Ex-rock star is on a roll with investments in oil, media and communications

Chairman of the Setdco Group

Setiawan Djody is a household name in Indonesia. Once a rock star, he is now an international businessman and Chairman of the privately-owned Setdco Group.
About 70 percent of Setdco’s investments are in the oil business, but it also has interests in the media, agro-industry and telecommunications.
Setdco – the group’s name is a contraction of its Chairman’s – is hoping to take over the financially troubled state-owned airline Merpati, the second-largest in the country. Mr. Djody has set up a consortium with Canadian and Australian investors to buy a stake worth between $300 and $500 million.
“I am hoping to take control of Merpati by acquiring the majority of shares in the company,” he says. “We also plan to take over Merpati’s debts.”
Mr. Djody says the aim is to boost the performance of the airline and add new routes. He has offered assurances that the current management would be retained if the takeover goes through. “There won’t be any layoffs or a reshuffle.”

Finance is sought for a 300,000 bpd oil refinery planned for construction next year

Merpati, which is 93.5 percent-owned by the government and the remainder by national flag carrier Garuda Indonesia, has been in financial difficulties since 1998. It recorded pre-tax losses of $5.6 million in 2001.
“It is a strong consortium and the partners have confidence in me to lead the acquisition of Merpati,” says Mr. Djody. “We are proposing that we take a 90 percent stake and the government 10 percent.
“The government is losing at least $2.2 million a month by subsidizing Merpati, which is why the airline should not be in the hands of the state. When we take it over, we will start an ambitious international expansion drive.”
Mr. Djody is also planning to improve oil distribution in East Java, where he believes the infrastructure is poor. He hopes to begin building a 300,000 barrels-per-day oil refinery next year, and is looking for finance for the scheme, which will cost an estimated $3 billion.

COMMUNICATIONS interests stem from Mr. Djody’s role in founding mobile company Telkomsel.

He says Chinese participation in the project is crucial because the country would be the main buyer of the refinery’s products. His goal is to complete construction of the refinery within two years, to coincide with the liberalization of Indonesia’s downstream energy sector.
Mr. Djody has been active in the energy sector for three decades. His business includes running a fleet of tankers, as well as oil trading. He is a major shareholder in an oil exploration and exploitation company in Kazakhstan. Setdco also has interests in fisheries and oil palm plantations.
Another big project in the pipeline is the acquisition of part of the government’s majority interest in the Papua Tangguh natural gas project, operated by British Petroleum (BP).

Last year, a tender by China’s Guangdong Province for long-term liquefied petroleum gas supplies prompted BP to begin marketing efforts for the Tangguh gas field. BP is ready to go ahead with the project and expects to complete construction in 2005.
Mr. Djody established his company in the late 1970s, focusing on construction and real estate. In 1977, with then Hong Kong Governor Tung Chee Wa, he started a shipping company for oil transportation.

In 1993, Mr. Djody established an oil production company, Central Asian Petroleum, with partners in Kazakhstan. The firm produces about 120,000 barrels of oil per day.
Mr. Djody was also one of the founders of mobile company Telkomsel, which was later taken over by the government. “I am now negotiating with the government to purchase my former equity,” he says, adding that Telkomsel has agreed in principle to sell back 14 percent.
The ambitious Chairman has yet another plan that he hopes will take off – a monorail link from Jakarta to Bandung in West Java. He says: “We are proposing it as a private development, with the government owning 20 percent of the shares in the new railway company.”
The monorail development consortium would comprise the same companies as those in the bid to take over Merpati.

“We will, of course, be expect-ing to have some financing facilities and assistance from the government in its capacity as one of the partners in the project. This is one of the reasons why I think that, once the green light has been given, the scheme can be achieved in a year to a year-and-a-half at most.”
Mr. Djody acknowledges that his family background – his great grandfather was Dr. Wahidin, the ‘father of national awakening’ and pioneer in the movement against colonial rule in the early 19th century – has played its part in his career.
“I owe a lot to this country and I also have a duty to my country,” he says. “Although I know the Suharto family well, I have also played music with lyrics with political views.
“My approach is multilateral; very cultural and very universal. I act and think globally. This country has everything, the only problem is bad management practise. We need big investment to lead our recovery,” he says.
Setdco places special emphasis on promoting music and art, as well as rural development, through several foundations headed by Mr. Djody.

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