signed an agreement with Xiaomi in February 2017. The assembly itself is done at a Sat Nusapersada facility in Batam within the free trade zone, and in close proximity to Singapore and Malaysia. “We want to be in the Indonesian market for a long time,” says Jun. Indonesian is a promising market for Xiaomi, as the country is a fast growing market for smartphones, according to researcher GSMA Intelligence Indonesia. The country has 339 million mobile connections, but only 36% of them have mobile broadband connections. The biggest cellular operator in the country, Telkomsel, has 170 million subscribers, but only 83 million have smartphones—and only 19 million have 4G LTE connections. Yet the number of smartphone users rose 34% in 2017 compared to 2016. While Xiaomi focuses on online sales, it does also sell its products offline, with the first Mi retail store opened in Pondok Indah Mall in South Jakarta in 2015. “We have a physical store to make it more convenient for our customers,” says Jun. Xiaomi aims to further strengthen its presence in Indonesia online and offline. By the end of this year, the brand aims to open 30 new Mi Stores and 90 authorized service centers. In January, it opened its latest store in Emporium Pluit Mall, in North Jakarta. Xiaomi can offer its phones at low prices because it makes its profits mostly on software and services, not the physical phones. However, the brand aims to have advanced and cutting-edge technology in the phones, which encourages greater use of apps, software and services. Currently it has more than 4,000 patents and another 1,500 in process. One example of its advanced tech is the Xiaomi Mix phone, released in 2016 as the world’s first bezel-less phone (and a second Mix model was released last year). Xiaomi sells more than smartphones here, it also sells various other branded products, such as rice cookers and TVs, both online and offline—and Jun also wants to increase sales of these products. Jun says the most valuable asset in a business is that the trust of the customers. “We have to gain the trust and love of our customers,” says Jun. F

FEBRUARY 2018

FORBES INDONESIA

SPECIAL FEATURE E-CONOMY

Kioson becomes the first tech startup listed on the IDX.

K BY SHINTYA FELICITAS

ioson’s website says it is a startup established in 2015 with the dream to “enable everyone in Indonesia to go online.” The company, whose full name is PT Kioson Komersial Indonesia, is an online-to-offline (O2O) platform, providing various services to Indonesia’s untapped masses who have not yet done much online. Kioson’s mobile app, for example, can allow those without a bank account to shop online, and pay for their purchases at local neighbor kiosks. It also offers bill payments online, micro-lending, money transfer and phone credits. It plans to be a partner with Laku Pandai, the government’s branchless bank program, to offer banking services, without the need to open an account at a physical bank. This company is also unique: it is the first local tech startup to list on the IDX, in October 2017. “People want to invest in a startup but don’t have the access,” explains Kioson Chief Executive Jasin Halim, 52. The IPO raised Rp 45 billion from the public, equal to 23% of the firm, which was used primarily for the acquisition of Narindo Solusi Komunikasi, an aggregator of electronic vouchers and digital services. For the offering, the stock was oversubscribed more than 10 times at an offering price of Rp 280. In the first month, IDX suspended Kioson shares from trading twice, because of the unusual market activity: its share price jumped nearly 10 times compared to its initial offer, and now trades around Rp 3,000. “When Kioson joined the stock market, everybody wanted to be involved,” says Jasin. Commissioner Roby Tan, 44, the founder of Kioson, says Kioson’s initial capital was around $5 million, and now, based on its current stock price, the company is worth about $14 million. According to its latest financial report, the company’s total assets are Rp 38.5 billion,

FORBES INDONESIA

FEBRUARY 2018

while revenues reached Rp 75 billion with a net loss of Rp 8 billion. Kioson earns revenue by charging a fee for each transaction, whether a fixed fee (Rp 2,000 for electricity bill, Rp 6,000 for money transfer, and so on), or a variable e-commerce fee, where Kioson takes a 30% cut from any revenues. Jasin explains that the reason he and the management team preferred an IPO immediately rather than seeking funds from venture capital, as most other startups do, was to be different. “We are a disrupting company, why don’t we disrupt the fundraising pattern as well?” says Jasin. According to Jasin, the IDX and the Financial Authority Services (OJK) fully supported Kioson to do an IPO, adding it was not as complicated as what most imagine. He even recommends other startups follow Kioson’s move, as it is a good alternative to traditional fundraising. However, he notes that it’s important to clearly demostrate that the business model works, especially because Kioson is now the first startup on the stock market, and will be a bellwether for others which might follow. “We have to guarantee our sustainability, and that we a profitable investment for investors,” Jasin says, who is a veteran in the tech business. He got his BS in computer science in 1987 and an MBA in 1990, both from Monash in Australia. He was chief executive of PT Mail Order Indonesia, a marketing catalogue company, from 1992 to 1998. Roby is also a veteran tech professional. After college,

“WE HAVE TO MOVE FAST, FAIL FAST, SUCCEED FASTER.”

AGOES RUDIANTO FOR FORBES INDONESIA

SERVING THE UNDERSERVED

From left: Roby Tan and Jasin Halim

he started a phone credit distribution business and was a director of PT Mitra Komunikasi Nusantara in 2008. Roby and Jasin met in 2000, and later Roby asked Jasin to help him at Kioson, which he started in 2015. Kioson claims it currently has 30,000 kiosk partners, mostly in Java and Sumatra, and total users since startup add up to three million. Kioson provides a tablet with its installed applications for the kiosk as tool for online transactions. Customers come to the kiosk, buy what they need, and the kiosk’s staff will order the item online and later the costumers can get their item at the same kiosk, and pay for it. The payment is done with cash, so the app connects the unbanked population to digital commerce. It also helps build people’s trust for online shopping and payment, which is quite low among residents in rural areas. On the

other hand, the company wants to improve the competitiveness of traditional kiosks, so they can offer more than what’s on the shelves. Merchants are also entitled to receive financial assistance from Kioson, with loans of Rp 5 million to 10 million, with a 14 days tenor and 24% interest rates per year. Kioson claims its NPLs are just 0.01%. This year, it aims to expand to Kalimantan and Sulawesi, and grow its merchant number to 100,000 partners. Besides that, Kioson also wants to be agent for the social assistance fund (bansos) from the government. “Our goal is to help government improve the financial inclusion in Indonesia, that’s why we will keep our focus on rural areas,” Jasin says. The key of success? “We have to move fast. Fail fast, succeed faster,” concludes Jasin. F

FEBRUARY 2018

FORBES INDONESIA

COURTESY OF DAVID SOONG

FORBES INDONESIA

FEBRUARY 2018

SPECIAL FEATURE E-CONOMY

SWEET MEMORIES David Soong’s Sweet Escape is making high-quality photography accessible.

BY ARDIAN WIBISONO

avid Soong has an eye for what makes a good business. A serial entrepreneur, David has cofounded several successful ventures such as the Boga group, a lifestyle company behind prominent brands in the country like Sushi Tei and Bakerzin, wedding photography service Axioo, online wedding vendor directory Bridestory and printing service Printerous. What’s next for David? A new online service called Sweet Escape, which provides professional photography services to travelers. Sweet Escape’s idea came from David’s experience when traveling on holiday with his family. Despite being a photographer, he found that he rarely had good family pictures. “I figured that it’s not just me, that others want to have good memories to remember. However, it should be easy and affordable,” David says. With Sweet Escape, one can book a professional photographer in more than 300 cities around the world, who will meet you, take your photos and return results within three days. It’s something like AirBnB or Uber, but for photography services. So far, the startup has a network of over 500 selected photographers, with more being added all the time. The pricing is also simple, from $300 to $500 for a two-hour session depending on the city–Jakarta costs $300, while Tokyo $400. European cities such as Barcelona cost $500. The prices can be checked beforehand on the site or its app, with Sweet Escape taking a standard 20% commission. While not cheap, David says the service is targeted at high-end tourists. David wants his clients to have a good experience with the local photographers, so each one is tested for interpersonal skills and knowledge of their city. David says the photographer should have lived in the city for at least five years, so he know good places

for pictures and the best time to do it. Many of his photographers are semi-professional freelancers with a full time job in a different field, but have a passion for photography and meeting new people. David says some have interesting backgrounds such as a firefighter and a civil engineer. “In other words, they are also a good tour guide as well, knowing where to find a good coffee shop or place to eat, for example. Our photographer in Quebec brought a heat pack for his client, an Indonesian family not used to the minus 24-Celsius degree cold. This good experience is priceless, but they also get good pictures,” David says. To ensure the quality of the photos, Sweet Escape’s team in Jakarta does all the editing. Clients get to select from over 150 photos and can download their favorite 40 as highresolution pictures. Additional photos are charged at a fee of $10 each. David says orders coming in last year were up five-fold from the year before, even though he does no marketing of the site—it is all word-of-mouth referrals. During the yearend holiday season, David says Sweet Escape received thousands of orders from around the world. Most are Indonesians who want photos taken in cities such as Paris, Tokyo and New York, but he says about 30% are overseas customers, with special interest coming from the U.S. He is confident that Sweet Escape has a good chance in the global market.

WITH SWEET ESCAPE, ONE CAN BOOK A PROFESSIONAL PHOTOGRAPHER IN MORE THAN 300 CITIES AROUND THE WORLD.

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“We want to be an Indonesian startup that caters to the global market. Other local startups are looking only at the domestic market potential—and there is nothing wrong with that since the market is huge. We see a good global opportunity,” David says. By starting with a global ambition, Sweet Escape is naturally differentiating itself from local competitors. David says competitors joining the market are also a good sign that this market has good prospects, such as Frame A Trip cofounded by actress Dian Sastrowardoyo. While initially Sweet Escape was meant for travelers, the site’s competitive pricing means it has started getting orders for graduation, corporate events, pre-wedding sessions and family portraits. After booking the service, customers can chat through the app to let Sweet Escape know about their photographic needs. As new markets develop and the startup expands to other countries, the business will become less seasonal, says David. David is planning to synergize Sweet Escape with Printerous, so soon there will be a print button on the app for client to order their picture to be printed. David claims he’s conservative in business, so he built Sweet Escape to be profitable from day one, although David has done an undisclosed round with East Ventures to expand. David says he may raise more money this year. Despite having many ventures, David say he’s now focusing on growing Sweet Escape and other businesses run by his partners. However, being passionate about photography himself, David still occasionally take pictures for Axioo and Sweet Escape clients. “I also need to see the service from the photographer’s perspective, for example whether two hours is enough, and what can be improved,” he says. F

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EXPRESS AMBITION J&T Express aims to become the country’s top express courier.

BY ARDIAN WIBISONO

he Indonesian government had set a tremendous growth target for the domestic e-commerce market, aiming to reach $120 billion in 2020 from an estimated $25 billion in 2016. With that in mind, logistics firm PT Global Jet Express, which operates as J&T Express, sees a huge growth opportunity since e-commerce must be supported by logistics. Despite growing competition, the company claims to be the second largest player in the express logistics service despite being started only a few years ago, with hopes to be number one soon. “The logistics business is an e-commerce supporting business, so we feel that we have the same growth potential. There are many competitors in the business but few are really serious, only a few big ones like JNE or Pos Indonesia, and it’s not an easy play,” says J&T Chief Executive Robin Lo at the company’s new office in Pluit, North Jakarta. Government figures showed that the logistics industry itself is a huge business, valued Rp 2,400 trillion in 2016. The delivery service part is relatively small, with an estimated market of just Rp 50 trillion in the same year. Robin says J&T prefers to focus on the express delivery service where the goods are shipped by air and in relatively small packages, which fits the typical shipments from e-commerce firms. J&T cofounders are the former chief executive of cellular phone firm Oppo Indonesia and Tonny Chen, who is the founder of Oppo International. The name J&T is said to be the abbreviation of the two founders first initials. The Chinese cellular phone brand is known for its aggressive marketing and promotion in key markets such as India, Indonesia and Thailand. Globally, U.S. researcher Gartner placed Oppo in the fourth place in global sales units after Samsung, Apple and Huawei with 8% global market share as of the end of third quarter last year, and in Indonesia, Oppo ranked number two after Samsung. Thus, J&T is piggybacking on Oppo’s well built network nationwide. “Even before J&T started, Oppo already had branches across Indonesia. We are two different companies, with different management teams, but we are using the same network as our strategic advantage. Oppo has a retail business model reaching even the smallest cities in the country and we have had that network since we started, which

other players don’t,” Robin explains. Thus, J&T now has 55 sorting centers in major cities and 4,000 drop points with 16,000 employees across the archipelago. Each day the company delivers 400,000 packages. Because logistics is a capital intensive business, the company has been pouring capital into the business. Last year Robin says the company injected $103 million in capex, adding to a previous $440 million, giving the company a valuation worth over $540 million. Robin says the funding was financed internally and will be used to improve service and efficiency, such as implement robotic automation in the main sorting center to cut delivery time. With the investment the company will also add more sorting centers, and plans to improve delivery capacity to one million packages a day. The investment is also aimed to meet the company’s target to grow e-commerce logistics contribution to 80% from the current 60%. The investment has also been used to improve the company’s IT system to provide more efficiency.

they still need education about e-commerce. Some of the SMEs are located outside Java, in Papua for example, and this is where we can help. As these SMEs grow and export, we are sure their domestic sales will improve, and so will our business,” Robin says. The company is not just looking for growth in the domestic market. Robin says the company plans to roll out a regional expansion this March, starting with Malaysia and Vietnam. The company plans to set up JVs with local partners there but Robin says that Oppo already has a good network in both countries as well. So J&T plans to copy the same technique to tap both markets. Robin adds that compared to Indonesia, which is an archipelago, both markets should be relatively easier to penetrate. Robin is also aware that due to the nature of the domestic logistics, the cost of operations is big, but Robin is sure that J&T is on the right path. F

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“THE LOGISTICS BUSINESS IS AN E-COMMERCE SUPPORTING BUSINESS, SO WE FEEL THAT WE HAVE THE SAME GROWTH POTENTIAL.” “J&T is the pioneer of system integration with a cashless system. E-commerce sellers can just bring the goods and the receipt, and it’s all taken care by us. He doesn’t need to pay anything; all payments are handled by us and the e-commerce company. Others might use the same system, but not consistently,” Robin says. In Indonesia, J&T is also partnering with Chinese e-commerce giant Alibaba by setting up a subsidiary J&T Alibaba. The subsidiary offers Alibaba platform for SMEs in Indonesia who wants to tap export markets. Robin says J&T provides network access to Alibaba to market across Indonesia as Alibaba raises its investment in the domestic e-commerce business. “There are many SMEs in Indonesia with good quality products, but

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A BOT FOR EVERYONE Diatche Harahap’s BJTech is developing homegrown chatbots for Indonesia.

t’s widely agreed that the rise of AI will have a massive impact on job prospects, as machine can replace humans doing tasks using machine learning and AI. Diatche Harahap, 31, is one of those who is pioneering the use of AI in Indonesia, through his startup BJTech, known formally as the PT Jualan Online Indonesia. “AI will not erase jobs for humans, but it will change them to become more efficient,” he says. As such, BJTech is one of the very few companies in Indonesia that is developing local AI (one of the others being e-commerce startup Sale Stock). Simply put, BJTech provides chatbots for websites. Users of sites can interact with chatbots, which can understand natural language queries, and reply with natural sounding answers, all in real time. The users may not even know they are interacting with a machine, rather than a real person—the bot can answer queries, do transactions

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BY SHINTYA FELICITAS

or provide other services. BJTech has so far developed two chat bots, one called “Bang Joni” that is a generic chatbot used on various sites, and one custom-built chatbot for client BNI Bank named “Cinta.” Cinta’s name is a tongue-in-cheek—officially it stands for “Chat Intelligence Assistant” but also means “love” in Indonesia. While chatbots have been developed and used elsewhere, what’s special about Diatche’s startup is that these chatbots can converse in fluent Indonesian, even understanding and replying in slang. Diatche first released Bang Joni, even before he had a company, at the end of 2015, and it was available at first on Telegraph and Facebook Messenger (now discontinued). Starting from October 2016 appeared in the LINE application, which currently has 90 million registered users in Indonesia—it also now on Twitter and Blackberry apps. Bang Joni’s first use was in the simple task of ordering ticket on Tiket.com, an online ticketing site.

“AI WORKS SIMILAR TO THE HUMAN BRAIN: THE MORE YOU USE IT, THE MORE YOU GET FEEDBACK, THE SMARTER YOU GET. FOR BJTECH, THE STIMULATION IS TEXT INPUT FROM USERS.” As the users keep growing, Diatche becomes confident that AI has big market potential in Indonesia, so he established BJtech in August 2017. “AI works similar to the human brain: the more you use it, the more you get feedback, the smarter you get. For BJtech, the stimulation is text input from users,” he explains. “A machine can be defined as artificially intelligent when it is able to fulfill user expectations, and for our bot it is carrying out transactions.” Diatche has no background in tech; he studied international business at Curtin University in Australia for his BA and diplomatic studies at the University of Westminster, UK for his MA. After graduation, he was working for an energy company when he first released Bang Joni.

Inspired by the 2013 U.S. romantic science-fiction drama “Her,” in which a human male star falls in love with a female-voiced AI assistant, Diatche wanted to create a chatbot that had some of the same user-friendly features, and simplify people’s busy schedules. “We want to make people more productive by providing tools to help them do errands,” Diatche says. Companies using Bang Joni now include Skyscanner, Indonesia railways, XTrans, MatahariMall, Uber, and many others—total users through the various client sites is 600,000 (Cinta will be officially released this month). Currently, BJtech’s clients include Bank BTPN, XL, Blackberry Messenger, Cisco and Nadhatul Ulama (NU). The partnership with NU, for example, is aimed at teaching users how to read the Koran. For education, it is partnering with RuangGuru, to create a chatbot teacher that is accessible all over the country. Wouldn’t Diatche’s chatbots eliminate jobs? Diatche argues that humans can be freed from boring, repetitive tasks with AI. “We want to make people more efficient and prove that AI can have a social impact. Customers will get a better experience, while the client can save costs,” he says (BCA already operates a similar chatbot named Vira, for virtual assistant). Diatche is planning to develop other specialized bots this year for the fields of education, law, transportation, and telecommunication. In 2016, the startup received $1.3 million funding from PT MFI Sinar Investama. It plans to raise more funds this year, and may open a Singapore office this year. For monetization, BJtech has four ways: transaction-based, project-based, per hitbased and advertising business. Diatche declines to share revenues and pricing, but admits that for now it mostly comes from transaction fees. He claims that the company is focused on product development first. “We need growth more than money, because after we grow, we get the money,” he laughs. As a startup, he admits that he and his team must be agile and open-minded. “We live with the pressure every second, against everything—the market, competitors, even investors. When we started this an uncommon tech company, no one would believe in us at first. But we have to keep going, and prove that it works,” says the founder. Moveover, Diatche wants BJtech to be on the same level as other AI companies all over the world. “This is the time for Indonesians to stop being inferior and be equal with the rest of the world,” he says. F

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eer out the 56 garage doors lining the walls of the warehouse giant Prologis’ new 260,000-square-foot facility in Oakland, California, and you’ll spot three highways. To the east there’s I-980 slicing through downtown Oakland; southbound I-880 leads to Silicon Valley; go north on I-580 and you’ll end up in the heart of Marin County. San Francisco is just 9 miles to the west. A railroad train could steam right up to the building and carry goods all the way to Chicago. But it’s those local roads that most interest Hamid Moghadam, Prologis’ CEO. “We are focused on the markets where there are large numbers of people and there’s lots of money in their pockets,” Moghadam says. “You rob a bank, because that’s where the money is. Where do you have consumption? Where people are.” With 687 million square feet of warehouse space in 19 countries, Prologis, which is based in San Francisco, is the world’s largest owner of industrial real estate and the king of the proverbial “last mile” between the warehouse and a customer’s doorstep. Its closest competitor, Indianapolis-based Duke Realty, has 20% of its space. In the United States, 60% of the population lives within 100 miles of Prologis’ 379 million domestic square feet. And it’s not ignoring the rest of the world. Seventy percent of Prologis’ 45-million-square-foot development pipeline is outside the country, in places were e-commerce is growing at a faster clip. Because if you believe in e-commerce, you believe in Prologis. While internet shopping has devastated demand for traditional retail spaces, it has had the opposite effect on industrial real estate. Amazon is Prologis’ largest tenant, occupying 16 million square feet. (Prologis is also Amazon’s largest landlord, accounting for 13% of the warehouse space it operates.) Why? Getting a book to you in less than 48

SPACE RACE The e-commerce boom has sparked an unlikely real estate revolution: Urban warehouses are now gold mines, and Prologis is sitting on the mother lode. BY SAMANTHA SHARF

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hours (Amazon Prime’s promise) means already having it—and several thousand other items—nearby when you order. E-commerce accounts for about 9% of total retail sales in the United States, a share that has more than doubled since 2010. Prologis, which is structured as a real estate investment trust, is benefiting hugely from that growth. The company’s shares are up 22% this year (through October), producing a market capitalization of $34.8 billion. (REITs broadly are down 1.5%. Prologis’ direct competitors DCT Industrial and Duke are up

TIMOTHY ARCHIBALD FOR FORBES

21% and 7%, respectively.) In 2016, Prologis’ net income was $1.2 billion, on revenues of $2.5 billion. Earnings have grown an average of 58% annually for three years. In the last quarter, rents on new or renegotiated leases were up 23% yearover-year and occupancy was at 96%. Prologis’ e-commerce strategy dates in one way or another to 1998, when Moghadam met the bookstore entrepreneur Louis Borders, who was raising money for the online grocer (and soon-to-be dot-com-bubble poster child) Webvan. Moghadam was then running Prologis’ precursor, AMB Property Corp., which invested $5 million in Webvan, built it three warehouses and divested a $1 billion retail portfolio, plowing the proceeds into more industrial space.

That $5 million briefly swelled to $55 million before crashing to nothing. But the loss had a big silver lining: Moghadam’s billion-dollar bet on warehouses formed the backbone of Prologis’ current portfolio. Webvan “opened our eyes to the possibility of ecommerce very early,” says the 61-year-old Moghadam, who founded AMB in 1983 after the Iranian Revolution had squashed his plans to return home after studying civil engineering at MIT. Prologis as it exists today was created by the 2011 merger of San Francisco-based AMB and a troubled Denver-based rival. Today, pure e-commerce customers make up about 10% of Prologis’ portfolio. But it’s where the growth

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is. Roughly 20% of new sales can be traced to these companies and to e-commerce-related demand from DHL, UPS and FedEx. E-commerce is just now large enough to move the needle for a giant like Prologis. In addition to pure plays, traditional retailers are investing heavily in online shops. E-commerce “is driving a much greater volume of demand than you would otherwise see in a 2%-GDP-growth world,” notes Eric Frankel, an industrial real estate analyst for researcher Green Street Advisors. Meanwhile, population growth and horrid traffic jams in major metro areas like Los Angeles and Seattle are making conveniently located warehouses more important than ever. In the past “you would just look for cheap space; if it was out in the hinterlands you could still get it to market pretty efficiently,” observes Dennis Duffy, a commercial real estate consultant at BDO. Now, instead of demanding a few large warehouses near key transportation hubs, retailers want lots of smaller ones near people. For Prologis’ next phase, Moghadam is taking a cue from his tech neighbors, collecting data about what happens in and around its buildings. Sensors will calculate how many times a door can rise and fall before breaking. Drones will inspect roofs for damage. With $1.3 trillion of goods flowing through Prologis facilities every year and more than 800,000 people working under Prologis roofs, Moghadam envisions a database tracking the movement of goods globally, potentially creating an entirely new business. Technology could also knock Prologis down: if, say, Amazon figures out how to get by with smaller warehouses; if electric, driverless trucks make transportation costs negligible; if 3-D printing turns us all into mini-manufacturers. But for now Prologis looks secure on its last-mile throne. F

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MONEY MOVER Max Liu’s EMQ comes to Indonesia to grab a slice of the global remittance market.

BY AASTHA SABOO

merican Max Liu had a stellar Wall Street career, working in high-profile jobs in firms such as Goldman, Citadel and his own boutique investment firm. Yet he decided in 2014 to venture out and start an online remittance firm called EMQ Inc., based in Hong Kong, first focusing on the roughly 330,000 migrant workers in Hong Kong to allow them to send money home, including Indonesia, through various platforms. EMQ has a simple business model: offer remittance services that allows anyone to send money through the app from Hong Kong to Indonesia, Taiwan, the Philippines, and Vietnam. “Simply send money,” is the company’s tagline. EMQ’s service is either free or at affordable prices. “We are trying to build a low cost settlement network that by-

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passes other networks,” says Max, whose title is chief executive and co-founder. The target market is huge: more than $600 billion in remittances is sent worldwide every year. However, Max and EMQ faced a big uphill battle to get his startup off the ground. First off, he had to struggle for three years without any revenue just to develop his network, including finding banks willing to partner with him, regulatory and legal approvals and various other issues. The banks were naturally reluctant to work with an unknown startup. “Many banks are skeptical about working with us because they are unsure of whether young companies like us understand compliance and regulation. So while the process of getting approvals for us was a long-drawn process, at every step we have been able to successfully convince each bank,” Max says. A second issue is the competition. The market for many years was dominated by banks, and the two well-known global brands—Western Union and Moneygram. Yet that $600 billion plus market has attracted a huge number of other players, all looking to grab even a small slice of that enormous pie ( just 1% market share would be $6 billion revenues). There are now many remittance firms around the world, including dozens of fintech startups—not to mention remittance being a typical service offered by many banks worldwide. Even in Hong Kong, EMQ has competition such as Toast, which claims to make sending money as easy as making toast. The big boys are not standing still as well, as Western Union, Moneygram and online giant PayPal offer online remittance services. Yet today, after a long time building, EMQ is finally gaining some traction. In the past 12 months, Max signed a slew of deals, including with China’s giant Tencent, the owner of WeChat, to offer a remittance service called We Remit, which allows money to be sent to Philippines and Indonesia. In the Philippines, it has partnerships with Union Bank, Cebuana (a pawnshop turned financial services company) and Globe Telecom, which has its GCash service for remittances and ewallets. Vietnam’s HD Bank has also come in as a partner. (Most of these third-party vendors charge a fee.) For the moment, most of the transactions are one way—EMQ can only send money from Hong Kong to Philippines, Indonesia and Vietnam, but these are the countries that supply the bulk of Hong Kong’s migrant workers, who send money to support their

loved ones back home. With We Remit, for example, any 7-11 store in Hong Kong accepts money from customers, who then scan a QR code with their phone, putting the money into their We Remit e-wallet, which then can be sent to the Philippines or Indonesia. EMQ says the process takes about 10 minutes. A more interesting development came in October 2017 when EMQ signed a deal with China’s QFPay to allow Chinese visitors in Indonesia to use QFPay for payments, getting EMQ into the much larger market of what is called “merchant settlement”—giving it a role more like a credit card payments processor than simple remittance. Max remains hard at work extending the EMQ network to Taiwan, which also has a big migrant community as well. He’d like to bring his services to the world, including big markets such as the U.S., China, Europe and the Middle East. Closer to Hong Kong, Max says

“WE PLAN TO EXPAND OUR FOOTPRINT BEYOND ASIA TO NORTH AMERICA AND EUROPE.” Cambodia, Malaysia and India are likely markets which he hopes EMQ can open soon. “We plan to expand our footprint beyond Asia to North America and Europe, and are building the required infrastructure to support remittance,” he says. Max is convinced his partnership model is working (although EMQ does offer its own branded apps for remittance). “We have built a strong partner ecosystem of financial institutions, telecommunications service providers, messaging platforms and payment processors, to offer our customers with immediate access to thousands of cash pickup options, and to any bank account or mobile wallet,” Max says. In typical startup fashion, Max won’t disclose any financials, except to say EMQ is growing at a 30% rate month over month. To help EMQ grow, Max recently raised $6.5 million in Series A funding from a group of investors that includes the U.S.-Indonesia crossborder firm Intudo Ventures. “With a global remittance business of more than $600 billion, we are quite upbeat about the company’s growth,” says Max. F

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BY WILL ONGKOWIDJAJA

wo years ago, I shared my 2017 e-conomy outlook column with Forbes Indonesia readers, highlighting that Indonesia is experiencing a chapter of technology transformative growth. I asserted that Indonesia has long-term potential in the global tech sector as long as we continue to couple big vision with execution. Last year has proven to be a breakthrough year for Indonesia’s tech sector. The total value of tech investments in Indonesia more than doubled from $1.4 billion in 2016 to $3 billion in September 2017. In terms of value, 40% of 2017’s investment was allocated to later-stage series C deals and beyond, led by companies in ecommerce marketplace and platform (Tokopedia and Traveloka) and ridehailing (Go-Jek). These larger deals demonstrate that Indonesia’s tech ecosystem is maturing. Furthermore, in 2017 we have seen global strategic investors from the U.S., China, and Japan entering the Indonesian market by partnering with leading local tech companies. For example, WeWork, a $20 billion global co-working space company from New York, acquired Spacemob, Southeast Asia’s leading co-working

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OUTLOOK FOR THE E-CONOMY 2018 space company. Spacemob locations in Jakarta and Singapore have been transformed into WeWork Southeast Asia. An interesting aspect of this acquisition is WeWork’s equihire strategy whereby the founder of Spacemob, Turochas Fuad, becomes the head of WeWork Southeast Asia and is spearheading WeWork’s expansion into Southeast Asia with a budget of $500 million. So what can we expect in 2018? I believe there are three key trends that will define Indonesia’s tech sector this year: 1

WILL ONGKOWIDJAJA IS A CO-FOUNDER AND MANAGING PARTNER AT ALPHA JWC VENTURES, AN INSTITUTIONAL AND INDEPENDENT VENTURE CAPITAL FIRM WITH AN INDONESIA FOCUS. ALPHA JWC VENTURES MAY HOLD INVESTMENTS IN SOME FIRMS MENTIONED IN THIS ARTICLE. PREVIOUSLY, HE WAS A DIRECTOR AT UBS INVESTMENT BANK AND A MANAGEMENT CONSULTANT AT MCKINSEY & COMPANY IN INDONESIA.

INCREASED INVESTMENT

There will be more entry of international strategic investors into Indonesia’s tech sector through equity partnerships and acquisitions. In 2018, we expect more international strategic investors to enter the Indonesian market, particularly from China. China’s big three Internet companies: Baidu, Alibaba, and Tencent, also known as “BAT,” have already entered the Indonesian market. Alibaba is leading Tokopedia’s $1.1 billion funding round, and Tencent is leading Go-Jek’s $1.2 billion funding round. China currently has 98 tech unicorns, comprising 39% of the world’s 252 unicorns. Many of these unicorns are expanding overseas, and Southeast Asia is a natural choice for expansion. Within Southeast Asia, Indonesia would be the focus as we are the largest market in the region. Apart from BAT, other leading China unicorns, such as PPDAI, a Chinese Fintech consumer lending company recently listed on the New York Stock Exchange, have started to enter the Indonesian market, forming partnerships with leading Indonesian tech companies. These Chinese companies bring not only capital, but also their technology and a growth strategy playbook.

GROWING ECOSYSTEM

I believe later-stage Indonesian technology companies will increasingly play a key role in growing the domestic technology ecosystem. Tokopedia, Traveloka, and GoJek, the three Indonesia technology unicorns, are well funded and as part of their growth strategy, are either acquiring or investing in earlier-stage tech firms. A key rationale for this bolt-on acquisition strategy is to acquire capability and to achieve synergies. Recent examples include Go-Jek’s acquisition of three tech companies in Indonesia: payment gateway firm Midtrans, offline payment firm Kartuku, and microfinance firm Mapan. I expect this trend will expand as more Indonesian tech companies are currently growing in their lifecycle. More later-stage Indonesian technology companies will join Tokopedia, Traveloka and Go-Jek to spur the growth of our tech ecosystem. In fact, a similar trend has been observed in the U.S. and China—the largest tech companies, Facebook, Amazon, and Google in the U.S., and BAT in China, played a significant role in driving domestic tech sector growth, either as strategic investors or acquirers.

RISE OF FINTECH

Last year saw much excitement about fintech in Indonesia and Southeast Asia. This sentiment is illustrated in a recent Google survey, in which about 70% of foreign investors and about 60% of Indonesian investors indicated fintech as the top sector category in which to increase investments. In 2017, much of the fintech focus was on fintech 1.0, which predominantly consists of lending companies, financial services marketplaces, and financial services price comparison companies. In 2018, we expect more advanced fintech 2.0 innovations to take off, such as software as a service (SaaS) fintech and blockchain. An example of a SaaS fintech company is OnlinePajak, Indonesia’s leading tax application company. OnlinePajak allows both corporate and individual taxpayers to calculate, file, and pay their taxes online. OnlinePajak can do this as it is connected to the Indonesian tax office. OnlinePajak is making a significant positive impact in helping Indonesia collect taxes by facilitating over $3 billion in tax payments and having over 500,000 registered corporate taxpayers on its platform, including leading corporates such Astra International, Telkomsel and Garuda Indonesia. Meanwhile, blockchain has such a potential to make a difference in the lives of Indonesians, considering its wide range of use cases in the financial services sector, including lower-cost remittance, application of smart contracts, and streamlining of clearing and settlement. Despite Indonesia’s vast natural resources, its growth driver is technology. As we enter 2018, Indonesia’s innovative growth trajectory shall continue. As a venture capitalist and Indonesian, I am privileged to play a key role in shaping our technology ecosystem by supporting technology entrepreneurs making a positive impact on our lives, and I remain committed to this quest in 2018. F

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DELIVERING THE GOODS When his top rival bought his largest customer, Instacart’s Apoorva Mehta cheered. It turns out he wasn’t crazy.

BY BIZ CARSON

s the obits piled up, Apoorva Mehta couldn’t help but shake his head. It wasn’t his death that the press was heralding, but that of his startup, Instacart, a five-year-old grocery and retail delivery service valued at $3.4 billion. That morning in midJune, Amazon stunned the world by announcing its purchase of Whole Foods for $13.7 billion. As shares of grocery chains plunged, many in the tech press noted that few had more to lose than Instacart. Whole Foods was not only an Instacart investor but also its biggest customer at the time, accounting for nearly 10% of sales. Even as pundits turned on him, Mehta, 31, says he felt nothing but vindication. For years he’d been telling grocery chains they should prepare for an all-out assault from Amazon. Services like AmazonFresh and a plan for its own futuristic brick-and-mortar grocery store were only the beginning, he warned. While Mehta hadn’t expected the Whole Foods purchase—no one had, it seems—that only made his pitch more urgent. As Whole Foods executives broke the deal news to Mehta and Instacart’s chief business officer, Nilam Ganenthiran, in a 6 a.m. call, the two messaged each other with thumbs-up emojis. As if on cue, Mehta’s and Ganenthiran’s phones began ringing and lighting up with text messages shortly after— and they didn’t stop all day. It was execs from grocery chains, including some of the ones whose stocks were cratering, calling to talk business. “Every major grocery retailer in the country was calling us,” Mehta says. That morning in San Francisco, he stood in front of Instacart’s 300 employees and told them it was time for war. Within months, Costco announced that it was deepening its partnership with Instacart and would offer delivery directly from the Costco.com website. After discussions that spanned four years, grocery giant Kroger inked a deal for

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Instacart to deliver from its Ralphs subsidiary. Several smaller chains also signed up, bringing Instacart’s partner count to more than 165. “It really was like a thermonuclear bomb against the entire grocery industry,” Mehta says of the Amazon deal. “When we look back, that may have been a turning point for Instacart.” Instacart has more than 500,000 customers and approximately $2 billion in revenue, according to Forbes estimates. (The company, which counts the full price of customer orders as revenue, declined to comment.) Though it started out as a service that catered to affluent big-city dwellers, the company is seeing increasing success in smaller regional markets like Buffalo, New York. Today the average Instacart shopper uses it twice a month and spends $95 per order. Instacart Express customers, who pay an annual fee of $149 for free deliveries, end up spending $5,000 a year on Instacart and order at double the frequency of its average customers. The company says it’s prioritizing growth over profits for now. But Instacart says it has reached gross-margin profitability—a measure that excludes costs like headquarters, employees and marketing—in over 80% of its markets. The company has raised $675 million from storied investors like Khosla Ventures and Sequoia Capital, in addition to Whole Foods. It still has more than $500 million in the bank, suggesting a relatively low burn rate. Mehta’s idea for Instacart was sparked by bad memories of grocery shopping as a kid. Growing up in Canada, he hated having to take the bus in winter to pick up groceries and lug them back home. After studying engineering at the University of Waterloo, near Toronto, he worked in fulfillment logistics at Amazon. Two years later Mehta moved to San Francisco to try his hand at entrepreneurship. After two years of hashing out ideas, he settled on a personal shopper that would go to the store, purchase what you want and deliver it to your door. Mehta launched the service in 2012 and applied to

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FEBRUARY 2018

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SPECIAL FEATURE E-CONOMY

THE ROBOT GROCER

Online pioneer Ocado is further ahead than anyone else in figuring out how to fully automate grocery shopping and delivery. Less than 2 feet below the roof beams of a warehouse in Andover, in the southwest of England, hundreds of robots are swarming above a giant block that’s as wide as a football field and three stories high. It’s a hive of groceries—thousands of plastic boxes, many layers deep—stocked with everything from grapes to shampoo to cat food. Ocado built and runs this hive, and it could make one for you, too, if you’re game. With about $1.4 billion in 2016 sales, the British e-commerce firm is the world’s largest online-only grocery chain. Founded in 2000, some 12 years before Instacart, it has since innovated its way through brutally complex logistical problems. “We’re dealing with 50,000 kinds of products, three temperature regimes, products that have to be segregated,” says CTO

Paul Clarke. Machine-learning software calculates all these aspects of the giant block—and in four dimensions when it factors in the time cucumbers go out of date. “We’re bumping up against Moore’s Law,” he adds, which is why Ocado plans to eventually use a quantum computer to power the algorithms. Ocado’s robots zoom around the top of the block like rooks on a chessboard, sometimes within half a centimeter of each other. If one needs to reach a box four levels below, others shift the ones on top within seconds. The bot then zooms down to a picking station to meet a rare commodity here: a human. Ocado’s employees still have a role putting the groceries into plastic bags. But that’ll change soon enough. Ocado’s engineers are working on a robot hand that can

Y Combinator, the prestigious Silicon Valley accelerator that hatched giants like Airbnb and Dropbox. He was rejected because the application deadline had passed. Undeterred, Mehta used Instacart to deliver a six-pack of IPAs to a Y Combinator partner. Within 30 minutes, he was asked to come in for an interview and the next day was accepted into the program. Shortly after, he closed a seed investment round. Even as a Y Combinator graduate and with some financing under his belt, Mehta faced lots of skepticism. Silicon Valley hadn’t forgotten about Webvan—perhaps the biggest blowout of the first dot-com era. In its attempt to build a giant grocery-delivery business, Webvan became a symbol of internet hubris, burning through more than $800 million on its way to bankruptcy. In one pitch meeting, an investor handed Mehta a floppy disk with Webvan’s business plan on it, telling him to study it. Mehta says he never found a floppy drive to read it. While both Webvan and Instacart were built on a popular idea, their business models never had much in common, says Sequoia’s Michael Moritz, who invested in both. “Consumers, given the option of being able to order groceries online very easily and very simply, will flock to it,” he says. Unlike Webvan, Instacart never built massive warehouses or operated fleets of cold-storage vans. Adopting an assetlight model, Mehta first built an app that let customers shop from established retailers—charging a delivery fee

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FEBRUARY 2018

carefully handle different types of fruit. They’ll be installed in Ocado’s new plant, opening in south London next year, set to be three times the size of its warehouse in Andover. In nearby Greenwich, Ocado is testing driverless delivery trucks. Ocado’s cofounder and CEO, Tim Steiner, recently told analysts who had toured the Andover warehouse that “every human touch point is designed to one day be replaced by a robotic solution.” The analysts ate it up. “Ocado could even become lower cost than a customer doing their own shopping in stores,” gushed Credit Suisse’s Stuart McGuire to his clients. Ocado is part of the reason why people in the U.K. purchase more of their groceries online than those in any other country besides South Korea. Small delivery trucks bearing the Ocado logo often trundle through Britain’s suburbs, along with those from rivals Tesco, Sainsbury’s and Morrisons. The latter is the first chain that plans to use Ocado’s hive. Clarke says “multiple deals” will follow soon. “We’re talking to retailers in every continent except Antarctica.” —Parmy Olson

and, at least initially, a slight markup. Instacart kept a cut for itself and paid the shopper. It wasn’t until after the company launched in Chicago that a grocer first approached Instacart to talk about its business. At one point the retailer asked Mehta how much it would have to pay to be featured on Instacart. Mehta hadn’t realized that there was extra profit to be made from partnerships. Four years later those partnerships make up a significant percentage of revenue. More than 80% of orders are placed with partners, up from less than 20% three years ago. Instacart hit upon a new revenue stream last year, with coupons and free samples from consumer-packaged-goods companies looking to advertise to its customers. There should be plenty of room for Instacart to continue growing. Only 7% of Americans buy groceries online, according to NPD Group. Following the AmazonWhole Foods deal, the $850 billion grocery market’s shift to online is certain to accelerate, says Forrester analyst Ananda Chakravarty. “You’re going to see a lot more grocers not just getting into understanding the online space but also getting to understand their customers better.” For his part, Mehta seems keenly aware that success can quickly turn to defeat when competing with Amazon. “What keeps me up at night is that I don’t want us to squander this opportunity,” Mehta says. After all, he doesn’t want those obits to have been prophetic. F

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SPECIAL FEATURE E-CONOMY

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RONEN GOLDMAN FOR FORBES

BIG DATA FOR BIG CITIES

ike most suburbanites, Janice Monkowski, a piano teacher who lives in Danville, California, some 30 miles east of San Francisco, gets around mainly by car. For much of her life, Moovit has created the Waze of public transit. public transit was not even an afterthought. That changed recently when MonIs this the app that can beat urban congestion? kowski, a self-described technophobe, BY ALAN OHNSMAN discovered Moovit. When she goes to San Francisco to meet friends or catch the lured by the potential to monetize Moovit’s real-time transymphony with her husband, the smartphone app lets her sit information, which includes more than 500 million plan bus and train trips down to the minute. “Moovit tells data points generated daily. me where to walk and how long it might take to catch a bus Now Moovit must prove it can convert that data into to get to the train station,” Monkowski says. “It had probcash. The company says it is just now turning to monetizaably been 10 or 15 years since I’d ridden a transit bus.” tion and won’t disclose revenue, which remains negligible, In exchange for the free service, Monkowski lets Moovit according to Forbes estimates. But Erez and his investors track her trips. Much like the navigation app Waze, which say that it won’t be hard to ramp up sales, and they believe follows its users on the road to determine optimal drivthe company is in the right place at the right time. Citing routes, Moovit aggregates Monkowski’s location data ies everywhere are battling congestion and pollution. This with that of other nearby users to predict the most efficient has fueled a frenzy around the concept of “smart cities,” a public-transit trip between two locations. “Transit users somewhat amorphous idea that data from all forms of senhave an even bigger problem than drivers,” says Nir Erez, sors, along with artificial intelligence and cloud-connected a 52-year-old Israeli serial entrepreneur who cofounded technologies, will help manage increasingly complex urban Moovit in 2012. Most commuters don’t know when a bus systems. Moovit’s plan is to feed cities’ appetite for tranmight arrive—let alone how it might connect with another sit data. “Urban mobility is a global concern,” says Sequoia transit service—or when walking or bicycling might be fastpartner Gili Raanan, adding that Moovit’s transit data could er, Erez says, speaking from his home in Tel Aviv: “Informa“dramatically improve the quality of life of our cities.” tion is usually bad.” Buenos Aires and Madrid have signed up to be early So bad that Moovit has become the world’s most downcustomers of Moovit’s Smart Transit Suite, a data portal loaded transit app. In just five years it has racked up 100 with precise, real-time information on bus and train lomillion users—roughly the same number as Waze, which cations and usage, passenger wait times, optimal routes Google bought for $1.1 billion in 2013. Moovit is available in and more. “They have very granular data as to how 44 languages and 78 countries, and commuters in 1,500 citpeople move around cities,” said Andreas Mai, an execuies, from Lexington, Kentucky, to London, Moscow and Hative vice president for Keolis, a French transportationnoi, rely on it to get to and from work. In Los Angeles, 40% management company that works with transit services of its users access it in Spanish. In 2016 Moovit became around the world. Keolis has invested in Moovit and will the official transit app for the Summer Olympics in Rio de incorporate its data in pilot programs in certain cities Janeiro, beating out Apple and Google, according to the that Mai wouldn’t identify. company. When public transit doesn’t get a user all the way Moovit began taking shape in 2011, when Erez had to her destination, Moovit may connect her to bike-share just left a startup he’d cofounded and was training for a programs or services like Uber. marathon. He had planned on a leisurely semiretirement Moovit’s popularity has helped it attract a string of of investing a bit in early-stage startups and competing marquee investors. The company, which launched with in triathlons. But on long training runs around Tel Aviv, $500,000 from Erez, has raised nearly $84 million from his friend Yaron Evron kept talking about a website he’d the likes of Sequoia Capital, Ashton Kutcher’s Sound Venmade for the local transit authority with a young comtures and BMW i Ventures. Its valuation reached $450 puter scientist named Roy Bick. million, according to PitchBook. The investors have been

An avowed transit nerd, Bick had taken it upon himself to help local commuters. Tel Aviv had recently reconfigured its bus system to accommodate a new rail line, changing routes and stops to feed more riders onto trains. Public information about new locations was poor. So Bick walked the city to log stops into a database he had built. He also tapped into transit-bus GPS information to turn his database into a real-time route-planning website. Bick’s work clearly had the potential to be useful well beyond Tel Aviv. And Erez, who had considered investing in Waze—also founded in Israel—understood that crowdsourced location data flowing from users’ smartphones could provide the basis for creating comprehensive transittrip planners everywhere. Erez, Bick and Evron founded Moovit the following year, with Erez becoming CEO and Bick overseeing operations. Evron never took a formal role. “I had a nice seven-month retirement, and then it was back to work in another startup,” Erez says.

As Moovit has grown to 100 employees, with headquarters near Tel Aviv and offices in cities such as San Francisco, Athens and Rio, Erez and Bick are convinced they can help cities be more efficient in myriad ways. If demand surges on a specific route, for example, Moovit could suggest deploying more buses to serve it. “We look at the demand and the actual movement information, then look at the system infrastructure, all the routes and the timetables to understand whether it’s optimized or not,” says Bick, 37. Cities spend millions of dollars to survey residents about their use of public transit, and Moovit can provide better, more up-to-date information at a lower cost, he adds. Best of all: It’s all built one data point at a time by people like Monkowski. “When I go to San Francisco, I don’t want to drive,” she says, noting the city’s “terrible” parking and traffic. Moovit has given her another option: “It’s very simple.” F

FEBRUARY 2018

FORBES INDONESIA

COLUMN

GROWTH STRATEGIES

QUAH MEI LEE

QUAH MEI LEE IS AN INDUSTRY PRINCIPAL AT FROST & SULLIVAN.

THROUGHOUT THE ASIA-PACIFIC REGION, up of mobile payments and how fast the transition where smartphone penetration is the highest in the will be 100% cashless per country. Although benefitworld, local governments have made major progress ing from regulatory pushes, the initial slow take-up is toward cashless societies, led by the region’s most mainly due to the drawbacks of today’s mobile phone developed countries such as Australia and Singapore. as an end-device, with its need for additional security Going cashless is seen as a catalyst for the mobile payfeatures such as biometrics, data privacy and, above all ments market: both in markets where the use of cards a phone that doesn’t just copy a physical wallet. transitions gradually into the use of mobile Standardization is also important. Local payments, and in markets where consumers e-wallets built to differing standards must be Regulators are leapfrogging to mobile payments from harmonized. Going 100% cashless means a must address cash. The common denominator is the smartstandard interface must be available everyinternational phone, a tool that allows the rapid growth of coordination where, even for church donations, foreign mobile payments. exchanges and so on. It must include all segon payments, ments of society, such as the poor, the elderly, Ideally, a cashless society revolves around security, and rural residents and tourists. an ecosystem that exclusively utilizes edata privacy payment methods such as e-money, debit Regulators must address international issues. cards and credit cards. To implement this coordination on payments, security, and data ideal, mobile payments must realize their full privacy issues. Plans should keep in mind the potential as a key enabler. It means ubiquitous, costend goal of 100% cashless and cater for small mereffective use of app-based and online solutions in a rechants and usage solutions outside of major towns and gion where smartphones are prevalent. city centers. Governments can lead the incorporation Mobile payments must also be integrated into daily of identification into mobile phones. Ultimately, the life, including options such as micro-payments, finanfocus now should shift to mobile payments in order to cial services and wide acceptance in retail. The mobile build a 100% cashless future across Asia Pacific. payments market in Asia-Pacific is led by Japan, South Because cash is seen as a permanent payment option, Korea, Australia, Singapore and China. The regional solution providers aren’t developing mobile solutions regulatory push towards cashless societies across the that truly disrupt the payment ecosystem. Apple Pay, Asia-Pacific region will help the $72 billion market in Samsung Pay and Android Pay have caused some disrup2016 (ex-China and ex-India) grow to reach $272 biltion—collectively, these three hold over 40% of global lion by 2021. The China market alone will grow to $1.4 mobile payments transactions. The China players are Alitrillion by 2021. Pay and WeChat, and Hong Kong’s Octopus. Mobile payRegulatory changes, standardization, and a ubiquiments are, at present, a small, albeit growing, fraction of tous payments infrastructure—as well as local conthe global payments market, but we need to keep our eye sumer behavior—play a role in determining the takeon 100% cashless as the goal despite the challenges. F 50

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COMPANIES & PEOPLE

DARWIN SILALAHI

Playing the Long Game Darwin Silalahi wants Shell Indonesia to be a longterm and trusted firm in the country. BY ADI WICAKSONO

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AHMAD ZAMRONI / FORBES INDONESIA

oyal Dutch Shell is one of the world’s biggest energy companies, but few realize that Indonesia is the birthplace of the company. It was started in 1884 when Dutch national Aeilko Jans Zijlker discovered oil in Telaga Said in North Sumatra. After Aeilko got a license to pump oil, he named his oil company Royal Dutch Petroleum in 1890. “Shell’s historical links with Indonesia are strong because Shell was founded in Indonesia over 130 years ago. When you visit Shell headquarters in The Hague, Netherlands, you will see many photographs of Indonesian villages in the building. This indicates that Shell appreciates its historical ties to Indonesia, even though it has become one of the world’s leading energy companies,” says Darwin Silalahi, 55, the country chairman of the Shell companies in Indonesia and president director of PT Shell Indonesia. Darwin’s appointment in 2007 to head Shell is important, as he is the first Indonesian in history in these leadership roles in Shell’s Indonesian operations. Shell re-entered Indonesia in 2006 after joining with Japan energy firm Inpex as a strategic partner to operate the Masela block which included the Abadi gas field. Inpex holds a 65% stake and Royal Dutch Shell 35%. Participation in the Abadi field underpins Shell’s current growth strategy, especially in LNG. The development

of the Masela block will reportedly cost well over $12 billion, and, when developed, promises to become Indonesia’s largest deepwater project. The Masela block is said to hold 10 trillion cubic feet of gas, and be capable of production that can last for over 20 years. In the retail sector, Shell opened a gasoline station in Karawaci, also in 2006, now grown that into a chain of 81 stations in greater Jakarta, Bandung and Sumatra. In lubricants, Shell operates the country’s largest lubricant blending plant in the country, with a capacity of 120,000 tonnes a year, located in Bekasi. Darwin recently talked to Forbes Indonesia about Shell’s “long game.” Forbes Indonesia (FI): What is your Indonesian strategy? Darwin Silalahi (DS): Our principle is to play a “long game.” We wish to avoid uncertainty. Shell wants to get involved where there are good regulations and open markets to allow us to make long-term investments. FI: What’s your view of the global energy industry? DS: The energy industry is experiencing a transition period. Digitalization and decentralization are causing disintermediation between the producer and buyer. Technological innovation is making possible cheaper prices. In the energy sector, prices have been affected by new energy sources, such as from fracking and shale oil. Other technologies are Enhanced Oil Recovery (EOR) that also reduces prices. Further down the line, renewable energy is on the rise, such as solar and wind power. These changes have all happened in the last decade, and the government needs to consider what energy policies to have in light of these new technologies. In Indonesia, Shell is focusing on gas resources because the known reserves of gas are bigger, while oil reserves are in decline.

FI: What do you think about Indonesia’s oil and gas sector? DS: In the last five years, there has been a decrease in production due to unfavorable conditions, and there is now a lack of investment for exploration. This is a major issue. Indonesia should try to be able to better compete with other countries for investment in this sector. FI: How is progress on the Masela block? DS: The country was formerly an oil exporting country, and now it has become a net importer. Indonesia still has oil reserves that have been discovered but not yet explored—Masela is an example. Masela could be described as the largest undeveloped resource in Indonesia. However, if the cost of renewable energy follows the trend for the last five to ten years, the

“We want the government to think of Shell as a trusted partner to solve energy problems.” production cost of renewable energy might be cheaper than developing the Masela gas field. The window of opportunity is becoming shorter to develop Masela with the declining cost of renewable energy. Shell and Inpex are cooperating to commercially develop the Masela field. We appreciate that government will give us seven years in compensation in changing the plan from a floating LNG plant to an onshore LNG plant. Masela is a large block in a deep water area, which is difficult to develop, as well as capital intensive and requiring advanced technologies. However, Shell has experience in resources management projects similar to Masela. We want to develop Masela in cooperation with the government and Inpex.

FI: Could you elaborate on Shell’s downstream business? DS: Indonesia is one of the key commercial downstream markets for us in Asia, after China and India. Shell has been playing a long game during the last 10 years in developing the gas station business. Before Shell entered this sector, the gas station business was limited to Pertamina. Today, you can see other players here such as Total, Vitol and AKR. This situation is very good, because all the players bring innovation to the sector. We are proud to bring improvements in the service levels of gas stations, which lifts the image of gas stations in the country. FI: Is Shell interested in renewable energy in Indonesia? DS: If we develop solar or wind power plants but have no way to distribute it, it will not be economically viable. For the time being, we consider this sector still in the development phase. However, Shell is watching the development of the renewable energy sector. However, for now, we cannot compete with new renewable energy companies that are building plants at 10 MW or lower. For Shell to join the renewable power plant sector, we would like to focus on plants at 200 MW or above—for which the government has not issued regulations. If it does, we can look again at the opportunity. FI: What is the goal of your “long game” in Indonesia? DS: Shell is very confident in playing a long game in Indonesia. We want to upgrade our operations here, so we can improve our image in society and with the government as a good corporate citizen. If customers have problems, we want them to think of Shell as the solution. We want the government to think of Shell as a trusted partner to solve energy problems. Shell wants to be an integral part of Indonesia’s development, and make its future better. F FEBRUARY 2018

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COMPANIES & PEOPLE

DANIEL LOH

The Last Coal Tycoon Dark days ahead for coal? Don’t tell that to billionaire Chris Cline, who’s convinced the dirtiest fuel still has a bright future and is building what he believes will be the last mine standing. BY CHRISTOPHER HELMAN

he masseuse felt the broken bones and the scars and asked Chris Cline what he did for a living. Cline said he was in the energy business. What kind of energy?, she wondered. Maybe solar panels or windmills? No, not that, he said. You’re not a fracker, are you? No, not that either. Then what? “I own coal mines,” said Cline. Without a word she stopped working on him and left the room. He waited a while, but she didn’t return. Cline won’t name the resort (“I might want to go back there”). And the scars? From his years underground in Appalachian mines, where the coal seams have been worked so thin it’s like “crawling under a table all day.” Cuts on his back from a mine’s ceiling “felt like insect bites.” Cline, 59, is one of the most archaic and unpopular specimens of capitalist: the coal tycoon. He doesn’t mind people not liking him. He knows that coal fuels 40% of the world’s power needs. “People deserve the cheapest energy they can get,” he says. “Tell the poor in India and China that they don’t deserve to have reliable, affordable electricity.” PHOTOGRAPHED BY JAMEL TOPPIN; GROOMING: SUZANA HALLILI USING ZIRH & SISLEY, PARIS

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MAJOR MINER: Chris Cline stands outside his newly opened Donkin mine on Cape Breton Island in Nova Scotia.

FEBRUARY 2018

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CHRIS CLINE

Coal is far from dead. Global demand has dipped because of America’s shale-gas boom and tighter regulations in China, yet it remains 50% above its level in 2000, at 7.2 billion tons per year, according to the International Energy Agency. Even factoring in a carbon tax of $30 per ton, coal can compete on price with natural gas and renewables. And Chris Cline, relying on operating efficiencies that he has honed over nearly 40 years of running his own mines, intends to be the last man standing in the industry, supplying low-cost coal from Canada to energy-hungry consumers around the Underground roots: Cline’s father in Appalachia. world. Cline thinks the carbon crusade is folly: “I’m all for getting sulfur and mercury and nitrogen oxide out of the air—that’s common sense,” but ultimately, he posits, “global cooling” will be a bigger threat. “I believe in our children’s lifetimes that they’ll wish they had paid us per ton to put more CO2 in the air.” (It’s easy to forget that, as recently as the 1970s, fear of a coming ice age was part of the mainstream climate conversation.) Which is why he has no qualms about having built his $2 billion fortune with a series of all-in bets that have taken him from Appalachia to Illinois and now to Canada. He created one of America’s biggest publicly traded coal miners, Foresight Energy, and two years ago sold most of his interest for nearly $1.4 billion. He’s since sunk $150 million into a new mine in Nova Scotia that may produce 500 million tons of high-dollar metallurgical coal by midcentury. And he has permits to develop 1.7 billion tons more at the Vista mine in western Canada. “If you had any idea where I started,” Cline says wistfully. Trim, powerfully built, 5-foot-11, he speaks in a quiet growl from the back of his throat, as if accustomed to keeping his thoughts to himself. Cline’s father, Paul, was a contract miner in Beckley, West Virginia; he operated rich men’s mines in exchange for a cut of what his team pulled up. When Cline was 6, his dad paid him a penny for each little bag he filled with dirt, which would be used to pack explosives into coal seams. When their front porch collapsed, it became clear young Chris had been excavating dirt from under the house. “It taught me the importance of engineering roof supports,” he says. He first went to work underground at age 15; the miners would hide him when inspectors came. Growing up, did Cline consider himself poor? “How much more poor can you get?” Cline’s first, battered hard hat sits above the fireplace in his mansion in Beckley. He created a lake here by damming up 56

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FEBRUARY 2018

the hollow; it’s big enough for waterskiing and features a 400foot waterslide. There’s also a go-kart track and a pasture, where 150-pound Italian sheepdogs keep tabs on livestock— including Fabio, a white stallion that stands at stud in a luxurious stable. Cline has four kids, now grown. His first wife died of cancer; he’s divorced from his second. For four years he dated Tiger Woods’ ex-wife, Elin Nordegren. Cline’s gun vault holds more than 50 firearms, including a Magnum .44 and a Gatling gun. The Bureau of Alcohol, Tobacco & Firearms comes out once a month to take inventory. A few years back, Cline was the subject of an extortion attempt that threatened his children. “Let ’em come,” he says with a grin. Today he’s armed with a sheaf of papers. There are architectural renderings for his island in the Bahamas and photocopies of old pics. A black-and-white shot shows a young Cline outside the little house where for fun he’d flatten bottle caps under the rails of the coal trains that ran a stone’s throw from the front door. “I’d hitch a ride on a train, hang on for a few miles, then grab one coming back.” $200

PIT BOSS

180

FROM TEENAGE MINER TO BILLIONAIRE COAL BARON, CHRIS CLINE’S CAREER HAS CLIMBED ALONGSIDE THE PRICE OF COAL.

160

140

1973

Cline starts working underground, age 15.

120

100

1980

Buys out Dad’s partner for $50,000.

1980s/1990s

Source: U.S. Federal Reserve.

COMPANIES & PEOPLE

Builds over 20 mines in Appalachia.

0 ‘80

‘84

‘88

Cline has since upgraded his transportation. He spends 400 hours a year in the air—most of it on his $50 million Embraer Lineage 1000—shuttling between his homes, making due-diligence tours of mines in Australia and Colombia, or hauling a Forbes camera crew to Nova Scotia, where he has been operating the Donkin mine since April. He applies the same philosophy to his planes as he does to his capital equipment: “We buy the best and run it hard.” Underground, 1,000-horsepower mining machines rip the coal face with rotating claws; roof bolters hammer steel rods into the ceiling to hold the rock in place. Cline saw early on how much more coal he could produce with reliable equipment. Productivity and profits correlate strongly with uptime. If a vital machine breaks down and needs parts, Cline thinks nothing of sending one of his jets to fetch spares from anywhere on the continent. The math is easy: Every minute his crews are not ripping coal out of the earth equates to hundreds of dollars in lost revenue. And, yes, it’s dangerous. “It used to be brutal,” he says. “We’re trying to get all the hard work out of it.”

In 1980, when Cline was 22, his father had heart bypass surgery, and his partner offered $50,000 to buy him out. “My dad was going to do it.” But Cline had no doubt he could work harder and smarter than anyone else. “I said, ‘Why don’t we buy him out?’ ” And so they did, borrowing every penny. The first two weeks he worked 16-hour days and never saw sunlight—whatever it took to make his payments. With every success he doubled down. He lays on the table some pictures of himself from the 1980s—grinning, mustachioed, standing in front of an early mine named after his daughter Candice. His first big success came with Pioneer Fuel, a mine he acquired for $1 million and flipped for $17 million. He bought a Lamborghini and a 200-foot yacht called Mine Games, but most of the money went back into the Appalachian ground. He implemented worker-friendly innovations like air-conditioned cockpits for mining machines. And he began handing out daily bonuses in the form of dollar coins, based on how many feet of coal a team had mined that day. “A man can go home and give it to his wife. Or buy some

2017

Opens Donkin mine in Nova Scotia.

2008–2012

Invests $1.5 billion in 4 Illinois mine complexes.

Global price of coal, USD per metric ton. 2007

2014

Riverstone Holdings invests in Foresight.

Initial public offering of Foresight Energy LP.

1998–1999

Financing from Enron.

2002

Acquires mining rights in Illinois.

2015

Cline sells most of his stake for about $1.4 billion in cash.

‘92

‘96

‘00

‘04

‘08

‘12

FEBRUARY 2018

‘16

FORBES INDONESIA

COMPANIES & PEOPLE

CHRIS CLINE

didn’t want to be tinkered with,” says Bartow Jones, a partner at Riverstone Holdings, which invested $600 million between 2007 and 2008. Not only did they acquiesce, Jones says, “we insisted on it.” Cline put $2 billion into four mine complexes, which soon became the most productive underground operations in the nation, averaging 13 tons per man-hour at costs of $23 per ton with output of 20 million tons per year. Cline had created a market for high-sulfur Illinois coal. “Coal is not a commodity,” Jones says. “You can’t just shove it into a pipeline like natural gas.” Cline swayed power plants to his coal by paying for their sulfur-catching upgrades out of his own pocket. He acquired docks on the Mississippi and built rail spurs to load coal from 100-car trains directly onto ships bound for India and Europe. Cline needed an exit for his investors. In early 2014 Foresight held an IPO and hit a market cap of $2.5 billion. By early 2015 Riverstone had exited, having nearly doubled its money at a time when many coal giants like Peabody Energy and Alpha Natural Resources were headed toward bankruptcy. Foresight’s relative soundness made it an attractive target for Robert Murray, a 77-yearold coal magnate whose privately held Murray Energy paid Cline a little less than $1.4 billion cash in 2015 for most of Cline’s Foresight stake. The two coal barons had been at odds for years in Illinois, Empty lockers: blocking each other via strategic land purchases. Cline hoped to create Cline stepped down from the Foresight board of 200 mining jobs for directors last March, though he still owns 2 billion distressed Nova Scotia. After layoffs, there tons of Illinois reserves, a slug of Foresight bonds are now only 81 at the and around 29% of Foresight shares—which have Donkin mine. traded down 75% since the Murray deal.

2003 he was out of Appalachian coal altogether. The coal industry had watched intently as the EPA cracked down on emissions of acid-rain ingredients like sulfur dioxide in the early 2000s. The quickest way for many power companies to comply was to stop buying high-sulfur coal (e.g., from Illinois) in favor of low-sulfur varieties (like those from Wyoming). Panicked holders of high-sulfur reserves just let their leases lapse and walked away. Through a new company, Foresight Energy, Cline started accumulating 3 billion tons of high-sulfur reserves in Illinois for less than 30 cents a ton, some of it from the likes of Exxon Mobil. What did Cline know that they didn’t? He believed in technology and was encouraged by power-plant innovations like scrubber systems that capture toxins before they go up the smokestack, enabling them to keep right on burning high-sulfur coal. Plus, he was used to making money on mines with seams just 3 feet thick. Those Illinois seams were 6 feet or thicker. “If it gets to where you can vertically stand up, it’s a lot more pleasant.” “I didn’t see it as a huge risk,” Cline says. He took on private equity capital on one condition: no second-guessing. “He 58

FORBES INDONESIA

FEBRUARY 2018

IN 2010, AS FORESIGHT was hitting its stride, Cline was hungry for something new. He formed a company called Gogebic Taconite that tried to get permits for a Wisconsin iron ore mine on the shores of Lake Superior. But in 2013 the plan ran afoul of the Bad River Band of the Lake Superior Tribe of Chippewa Indians, who farm wild rice in the area. Cline canceled the plans, he says, because of low iron prices. “It will be mined someday.” Canada was more hospitable. On the day of Foresight’s IPO in 2014, Cline rang the bell on the floor of the New York Stock Exchange, then hopped on his plane and three hours later landed in Nova Scotia to go down into a mothballed mine shaft on the eastern tip of Cape Breton, in a town called Donkin. He was drawn to the huge 12-foot-thick seam and the coal’s high energy content, which at 14,000 British thermal units per ton can be readily turned into high-value coke for steelmaking. He was also impressed that the highest-risk capital had already been sunk. The Donkin Project was a Hail Mary by the Canadian government to prop up a dying industry; it spent $50 million in the 1980s to bore twin tunnels 2 miles out under the Atlantic Ocean to tap a massive 500-million-ton coal bed. By

PHOTOGRAPHED BY JAMEL TOPPIN; GROOMING: SUZANA HALLILI USING ZIRH & SISLEY, PARIS

beer,” Cline says. At year’s end he’d hand out checks to cover taxes due. “Those guys would run through a wall for him,” says Andy Fox, an independent mining engineer who first met Cline when Cline pulled up to his office in a red Porsche 928 on the way to the beach and unloaded five bags of coal he needed Fox to analyze. Still, it’s not enough to be innovative. “You need a little luck,” Cline says. In the late 1990s he had acquired enough reserves to build six new mines. Enron was big in natural gas and wanted to diversify into coal, especially coal trading. Cline got $85 million in loans and equity from Enron to build three mines. After Enron’s 2001 collapse, he bought back the interests for $13 million, then turned around and sold a similar stake to ArcLight Capital Partners for $151 million. By

the time the shafts were cut in the late 1980s, benchmark coal prices had dropped (see chart, p. 34). When 26 miners died in a 1992 explosion at Nova Scotia’s Westray mine, it seemed like the end of the industry. But time—and higher commodity prices—heals all wounds. And Donkin was the perfect size for Cline, who bought 75% of it in late 2014 for an estimated $20 million (he’d snap up the remaining 25% the following year). Since then, ten of Cline’s old Foresight lieutenants have jumped to Donkin, where they’ve overseen $150 million of investments. That includes a 6,000-hp conveyor system to carry raw coal out of the mine, run it through a cleaning plant and hoist it 100 feet in the air, from which pulverized chunks drop onto jet-black pyramids. In time the conveyors will extend a half-mile to a barge-loading dock. For now front-end loaders scoop coal into trucks that carry it to Panamax-size ships at nearby Sydney. Legendary coal trader Ernie Thrasher is Cline’s partner on the logistics side. He says Donkin’s location, nearly halfway across the Atlantic, makes shipping costs to Rotterdam at least 30% ($5 per ton) less than they would be from central Appalachia. The best coking coal fetches more than $200 a ton today. The simplest way to sum up Cline, according to Thrasher: “He sees value in assets others overlook.” Environmental opposition in economically depressed Nova Scotia is restrained. “Even those protesting the trucks know the coal is a good thing for the community,” says Paul Carrigan of the Port of Sydney Development Corp. “It’s in our blood.” European settlers mined the first coal here 300 years ago. Through the 1970s mining and steelmaking thrived, employing 20,000 before competition from the likes of China wiped it all out. There’s talk of using some of Donkin’s output to fuel Nova Scotia’s remaining coal plants. With plentiful wind and hydropower, Nova Scotia is well within Canada’s emissions standards. Even First Nations peoples, like the Mi’kmaq, have been placated with jobs and a royalty on every ton. The mining jobs, paying $100,000 a year, are “an economic lifeline,” says Geoff MacLellan, a rep in the Nova Scotia legislature. But how many jobs will there be? At first, Cline had said 200. But in early November—six weeks after Forbes toured the Donkin site with Cline—the mine laid off 49 of 130 workers. Just a bump at the start of a long road, Cline says. After they did some test drilling for a few months, productivity wasn’t high enough, so they need time to bring in new equipment. Cline is patient. He has no equity partners or outside financing on Donkin. Once the mine is rocking and rolling, within ten years it could be generating $500 million in annual revenues and putting $100 million in cash into Cline’s pocket. The reserves are vast enough to last for decades. Is there anything that keeps Chris Cline up at night? “Sago,” he says, the name of a West Virginia mine then owned by In-

ternational Coal Group where in 2006 a methane explosion killed a dozen miners. Initial reports claimed there were many survivors. Which only deepened the anguish once the bodies were found. Then in 2010 came the disaster at Massey Energy’s Upper Big Branch Mine, also in West Virginia, where 29 died. Cline had nothing to do with either incident, though over the years four workers have died in his mines, including his best friend. There are other risks. The Illinois attorney general sued and settled with Foresight for just $300,000 (plus $6.9 million in mine “retirement obligations”) over the pollution of groundwater with toxic coal slurry. Lisa Salinas, a critic of Cline who owns a farm 100 yards from an unlined slurry pond in Carlinville, thinks the settlement is a joke because it “calls for little to no valid mitigation of the existing pollution and, in fact, only encourages more damage.” A Foresight mine near Hillsboro, Illinois, has been shut since 2015 because of a dwindling coal fire. Cline is amused by the popular misconception that coal is on its deathbed. Yes, coal-fired power plants do continue to close, and U.S. coal output, currently 700 million tons a year, is down 30% from its peak. And yet the U.S. still relies on coal for 30% of its electric power, compared with just 7% for wind and solar combined. Worldwide demand for coal continues to grow, possibly (but not definitely) peaking by the mid-2020s. Policy and technology are the wild cards; Paul McConnell at energy consultancy Wood Mackenzie figures that advances in solar and battery technology plus worldwide carbon taxes have the potential to erode coal demand by 8% a year. But the death of coal—if it comes at all—will be long and slow. Cline aims for his next project, in Alberta, to be a survivor. He acquired the Vista project via his takeover of the Torontolisted company Coalspur in early 2015 for an estimated $75 million. The seam is 70 feet thick on the surface, so Cline will build Vista as a pit mine, then go underground to eventually tap 1.7 billion tons. By 2022 it could be doing 10 million tons per year. Cline is cold-blooded when it comes to pushing marginal operators out of business. His Illinois mines took business from Appalachia. His Canadian projects will take business away from Illinois. “I think [Vista] could be the last mine operating after they’ve shut down all the rest of the coal in the world,” he says. Cline plans to enjoy the rising sea levels in splendor. He recently acquired Big Grand Cay, a 280-acre archipelago in the Bahamas that used to be owned by Bob Abplanalp, inventor of the aerosol spray can. On his iPad, Cline scrolls through plans for a serene resort amid azure waters and nonjudgmental massage therapists. It’s too expensive even for this billionaire to haul in enough diesel to keep the generators running, so he’s installing solar panels and researching Tesla batteries, and has three wind turbines on order. “Where it makes sense,” Cline says, “I’m absolutely for it.” F

“Even those protesting know that coal is a good thing for the community. it’s in our blood.”

FEBRUARY 2018

FORBES INDONESIA

Hong Kong’s 50 Richest BY JOHN KOPPISCH

It’s Raining Money ong Kong’s wealthiest soared last year, propelled by a 37% jump in the Hang Seng index, a booming real estate market and a strong global economy. And no one in Hong Kong made more money than Lee Shau Kee. His net worth jumped $9.3 billion, or 39%, to $32.9 billion. Not only did shares in his Henderson Land Development jump, but some of his stakes in mainland banks and companies—such as Ping An Insurance and developer Country Garden—were on fire. Lee’s fellow 89-year-old business titan, Li Ka-shing, kept his No. 1 ranking by adding $5.7 billion to his fortune, raising his total to $36 billion. The territory’s richest woman, Pollyanna Chu, and her Kingston Financial Group rode the stock market wave to a 150% hike in her net worth, to $12 billion. A savvy purchase—76 hotels from the Dalian Wanda Group at a 40% discount—helped kick up the value of Li Sze Lim’s assets by 82%. Most of the casino fortunes continued to rebound from their 2014–16 losing streak. Galaxy Chairman Lui Che Woo collected another $7.8 billion in winnings, boosting his take 70% to $19 billion. But he’s not yet

FORBES INDONESIA

FEBRUARY 2018

Biggest gainer Lee Shau Kee: $9.3 billion richer.

back to his $21 billion peak in 2014. Melco Resorts & Entertainment Chairman Lawrence Ho saw an 85% jump in his net worth (see p. 65). Pansy Ho also showed a winning hand— she was up 28%. But the wealth of SJM Managing Director Angela Leong slipped 7.5%; the opening of the company’s first Cotai resort—the $4.6 billion Grand Lisboa Palace—has been pushed back to next year. Other newsmakers include brothers Tung Chee Hwa & Chee Chen,

who are accepting a rich offer from China’s state-owned shipping company Cosco to sell their stake in their family’s Orient Overseas. That goosed their combined wealth by 73%. Two executives at red-hot internet companies got richer—Joseph Tsai at Alibaba and Martin Lau at Tencent, who debuts on the Hong Kong list this year (see p. 60). The other newcomer is Henry Cheng on the strength of his $9.5 billion Greenwich Peninsula residential-and-commercial project under way near London. His father, Cheng Yu-tung, was Hong Kong’s third-richest when he died in 2016, apparently leaving a trust for future generations. Infrastructure builder Gordon Wu and Lee Kum Kee sauces king Lee Man Tat (see p. 52) return to the list. The collective wealth of Hong Kong’s richest rocketed up by $60 billion to $307 billion, one of the biggest leaps ever for a Forbes Asia 50 list. Net worths are based on stock and currency prices as of January 5. Reporting by Jason Booth, Yinan Che, Shu-Ching Jean Chen, Grace Chung, Muhammad Cohen, Rebecca Feng, Russell Flannery, Jane Ho, Sean Kilachand, Luisa Kroll, Anis Muslimin, Suzanne Nam, Robert Olsen, Sheela Sarvananda, Jessica Tan and Jennifer Wells.

CREDIT PAUL YEUNG/BLOOMBERG

The top 50 added a record $60 billion to their piles last year.

THE LIST 1

LI KA-SHING $36 BILLION  CK HUTCHINSON, CK ASSET HOLDINGS AGE: 89

LEE SHAU KEE $32.9 BILLION  HENDERSON LAND DEVELOPMENT AGE: 89

LUI CHE WOO $19 BILLION  GALAXY ENTERTAINMENT GROUP AGE: 88

THOMAS & RAYMOND KWOK $17.8 BILLION  SUN HUNG KAI PROPERTIES AGES: 66, 64

JOSEPH LAU $17 BILLION CHINESE ESTATES HOLDINGS AGE: 66

PETER WOO $13 BILLION  WHEELOCK & CO. AGE: 71

POLLYANNA CHU $12 BILLION  KINGSTON FINANCIAL GROUP AGE: 59

YEUNG KIN-MAN & LAM WAI YING $11.1 BILLION  BIEL CRYSTAL

JOSEPH TSAI $10.4 BILLION  ALIBABA GROUP AGE: 53

WALTER KWOK $8.7 BILLION  SUN HUNG KAI PROPERTIES AGE: 67

LEE MAN TAT $8.5 BILLION  LKK GROUP AGE: 87

MICHAEL KADOORIE $7.6 BILLION  CLP HOLDINGS, HONGKONG & SHANGHAI HOTELS AGE: 76

IMAGINECHINA

Francis Choi: Uncomfortable Attention AN INVESTIGATION launched in December into a financial scandal, touted as the largest in decades in Hong Kong, has caught billionaire Francis Choi in a tight spot. Known as the Toy King, he’s not wanted by law enforcement or listed as a suspect. But he’s dogged by questions over his long relationship with the alleged mastermind, his former family doctor Dr. Roy Cho Kwai-chee, who has escaped arrest by fleeing to Australia. Choi was a big shareholder in Town

Health, a medical-clinic chain started by Cho, and his daughter, Crystal, served as chairman. Through Town Health, Cho gained control of another company and used it to allegedly embezzle $517 million—the payment made by Taiwan billionaire Richard Tsai of Fubon Financial Holdings for new shares in 2015. Choi told Forbes Asia that Cho owed him $64 million: “I am extremely disappointed with Dr. Roy Cho and his work ethics.” Cho couldn’t be reached for comment.

FRANCIS CHOI $6.5 BILLION  EARLY LIGHT INTERNATIONAL AGE: 70

PAN SUTONG $5.7 BILLION  GOLDIN PROPERTIES, GOLDIN FINANCIAL HOLDINGS AGE: 54

PANSY HO $5.5 BILLION  MGM CHINA SHUN TAK HOLDINGS AGE: 55

PATRICK LEE $5.2 BILLION  LEE & MAN PAPER MANUFACTURING AGE: 75 UP MORE THAN 10% DOWN MORE THAN 10% NEW TO LIST RETURNEE

FEBRUARY 2018

FORBES INDONESIA

The Life and Times of Joseph Lau

ew Hong Kong tycoons have cut as colorful a figure as real estate magnate Joseph Lau. He spends lavishly on diamonds and artworks; his girlfriends made him a fixture on the gossip pages, and he’s forced to avoid Macau, where he’s wanted as a fugitive. Now 66 and suffering from heart disease and diabetes, he says he’s given away most of his wealth to his wife and children. But Forbes Asia includes the spouse’s assets when we calculate net worths, and for Rich Listers who founded the company that generated the wealth, we also include assets given to children because we figure the founder still controls those assets. So we estimate his wealth at $17 billion, up $1.5 billion from a year ago, putting him at No. 5 on the list. These assets include properties in Hong Kong and the U.S., stakes in blue-chip companies, and corporate and government bonds. —Grace Chung and Sean Kilachand

2004 Becomes a billionaire.

1974 Graduates from University of Windsor in Canada.

1978 Establishes his own company, Evergo, to make and sell ceiling fans and kerosene heaters.

1983 Evergo goes public.

1985 Diversifies into stock investments and property management.

1974 Joins family business making ceiling fans with brother Thomas Lau, now also a billionaire.

MAY 2013 Reports of illness surface after being a no-show for a Macau court hearing.

MARCH 2014 Becomes a fugitive. Sentenced to five years in prison by a Macau court in connection with a racket that bribed a public official in return for land concessions.

Lau in 2013.

1986 Buys Chinese Estates, which began in 1922.

OCTOBER 2016 Reports of poor health start to resurface. MAY 2015 Buys Pablo Picasso’s “Buste de Femme” for $67.4 million.

The Peninsula

1977 Marries Theresa Po Wing-kam, divorces in 1992. She dies in 2003.

FORBES INDONESIA

1987 Wins control of the Kadoorie family’s Hongkong & Shanghai Hotels in a hostile takeover; earns corporate raider nickname. Later sells the hotels back to the family.

FEBRUARY 2018

NOVEMBER 2015 Spends $49 million on the Blue Moon Diamond for 7-year-old daughter.

NOVEMBER 2016 Takes out newspaper ads detailing 2014 split with ex-girlfriend, the mother of two of his children. Then marries 37-year-old Kimbee Chan Hoi Won, a former Apple Daily entertainment reporter.

2017 Citing health concerns as one reason, says he’s keeping 10% of his assets and transferring a third of the rest to his son, Lau Ming Wai, and two thirds to his new wife on behalf of their two children.

THOMAS LAU: HON SIU KEUNG/EYEPRESS NEWS/NEWSCOM; WING-KAM: SCMP; PENINSULA: TED ALJIBE/AFP/GETTY IMAGES; PICASSO: UKARTPICS/ALAMY LIVE NEWS; DIAMOND: FABRICE COFFRINI/AFP/GETTY IMAGE; JOSEPH LAU: IMAGINECHINA; LUI LAI-KWAN: DICKSON LEE/SCMP; CHAN: IMAGINECHINA

Hong Kong’s 50 Richest

THE LIST 17

TUNG CHEE HWA & CHEE CHEN $5.1 BILLION  ORIENT OVERSEAS AGES: 80, 75

LAW KAR PO $5 BILLION PARK HOTEL GROUP AGE: 69

RICHARD LI $4.4 BILLION FWD GROUP AGE: 51

VIVIEN CHEN

ROBERT MILLER $4.3 BILLION  DFS GROUP AGE: 84

An Expensive Defeat

DICKSON LEE/SCMP

t’s been a rough spell for Vivien Chen, one of Hong Kong’s richest women and former chairman of real estate giant Nan Fung Group. A court ruling in June put an end to a lengthy lawsuit between her and her mother, Yang Foo-oi, 93, over the distribution of the family’s wealth and ordered Vivien to pay more than $1 billion. Vivien, after decades of grooming, took over the reins of the family business in 2009 after her father, Nan Fung founder Chen Din Hwa, was diagnosed with Alzheimer’s. Yang didn’t wait long before bringing the younger of her two daughters to court in 2010, disputing a 2004 agreement and other arrangements that called for Vivien, her sister Angela and Yang to each receive a third of certain assets. The three disagreed on what should be included in those assets, their valuation, which assets Vivien had already transferred to Yang, and other issues. There were also disputes over whether the agreement should be canceled, given Yang’s and Chen’s mental capacity at the time it was made. Yang suffered a major stroke in 2014 and is still incapacitated. But her mental state was already considered an issue—in 2007 she confirmed in writing that Vivien had distributed all of the assets she was due. In any event, Yang won a divorce from Din Hwa in 2011, with a settlement worth hundreds of millions of dollars,

according to the Hong Kong Standard. Local reports also said Din Hwa had long been unfaithful, and when Yang filed for divorce the reason first given was his “unreasonable behavior.” Din Hwa died in 2012 at age 89. He was a billionaire for many years, with his wealth peaking at $3.8 billion in 2011. A court-appointed committee tapped Vivien to run the family business. Angela, who had long lived in the U.S. before returning to Hong Kong, sided with their mother in the court case. Vivien lost the case in 2016, and in its ruling last June, the court refused to grant her permission to appeal. That meant coughing up around $1.1 billion, which doesn’t appear to have been paid yet. Even excluding the money owed to her mother, she still claims an estimated net worth of $2.35 billion. No one at the privately held group, which started in textiles in 1954 and moved into shipping and property, agreed to comment. Vivien, 58, seems to be moving on. She resigned as Nan Fung’s chairman in 2016 and became honorary chairman without day-to-day involvement in the business. Her youngest daughter, Vanessa Cheung, became the group’s managing director in August, a role Vivien once held. She’s responsible for the group’s core property business in Hong Kong as the dynasty begins writing a new chapter. —Jane Ho

SAMUEL TAK LEE $4 BILLION  LANGHAM ESTATE AGE: 78

ANGELA LEONG $3.7 BILLION SJM HOLDINGS AGE: 56

EDWIN LEONG $3.5 BILLION TAI HUNG FAI ENTERPRISE AGE: 66

LI SZE LIM $3.45 BILLION  R&F PROPERTIES AGE: 60

RITA TONG LIU $3.4 BILLION  GALE WELL GROUP AGE: 69

RONALD MCAULAY $ 3.35 BILLION  CLP HOLDINGS AGE: 82

VICTOR & WILLIAM FUNG $3.3 BILLION LI & FUNG AGES: 72, 68

HORST JULIUS PUDWILL $2.8 BILLION  TECHTRONIC INDUSTRIES AGE: 73

LAWRENCE HO $2.65 BILLION  MELCO INTERNATIONAL DEVELOPMENT AGE: 40

FONG YUN WAH $2.6 BILLION HIP SHING HONG GROUP AGE: 93

OR WAI SHEUN $2.5 BILLION  KOWLOON DEVELOPMENT AGE: 66

WONG MAN LI $2.45 BILLION  MAN WAH HOLDINGS AGE: 52

UP MORE THAN 10% DOWN MORE THAN 10% NEW TO LIST RETURNEE

FEBRUARY 2018

FORBES INDONESIA

Hong Kongâ&#x20AC;&#x2122;s 50 Richest

THE PAST YEAR was a slam dunk for Joseph Tsai, executive vice chairman of Chinese internetcommerce giant Alibaba Group. The Taiwaneseborn Canadian citizen and Hong Kong resident saw his net worth soar 93% to $10.4 billion in 2017, thanks to his 2.5% stake in the company. As Alibabaâ&#x20AC;&#x2122;s lead strategist after founder Jack Ma, Tsai has overseen its deal-driven expansion beyond its core Chinese online retail business into areas such as international retail, financial technology, and media and entertainment. He celebrated his growing multibillionaire status with a high-profile acquisition of his own. After selling millions of shares in 2016 and 2017, he agreed to buy 49% of the Brooklyn Nets basketball team from Russian billionaire Mikhail Prokhorov for $1.1 billion. Tsai, who played lacrosse as a student, also spent $5 million to buy a National Lacrosse League expansion team in San Diego.

IMAGINECHINA

Joseph Tsai: Hoop Dreams

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FEBRUARY 2018

LAWRENCE HO

THE LIST

Taking Charge

BILLY H.C. KWOK/BLOOMBERG

awrence Ho got a more than $1.2 billion boost to his wealth over the past year as Macau’s casinos continued their strong recovery. But this likely means less to him, at age 40, than asserting more control over his empire. In May, Ho and James Packer’s Crown Resorts ended their self-proclaimed “world’s most successful gaming partnership.” Nasdaq-listed Melco Crown became Melco Resorts & Entertainment, majority owned by Ho’s Melco International. In December Melco said the Crown Towers hotels at City of Dreams in Macau and Manila will be converted to a new luxury brand, Nüwa, further distancing Melco from Crown. Another Melco luxury hotel brand, Morpheus, will be launched this year with a Zaha Hadid-designed tower at City of Dreams Macau. The Crown split followed the departure of longtime Melco Crown chief operating officer Ted Chan. Rather than replace him, Ho assumed a direct operational role. That means he oversees Melco’s three Macau resorts and eight Mocha electronic gaming parlors, the Manila resort and a partnership building Europe’s biggest casino-resort on Cyprus. Melco axed Hard Rock International from that project, now dubbed City of Dreams Mediterranean, and from City of Dreams Macau last year. Lessening his responsibilities, he stepped down as chairman of Summit Ascent, owner of a Vladivostok casino, while selling his shares in that company. As Japan plods toward casino legalization, Ho remains a brash aspirant, pledging “whatever it takes” to get a license, including moving Melco’s headquarters to Japan. Former Macau casino kingpin Stanley Ho brought his oldest surviving son,

MARTIN LAU $2.4 BILLION  TENCENT AGE: 44

VINCENT LO $2.37 BILLION  SHUI ON LAND AGE: 68

CHAN TAN CHING-FEN $2.36 BILLION  HANG LUNG GROUP

VIVIEN CHEN $2.35 BILLION  NAN FUNG GROUP AGE: 58

Breaking up is good to do.

who grew up mainly in Canada, into gambling from banking. Lawrence’s style elicits powerful reactions. “As a newgeneration Chinese businessman, Lawrence embodies the modern values of the East—for example, a strong work ethic— and Western freedom of expression and openness to new ideas,” says University of Macau professor Desmond Lam. The corporate culture and Ho’s age attract “young enthusiastic employees,” says Lam, author of Chopsticks and Gambling, which examines Chinese gaming behavior. But it leads to “testing new ideas without taking into account the big picture . . . placing his bets every way with no clear strategy.” One example: Melco’s 60%-owned Studio City opened in late 2015 with a Hollywood theme foreign to many mainland Chinese, a multistage magic show and no VIP gambling. A year later, Studio City added VIP rooms, and in October it closed House of Magic. “Since the breakup there is now a more consistent set of strategies in place,” says gaming consultant Michael Zhu, a senior vice president at The Innovation Group. “Diversification is the key point. Head-to-head competition for market share in Macau is expensive and ineffective. [Ho’s] probably better off having more presence outside Macau, where he can, again, play his Eastern and Western cards.” —Muhammad Cohen

FOR METHODOLOGY AND ALL BIOS, GO TO FORBES.COM/HONGKONG.

MICHAEL YING $2.3 BILLION ESPRIT AGE: 68

TANG YIU $2.3 BILLION BELLE INTERNATIONAL AGE: 83

KENNETH LO $2.28 BILLION  CRYSTAL GROUP AGE: 79

TANG SHING-BOR $2 BILLION  ETS GROUP AGE: 83

ALBERT YEUNG $1.7 BILLION  EMPEROR INTERNATIONAL HOLDINGS AGE: 74

JEAN SALATA $1.65 BILLION  BARING PRIVATE EQUITY ASIA AGE: 52

THOMAS LAU $1.61 BILLION LIFESTYLE INTERNATIONAL HOLDINGS AGE: 63

TANG HSIANG-CHIEN $1.6 BILLION  SHENGYI TECHNOLOGY AGE: 94

HELMUT SOHMEN $1.59 BILLION BW GROUP AGE: 78

ALLAN WONG $1.55 BILLION VTECH HOLDINGS AGE: 67

JIM THOMPSON $1.5 BILLION CROWN WORLDWIDE GROUP AGE: 77

GORDON WU $1.37 BILLION  HOPEWELL HOLDINGS AGE: 82

HENRY CHENG $1.3 BILLION  KNIGHT DRAGON AGE: 71

LO KA SHUI $1.25 BILLION  GREAT EAGLE HOLDINGS AGE: 70

UP MORE THAN 10% DOWN MORE THAN 10% NEW TO LIST RETURNEE

FEBRUARY 2018

FORBES INDONESIA

ANOTHER REASON TO CHOOSE MAYAPADA HOSPITAL

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Neuro-vascular is a subspecialty field in Neurosurgery, divided

with early detection. In developed countries, ruptured aneu-

into two major categories: Microsurgery and Endovascular.

rysm has a low number of incidence. Early treatment of aneu-

Neuro-vascular abnormalities such as aneurysm, arteriovenous

rysm cases will give optimum result with short hospitalization

malformation (AVM), carotid artery abnormalities, hyperten-

days.

sion and ischemic stroke, and blood vessel tumor in the brain will decrease one's quality of life, causing neurologic disorder from disabilities to fatality. To detect blood vessel abnormalities in the brain, a non-invasive angiography can be done such as Magnetic Resonance Angiography (MRI) and Computed Tomography Angiography (CTA). Another option is to do an invasive endovascular procedure, such as Digital Subtraction Angiography (DSA). It will give better imaging and is the gold standard for vascular workup. A definitive procedure can be done following angiog

Giant Aneurysm

raphy

Neuro-vascular is growing rapidly in the last decade. Through endovascular procedure, aneurysm management can be done from a simple procedure such as simple coiling to balloon/stent assisted coiling and the latest technique of flow diversion. Flow diversion stands as an alternative procedure for giant aneurysm. Bypass is also an alternative that can be done following open surgery. Despite its advance technique, not all cases can be managed by endovascular. It depends on the morphology, location, perforating arteries involvement, durability, patientâ&#x20AC;&#x2122;s age and general condition. A neuro-vascular neurosurgeon will decide the best treatment for the patient, either with open surgery and clipping or endovascular procedure with coilArteriovenous Malformation (AVM)

ing.

Ruptured aneurysm is one of the most common cause of death

In AVM cases, embolization can be done by endovascular pro-

in neurosurgery. According to the Brain Aneurysm Foundation,

cedure before Open Resection Surgery or Stereotactic Radio-

there are 500.000 deaths per year in the world, half of them are

surgery. Deep situated AVM will usually undergone Stereotac-

under 50 years of age. Whereas 60% of ruptured aneurysm

tic Radiosurgery whereas superficial AVM is best done by

cases will have disabilities. These numbers can be lowered 66 | FORBES INDONESIA FEBRUARY 2018

Ischemic stroke also has a good outcome with endovascular

Common neuro-vascular cases :

technique. Cases with onset less than 3 hours will give clinical-

Aneurysm

ly significant recovery with intravenous rTPA treatment. If it

Arteriovenous Malformation (AVM)

does not give maximum outcome, mechanical thrombectomy

Arterial dissection in the brain

can be done following DSA.

Carotid Cavernous Fistula (CCF) Carotid artery abnormalities : stenosis

Hypertensive strokes often cause loss of consciousness due to

Hypertensive and Ischemic stroke

blood collection in the brain. This situation needs an emergen-

Blood vessel tumor : cavernoma, hemangioblastoma

cy procedure to evacuate the blood and control the bleeding, and if needed, decompression of the bone. On several cases of deep situated hypertensive strokes, an endoscopic evacuation technique has been developed to minimize brain tissue damage and produce faster recovery.

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Multiple Aneurysm, 3D Reconstruction of a CT Angiography

Clipping Microsurgery on Multiple Aneurysms Sometimes on blood vessels tumor in the brain, a neuro-oncology neurosurgeon will work together with a neuro-vascular neurosurgeon. This collaboration of endovascular techniques is to shut off the feeder artery by embolization and will facilitate

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the tumor evacuation process and minimize the bleeding.

FEBRUARY 2018

FORBES INDONESIA

Making a splash: The MONA in Hobart, Tasmania, is adding a five-star hotel, a library and new performance spaces.

Artsy Aussies There’s a multimillion-dollar museum boom Down Under. BY OLIVER GILES

FORBES INDONESIA

FEBRUARY 2018

he world’s greatest cities are nothing without their galleries. London has the Tate Modern, New York the Museum of Modern Art and Paris the Pompidou Centre. But what art spaces do Australian cities have? You may not be able to name a single gallery in Australia, but the country is in the middle of a cultural boom. This year, plans for museums, galleries and other arts spaces have been unveiled in all six Australian states. One of Australia’s most famous art institutions is the Museum of Old & New Art (MONA) in Hobart, Tasmania. Since Australian businessman and art collector David Dominic Walsh opened MONA in 2011, more than 1.7 million people have walked through its doors, adding an estimated $100 million to Tasmania’s economy every year. Just as architect Frank Gehry transformed the sleepy Spanish town of Bilbao with his curvaceous Guggenheim Museum, Walsh has rejuvenated the Tasmanian

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FORBES LIFE

GALLERY BOOM

capital with MONA, which houses controversial artworks such as Wim Delvoye’s “Poo Machine,” an installation that converts food into feces. And now Walsh wants to push MONA even further. In July, he unveiled plans for the “next phase” of the museum, an extension called HOMO (which stands for Hotel at MONA). HOMO includes a 172-room, five-star hotel, but it will also feature a library and new spaces for performing arts. The MONA Library inside HOMO will house Walsh’s large collection of rare books and manuscripts and will be accessible to the public and researchers. HOMO is expected to open in 2022. Other philanthropists are funding new arts and cultural spaces around the country. Naomi Milgrom, the owner of women’s clothing brands Sportsgirl, Sussan and Suzanne Grae, says private patrons have played a key role in strengthening Australia’s cultural scene. “There are a number of individuals with big ambitions,” Milgrom explains. “Ulrike Klein in South Australia is one. She’s developed the Ukaria Cultural Centre, which is a beautiful performance space for music. There’s also Judith Neilson, who’s created the White Rabbit Gallery in Sydney.” Milgrom is too modest to include herself on that list, but she is one of the country’s most prominent patrons of the arts. Through the Naomi Milgrom Foundation she supports art, design and cultural projects in Australia and around the world. Her most famous initiative is the MPavilion, a temporary event and performance space that is installed for four months every year in Melbourne’s Alexandra Gardens. The MPavilion hosts everything from fashion shows to lectures by artists to performances by local

MPavillion, a temporary event space in Melbourne’s Alexandra Gardens.

musicians, all of which are free to the public. It’s estimated that “more than 100,000 people will pass through the current MPavilion,” during its run from October 3, 2017 to February 4, 2018, according to Robert Doyle, Lord Mayor of Melbourne. “With the MPavilion, I want to deliver an inspirational civic space for Melbourne,” Milgrom says. “People can come and go—there’s no ticketing. It’s a completely free cultural space.” Milgrom commissions a different architect to design the MPavilion every year. For this year’s MPavilion, the fourth, she enlisted the famous Dutch architect Rem Koolhaas. With his studio, the Office for Metropolitan Architecture (OMA), Koolhaas created a high-tech amphitheater to accommodate the varied events planned for the building. “Melbourne is a city that’s changing very, very fast in a country that’s changing very, very fast,” Koolhaas said at the opening. Keen to attract both international and interstate tourists, Australian state governments are also investing in new cultural spaces. The government of New South Wales, for example, is spending almost $200 million to extend Keen to the Art Gallery of New South attract both Wales in Sydney. international Designed by Japanese arand interstate chitectural firm SANAA, the extension includes plans for tourists, Australian state an elegant new building and the transformation of WWIIgovernments era oil tanks buried beneath are also the museum into cavernous investing in exhibition spaces. It will crenew cultural ate more than 4,500 square meters of new gallery space spaces. and is expected to boost the number of visitors from 1.2 million people per year to 2 million. More visitors also means more money. In the first 25 years after its completion, the gallery believes the extension will add $800 million to the economy of New South Wales. On the other side of the country, in the far-western city of Perth, the local government has committed over $300 million to fund the New Museum for Western Australia. Like this year’s MPavilion, this megamuseum was designed by OMA. “The New Museum for Western Australia was the first time in Australian history that they organized a tender where only international architects could compete,” says David Gianotten, one of OMA’s managing partners. OMA competed with other major firms, including Jean Nouvel and Foster & Partners. “We’re very used to competing with those firms in Europe, but we very rarely encounter them on the other side of the world,” Gianotten says. “That really shows how the Australian cultural scene is growing.” F FEBRUARY 2018

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FORBES LIFE

LEXUS INDONESIA

Aspirational Luxury Lexus Indonesia has succeeded by offering high-end services for its high-end customers. BY YESSAR ROSENDAR

FORBES INDONESIA

FEBRUARY 2018

exus Indonesia recently had a great gift for its 10th anniversary last year as it recorded its highest growth in sales in its history here, doubling its sales to 1,000 units at the end of 2016. The rise was attributed to a new lineup of SUVs and the brandâ&#x20AC;&#x2122;s unique approach in selling cars. Lexus Indonesia took a quality over quantity route compared to its European rivals; it only focuses on the high-end of the market. While its European competitors sell many cars under Rp 1 billion, Lexus Indonesia opted to only sell those starting from Rp 1 billion. With less volume, the brand can then give more personalized and luxuri-

ous service for its customers. Thus, Lexus avoids a head to head competition with its European competitors. Service is where the brand tries to outperform its rivals. One example is when one visits the Lexus Gallery showroom and workshop in Menteng—it is radically different from a typical showroom. For sure, there are three cars on display, and a service area but that’s where the similarities end. On the ground floor, it has fish ponds and a grand piano in the corner, and the second floor has a library, a fridge full of premium ice cream and a private lounge where the customer also can see the car being serviced below. Order a cappuccino and it will come with

Indonesian high-end customers would need more personalized and premium services. So, from the beginning, the brand has focused on its services. His bosses in Japan were reluctant at first, as they wanted to stick to a global concept. “They hesitantly agreed in the end,” Adrian says. The concept was later deemed such a success that Lexus imported the idea to Japan, opening its first Lexus gallery in the swanky Aoyama area of Tokyo in 2008. To focus on service, Lexus Indonesia started with only one showroom in Menteng and later the showroom in Tendean. To have a personalized service, the brand also limited the number of salespersons in a showroom, but all had to screened first for qualifications such as education and family history, so highend customers would feel comfortable with them. “They act like a curator when you visit a museum, they can tell you the story of the car,” Adrian says. The brand also doesn’t offer discounts—the price is fixed. “I don’t want anyone to felt cheated after receiving a different price, in this segment trust is important,” Adrian says. As the sales grow, the brand is innovating to serve its customers, setting up what it calls the Lexus Mobile Concierge. This service can be dispatched quickly to serve customers whether they are at home, in the office or at a golf course. Currently the brand has six service cars that will be expanded to ten cars this year. It also has motorcycles for even faster service. “If someone breaks your side mirror, in half an hour this motorcycle will bring a temporary replacement for you,” Adrian says. Improved models from the brand also play a significant role in the sales growth, as Lexus engines are now mostly turbocharged—making them more efficient and putting them on par with European counterparts. Though Lexus was a bit late in applying turbochargers, Adrian says that is the Lexus way. “We wanted to make sure that we have the best, we proudly produce our turbocharger by ourselves,” says Adrian. Currently the biggest sales contributor for the brand is its SUVs, mainly its midsized RX model that contributed about 70% of sales. Given these achievements, Akio Toyoda—whose grandfather Kiichiro Toyoda founded Toyota (the owner of Lexus)—even visited the Lexus Gallery last year to appreciate the brand in Indonesia and praised Lexus Indonesia for its accomplishments. Going forward the brand wants to continue to expand while maintaining its focus on services, and try to expand to more cities. It wants to continue to set a global standard for the premium automotive industry at home and abroad. “I want Lexus to be an aspirational brand,” says Adrian. F

From the beginning, the brand has focused on its services. a Lexus logo on top with some biscuits on the side a la a fancy café. At several premium hotels and malls, the brand already has a dedicated VIP parking space so Lexus owners don’t have the hassle of searching for parking, such as the Fairmont Jakarta and the Grand Indonesia mall. To celebrate the 10th anniversary of the brand in Indonesia, Lexus also created a custom food truck with a celebrity chef—who used to cook for Michael Jackson—for customers to dine with their guests. “All these details are maybe not essential for other brands, but for us they are important,” says Adrian Tirtadjaja, 38, general manager of Lexus Indonesia. When Adrian wanted to launch the brand, he went to several Lexus dealerships around the world from Japan to the U.S. However, he wasn’t satisfied with what he found, he felt Indonesian customers were different from the global profile. He researched the customer base here, and realized that

FEBRUARY 2018

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FORBES LIFE

PIO BOFFA

Timeless Dynasty Pio Boffa’s family-owned Pio Cesare winery is one of Italy’s best boutique producers. BY JUSTIN DOEBELE AND NATASHA STEVEN

io Boffa, 63, is the fourthgeneration winemaker of Pio Cesare winery from Alba, Italy. He was named after his late great-grandfather Cesare Pio, who founded the company in 1881. Initially Cesare, a businessman, made wine as a hobby, for his family and friends. From the beginning, however, Cesare believed in the quality of wines from that region, which is known for its famed Barolo and Barbaresco—both made with the Nebbiolo grape. His son Giuseppe expanded the winery, then thriving as its own business. Pio, being born into a wine fami-

ly, had a natural fascination for oenology from childhood, often watching his father and grandfather produce wine. In 1972 when Pio was 17, he went to study for three months under the legendary U.S. winemaker Robert Mondavi, where he absorbed many of Mondavi’s techniques. Although there for only a short time, Pio says: “It was the experience of my life to be able to be adopted into the wine business by such a person as Robert Mondavi.” Focused on being a boutique producer, Pio Cesare’s name is closely associated with the rise of Barolo as

WINE AMBASSADOR

During a recent visit to Jakarta, Pio talked about his view of winemaking and Indonesia’s wine culture, after which he hosted a dinner that served five Pio Cesare wines, ranging from a Dolcetto D’Alba 2014 to a Barbaresco 2009. Forbes Indonesia (FI): What is the secret to Pio Cesare’s long success? Pio Boffa (PB): The aim and work of each generation, myself included, has always been to make sure that the wines we make today are in the same style that they have been made in the course of our histories in the vintages before. FI: What is your management style? PB: Every penny we make is invested into the winery. We buy new

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vineyards and new equipment, but we make sure that we do not enlarge production. This is a very important factor, as we are not willing to become a large producer, we want to stay boutique. FI: How do you ensure the quality of your wines? PB: Well it’s the grape. Nebbiolo grape has a particular style, characteristic and flavor and only grows this well in the Piedmont area. The uniqueness of the area

FEBRUARY 2018

where the wines come from, in comparison to other varieties, makes it to be one of the world’s best wines. FI: Which wine is your flagship? PB: The Pio Cesare Barolo is highly recognized as one of the most iconic Barolos. We are one of the first families to dedicate their lives to the production of these wines. We try to be the ambassador for the name Barolo and Barbaresco in the world as much as we can.

one of Italy’s greatest wines. The family has now been producing wines in Alba and the Piedmont area—the heart of Barolo and Barbaresco production—for 135 years. The family uses ancient cellars, that include parts of Roman walls dating back to 50 BC. “Barolo and Barbaresco are two widely known wines in the panorama of wine lovers,” says Pio. Although Barolo and Barbaresco wines are both made from Nebbiolo, Pio says each has its own character. “Barolo is known as the king of Italian wines, while Barbaresco is known as the queen of Italian wines due to Barbaresco having more finesse and being more feminine, while Barolo has more character, being more robust and masculine,” says Pio. The family ensures that every detail is preserved as Pio Cesare founded the winery, opting for long-held traditional winemaking techniques as proof of their dedication. The family takes pride in being a small-scale artisanal producer, making only 400,000 bottles in a limited number of styles, including some white wines. The family owns most of its own vineyards, about 70 hectares. It uses minimal “intervention” in the form of chemicals, focuses on quality over quantity, and hires no seasonal workers—using a dedicated

Pio Boffa in Jakarta

“Barolo is known as the king of Italian wines, while Barbaresco is known as the queen of Italian wines.”

group who nurture the grapes for the entire growing cycle. “Everything is kept as it used to be, to keep the integrity of the family that has dedicated their years to the production of high quality wines,” says Pio. These iconic Barolo and Barbaresco wines have received acclaim from numerous wine critics. James Suckling has said: “The Boffa family, owners of Pio Cesare, has probably done

more for promoting Barolo around the world than anyone else.” He gives the Pio Cesare Barolo Ornato 2012 and 2013 vintages ratings of 98 (100 is a perfect score). He said of the Ornato: “Full to medium body, ultra-fine tannins and bright acidity. Fascinating character.” He noted the wine had notes of “rose stems, wet earth, strawberries and mushrooms.” Robert Parker gave the 2013 Ornato 95 points. F FEBRUARY 2018

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FORBES LIFE

GUITTARD

or many, the arrival of Scharffen Berger’s bean-tobar chocolate bars some 20 years ago—with their $10 prices, quirky origin stories and artsy wrappers—marked the starting point of the craft movement in American chocolate. For Gary Guittard, president of Guittard Chocolate, Scharffen Berger’s arrival marked something darker. “I smelled something dangerous for us,” Guittard says. Scharffen Berger, using old world artisanal methods and rare cacao beans, upended an industry that had turned to industrialized manufacturing and cheaper ingredients to reduce costs. Over time, Guittard acknowledges, his company and others had “washed out a lot of the flavor in the beans.” The marketplace responded to the new brand with wild enthusiasm, says Guittard, 71, who concluded, “I needed to make changes in order to survive.” He spent the next four years experimenting, a process Guittard says nearly did him in. Founded by Gary’s great-grandfather in San Francisco in 1868, E. Guittard & Co. Chocolates & Cocoa survived the 1906 San Francisco Earthquake, the Great Depression and the sudden deaths of Gary’s father and brother, then the company’s president and its designated heir, respectively. The challenge posed by Sharffen Berger was to refine and reengineer manufacturing techniques to produce

Gary Guittard’s business has built key relationships, like one with a certain Seattle coffee chain.

Despite little name recognition, San Francisco chocolate maker Guittard has managed to survive competition from both the Davids and the Goliaths. BY STACY PERMAN

The Sweet Spot 74

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FEBRUARY 2018

TIMOTHY ARCHIBALD FOR FORBES

the kind of flavor found in artisanal batches but on a larger scale. “I almost lost my mind trying to duplicate that,” he says. “I went back to the way we made chocolate 100 years ago.” In short, Guittard managed to find a sweet spot by using types of beans the company hadn’t used in decades, old family recipes and some new processing techniques. He could make chocolate with better quality than the big guys, and he could produce that chocolate in quantities that artisanal makers couldn’t match. In the $22.4 billion American chocolate market, Guittard generates more than $100 million in annual revenue, far behind Hershey and Mars, which together make up about three quarters of the U.S. market, but substantially more than small-batch makers like Askinosie, Dandelion and Madécasse (Hershey acquired Scharffen Berger, then generating an estimated $10 million, for a reported $50 million in 2005). Today, Gary says, the company is profitable but chocolate-making remains capital-intensive, and he plows an average of 30% of profits back into the business each year. Guittard is the biggest American chocolate company most people have never heard of. It has never established a large retail presence, mostly to avoid competing with core customers like See’s Candies, the iconic California confectioner owned by Warren Buffett’s Berkshire Hathaway. Guittard began working with See’s, its biggest customer, in the 1930s, supplying it first with dark chocolate and then picking up its milk chocolate business four decades later when Nestlé, See’s original supplier, began selling branded truffles that competed with See’s. “We work very closely with them,” says Brad Kinstler, See’s CEO. “Our particular chocolate that they produce is critical to our flavor. We have special requirements, and they are able to meet our specifications to a T.” Other clients of Guittard’s bars, chips, wafers, sweet-ground chocolate

Guittard is the biggest American chocolate company most people have never heard of. and cocoa powder include WilliamsSonoma, Baskin-Robbins and scores of bakeries, candy makers and chefs—from Thomas Keller to Jacques Torres. Shake Shack puts Guittard in its chocolate frozen custard, and Wolfgang Puck has used it to make his miniature Oscars for the post-Academy Awards Governor’s Ball. Two years ago, when the restaurant Untitled opened at the Whitney Museum, Grub Street dubbed its Guittard-based triple chocolate cookie New York’s finest. “I like to say, you don’t know how much Guittard you’ve consumed,” says Amy Guittard, 35, Gary’s daughter and the director of marketing. Guittard began as many ventures do, with aspirations that shifted dramatically. Gary’s great-grandfather Etienne Guittard left his home in Tournus, France, for San Francisco’s Barbary Coast, hoping to strike it rich in the Gold Rush. When he found that wealthy miners would pay handsomely for his chocolates, he changed course. Similarly, Gary never planned to work at Guittard, where his older brother Jay was expected to take over. Passionate about the outdoors and adventure sports, Gary went to college in Colorado and then worked in advertising in San Francisco. In 1973, he returned to the fold, “hat in my hand,” after being laid off. His father, Horace, told him to work elsewhere and develop a skill, and he landed a job as a food broker, introducing new products to grocery stores. Two years later, he joined Guittard, sharing an office with his father and brother, and focused on expanding sales of consumer products, such as the home-baking line.

And then in 1989, after his father, 76, and brother, 46, died within six months of each other, his father of ALS and his brother of a heart attack, Gary took over the company. The loss was devastating personally, but he says he was ready: “I had a vision; I felt pretty confident. I just focused on the things that needed to be done and what came next. There wasn’t any kind of ‘aha’ moment or ‘Oh God’ or ‘Oh boy.’ There was just the fact and reality that this is the way it is.” The family’s business had always been based on doing what it takes to build relationships. When sugar prices quadrupled in the 1970s, Gary went to each of his clients and asked them to renegotiate their contracts. The exercise taught him not only who his friends were but also an important lesson: “Those that renegotiated stayed in business. Most of the ones that didn’t don’t exist today.” In the 1950s, when See’s wanted its chocolate delivered in liquid form, Guittard began sending tankers of melted chocolate directly to the company. This summer, after Guittard missed a delivery date, it took an $11,000 hit to fly 2,000 pounds of chocolate to the Honolulu Cookie Co. Mark Spini, vice president of sales, who’s been with Guittard for 31 years, says, “We understand we’re dealing with entrepreneurs growing their businesses. We were once like that too.” In the 1970s, a Palo Alto housewife named Debbi stopped by regularly as she experimented with a chocolate chip cookie recipe. Eventually, she launched Mrs. Fields Cookies. Around the same time, a friend of Gary’s, working at a fledgling coffee roaster in Seattle, called him seeking help to develop mocha for hot chocolate; Starbucks remains a customer today. “When our customers are successful, we are successful,” says Clark Guittard, 45, Gary’s nephew and director of international sales. “We grow with them.” F FEBRUARY 2018

FORBES INDONESIA

THE EYE

BY YESSAR ROSENDAR

OUTSTANDING CONVERTIBLE McLaren Jakarta last month just launched the newest lineup from the brandâ&#x20AC;&#x2122;s Sports Series with the McLaren 570S Spider. The car is the first and only convertible in the Sports Series that is an entry level car from the supercar brand based in Woking, England. The convertible uses the same retractable hardtop from the McLaren 650S and 675LT Spider, which can fold in just 15 seconds at speeds of up to 40 km/h. As the car also uses a carbon chassis that is strong and light, it doesnâ&#x20AC;&#x2122;t need an extra reinforcement for its chassis, hence is only 46kg heavier than the coupe version. The car is powered by the same engine as the coupe, with a 3.8-liter twin-turbocharged V8 that generates 570 horsepower, and is mated with a sevenspeed dual clutch automatic gearbox. Acceleration from a standstill to 100 km/h can be reached in 3.2 seconds and top speed is 328 km/h, identical to the coupe version, while top speed with the top down is 315 km/h. 76

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FEBRUARY 2018

Premium Service

JW Marriott Hotel Jakarta will present numerous delicacies to welcome the Chinese New Year 2018, which will be the Year of the Dog in the 12-yearcycle Chinese zodiac. The festivities start on February 15, the New Year Eve celebration, where guests can take part in a Yee Sang ceremony—mixing a huge plate of Cantonese-style raw fish salad that is also known as a prosperity toss—in the hotel lobby. On that day, guests can enjoy a special dim sum and tea brunch called Yum Cha while being entertained by traditional music and a barongsai performance. Chinese Master Chef Ken Choy from Pearl Chinese Restaurant will serve a special set menu for the occasion, named Wealth, Prosperity, and Fortuna, that is available from February 9 to March 2. — Shintya Felicitas

Last month BMW Group Indonesia partnered with PT Artha Motor Lestari to open BMW Thamrin as the first city sales outlet from the brand in Indonesia. The dealership is aimed at executives as it’s located at the Indosurya Plaza in the center of Jakarta’s business district. The dealership spans 803 sqm, offering a complete line of services, from sales to maintenance everyday from 10 am to 8 pm. It offers BMW Fast Lane Services at its workshop located in the basement, customers only need to drop their car at the concierge area at the showroom, and the service will be done in less than 90 minutes. The workshop has a capacity of three working bays and five certified mechanics.

Festive Celebration

FEBRUARY 2018

FORBES INDONESIA

THE EYE

BY YESSAR ROSENDAR

RECORD THIN

Audemars Piguet aims to reinvent the calendar watch with the Audemars Piguet Royal Oak RD#2, a combination of complication and ultra-thin case. Audemars Piguet took five years to develop the new ultra-thin 5133 calibre with perpetual calendar. The challenge has been to re-engineer a threestory movement into a single level, making it ultra-thin while combining and rearranging the functions to boost its ergonomics, efficiency and robustness. This patented system features a recordsetting 2.89 mm central rotor. At just 6.30 mm, the redesigned case shaves almost 2 mm off the Royal Oak Extra-Thin Jumbo, making the Royal Oak RD#2 the thinnest selfwinding perpetual calendar in the world. The watch is also a tribute to the brand’s heritage as the 12 o’clock moon phase pays homage to the company’s first perpetual calendar wristwatch that came out in 1955.

FORBES INDONESIA

FEBRUARY 2018

Mercedes-Benz

Mercedes-Benz Indonesia just launched two new models at the start of this year, with the GLC 200 AMG and E 200 Avantgarde. The two cars were introduced at the Mercedes-Benz Weekend Test Drive 2018 event that was held at the Epiwalk in Jakarta in January, aimed to widen the options at the entry level of the respective models. The E 200 Avantgarde, while priced just below Rp 1 billion, still offers luxury and high tech features such as self parking and smartphone integration. Introduced as well is the new GLC 200 AMG that adds a sporty touch to the SUV variant, the car equipped with AMG styling in its exterior. Further adding to the sporty look are the 19 inch AMG 5-twin spoke wheels. The GLC 200 AMG Line is priced at Rp 929 million, while the E 200 Avantgarde is priced at Rp 999 million—both off the road.

Oceanside Lifestyle Como Hotels and Resorts will open its newest resort in Bali this February, the Como Uma Canggu. The oceanside resort is located on Bali’s south coast, and will offer activity focused around the beach and culture. The resort, which occupies one hectare of land, features 119 contemporary rooms, suites, one- and two-bedroom residences,

as well as three-bedroom duplex penthouses with individual rooftop pools. The aesthetic of the resort is to combine modern Asian and Italian touches from designers Koichiro Ikebuchi and Paola Navone. Fine dining, dubbed “new world cuisine,” will be available at the Como Beach Club, using locally sourced ingredients from across the island. Healthy “Como shambhala” cuisine will also be available. A major aspect of the resort will be its luxury surfing concept, in partnership with Australian firm Tropicsurf. Veteran surfers will be satisfied with the large waves found to the right of Como Uma Canggu, while novices can learn the foundations under an expert eye on calmer rides. FEBRUARY 2018

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LeaderBoard During our centennial year, we’re unearthing our favorite covers.

Power Cut: July 15, 1976

Sign of the Times VANDEMONIUM The Big Three automakers were on track to sell 520,000 vans in ’76, up nearly fivefold in six years. The trend had started “in California when surfers began using cargo vans as luxury campers. The fad has spanned Manhattan and [reached] into prim New England.”

AMERICA was one of the world’s two superpowers, but it remained dangerously dependent on foreign oil. The 1973 OPEC embargo—imposed on America in retaliation for weapons sales to Israel during the Yom Kippur War—had cost the United States between $10 billion and $20 billion in gross national product (upwards of $86 billion today) as well as 500,000 jobs. It exposed the country’s extreme dependence on foreign oil, a “vulnerability to supply interruptions [that] will get worse, not better.” Sure enough, another oil shock would hit in 1979 after the Iranian Revolution. As America sank into another recession, blocks-long lines at gas stations nationwide again became a daily test of endurance. Despite the warning calls sounded by Forbes and many others, reliance on foreign oil worsened in the ensuing decades, reaching a peak of nearly 3.7 billion imported barrels a year in the mid2000s. That figure has declined by 22% since, as technological advances such as hydraulic fracking and horizontal drilling have offered access to new U.S. oil and gas reserves.

Amazing Ad YANKEE DOODLE DIESEL Southern Pacific launched a fleet of red, white, blue and gold trains to mark the country’s bicentennial—freight locomotives that continued to do “a job we’ve been doing for 125 of the 200 years we’re celebrating in 1976.” 80

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The Editor’s Desk THEIR HIGHNESSES More than 10,000 spectators attended the second annual gathering of hot-air balloonists, hosted by Malcolm Forbes at his Normandy estate. Each paid $2.20 (roughly $10 today) to see pilots from a dozen countries, all personally selected by Malcolm, maneuver their buoyant craft through the skies.

BY ABRAM BROWN LEFT: ALAMY

Notable and Newsworthy BRIGHTON BEACH MILLIONS Neil Simon didn’t need to blow his own horn: He was a “one-man entertainment conglomerate” who earned in the mid–seven figures just for the film outline of The Odd Couple; he had also written 1976’s Murder by Death (below).

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