Overseas fortunes help out the motherland

PUBLISHED : Sunday, 06 April, 1997, 12:00am
UPDATED : Sunday, 06 April, 1997, 12:00am

THEY and their ancestors fled the poverty and hopelessness of rural China to seek their fortune across the ocean. Now they mix with kings and presidents and control fortunes that move effortlessly across national borders.

The overseas Chinese elite, among the richest people on earth, consider themselves citizens of the world.

One of them, James Riady, son of Mochtar Riady, or Li Wenzheng to give him his Chinese name, is a close friend of President Bill Clinton from their years together in Arkansas in the late 1970s, a frequent visitor to the White House and a controversial contributor to the Democratic Party.

The Riady family is one of those who have chosen to invest some of their fortunes in the towns they came from on the coast of Fujian province, southeast China. Fujian has a population of 33 million, with an estimated eight million migrants and their descendants abroad, most in Southeast Asia.

The town of Fuqing, 50 kilometres south of the provincial capital of Fuzhou, has been greatly changed by the largesse of two of the families among the 700,000 people that have emigrated. The present population is about one million.

One of its benefactors is Sudono Salim, whose Chinese name is Liem Sie Liong, head of the Salim Group, the largest company in Indonesia. He is one of the wealthiest of overseas Chinese. The other is Djuhar Sutanto, or Lin Wenjing, chairman of Indocement, part of the Salim Group, whose parents hail from the area.

The two men set up a group called Yuan Hong, which makes its presence felt everywhere in Fuqing.

The Yuan Hong Flour Mill uses modern equipment from Italy to process 600 tonnes of flour a day. The mill receives its grain from Canada, the United States and elsewhere by way of the Yuan Hong pier, which can handle ships of up to 30,000 tonnes. It is the largest plant in the 5,000-hectare Yuan Hong industrial park, making it one of the largest such zones in China. Most of the money for roads, power stations, water supply and telephones in the park was provided by the two benefactors.

Their aim, Mr Sutanto explained in the coffee shop of the luxury hotel he and Mr Liem built in the centre of town, was filial more than commercial.

'I did not do this for profit. When we started this in 1987, Fuqing had no factories and no industrial workers. There were no conditions for them - no hotel and only a few antiquated telephones.

'We had to put in the infrastructure - roads, telecommunications, hotels and a pier,' he said. 'Our aim was to do something for our home town, provide work for its people and raise living standards.' Mr Sutanto never lived in Fuqing. Born in Indonesia, he visited it briefly as a boy and as an athlete in his teens. So why was he so concerned about the town? 'You could say that it was my upbringing and the opinion of the people round me.' When his mother, a Christian, died in Indonesia in 1992, Mr Sutanto chartered a plane to bring back her remains and to bury them next to her late husband in a sculptured tomb in a landscaped garden he built in Fuqing next to the industrial park.

It is the same concern that motivates Mr Liem, who lived in a one-storey, five-room wooden house for the first 20 years of his life, before leaving in 1936 to escape the draft.

He went to Indonesia, where he made his fortune, starting with peanut oil and clove cigarettes and diversifying into other sectors, including flour, cement and coffee, then finance and real estate.

A cousin, Chen, who lives in Mr Liem's ancestral home said: 'His investments here are not for profit. They are not making money. He wants to make a contribution to his native place.' Hanging on the walls are plaques from the Fuqing city government to thank Mr Liem for the schools and hospitals built with his money.

Mr Sutanto said events had surpassed initial expectations. They had prepared the industrial park with the aim of attracting overseas Chinese investors.

Instead, it was Taiwan companies that flooded into Fujian after the Nationalist government eased restrictions on investing in China.

'When we started in 1987, Fuqing had no factories and no industrial workers. Now it has 500 factories and 60,000 industrial workers, with GDP in 1996 of 20 billion yuan (about HK$18.6 billion), 50 times the level of 1987,' he said.

Mr Sutanto believes the exodus from Taiwan in search of cheaper land and wages, is only just beginning. The average worker in Fuqing receives 400-500 yuan a month.

'We could have tens of thousands of factories here. We have 300 square kilometres of land. Singapore and Hong Kong have no such space.' Among his long-term projects are a deep-water port with 100 berths and capacity of 300,000 tonnes, a flour mill to produce 10 million tonnes a year and a steel plant with output of 10 million tonnes, most of it for export to Taiwan, which at present has to import that amount of steel.

The Baoshan steel works in Shanghai, the most advanced in China, is considering the feasibility of such a plant, he said. Government policy does not permit joint ventures to produce steel, although China spends US$7 billion a year on steel imports, he said.

'We do not understand this attitude. If Fujian province used money from Taiwan and overseas Chinese, it would not need money from the central government,' he said.

The realisation of such plans, and Fujian becoming to Taiwan what Guangdong has become for Hong Kong, will largely depend on the politics between Beijing and Taipei.

'From Fuzhou to Taipei would take 25 minutes by air,' Mr Sutanto said.

'Taiwan investors lose billions of dollars a year because of the lack of direct links between the two sides.' Partly in anticipation of this, the provincial government is building an international airport in Changle district, which borders Fuqing.

About 50 kilometres down the coast, the Fuqing story is repeated, with investment by another billionaire Indonesian Chinese, Mochtar Riady, who is building an industrial, tourism and residential estate in the peninsula south of Putian, his ancestral home.

Tati City, a project by the Tati group, a unit of Mr Riady's Lippo Group, has a lease on 36 sq km of land on the peninsula. It is a boat ride away from Meizhou island, home to a temple to Mazu, the goddess of fishermen, which attracts a million visitors a year, about 10 per cent from Taiwan.

Power, water supplies and roads have been completed on the first phase, involving investment of US$25 million, and four investors are moving in. Tati has also built a shopping and office centre, an administration building and apartments to house staff who will work in the factories.

Longer-term plans include two golf courses, holiday villas, an airport and facilities for visitors.

The group is confident of getting investors, because of cheap costs, infrastructure quality and after-sales service.

If Mr Riady was after a quick profit, he could have easily invested in Shanghai, Beijing or Xiamen.

Another major investor in China is the Sinar Mas group, founded by Indonesian Eke Tijpta Widjaja, born Oei Ek Tjong in Fujian province in 1923.

It has investments in real estate and banking. Such large projects have raised concerns in Indonesia about why their ethnic Chinese citizens are not investing more at home and why, if the motive for investing the money is social not commercial, they do not invest in areas of Indonesia where people live below the poverty line.

The investments in China are legal, since Indonesia has free inflow and outflow of foreign exchange.

'The motive for these investments is not entirely social,' one Asian economist said.

'These people are sharp businessmen. By making such investments, they are aiming for advantages from the government from other projects.' In response, Mr Sutanto said his investments in China were not financed by money from Indonesia and were far smaller than his investments in Indonesia.

'I am an Indonesian. I have only one passport,' he said.

For the first 30 years of communist rule, Fujian received a negligible share of investment from the central government, which saw it as the front line against Taiwan.

By 1978, it ranked 22nd of China's 29 provinces and regions in terms of per capita GDP, with its economy largely dependent on agriculture.

The wealth these investments have created in Fujian may persuade many people not to risk the journey made by Mr Liem and others to seek their fortune overseas.