Oei Tiong Ham
Interview: Oei Tjong Tjay
Oei Tjong Tjay
Date: April 17 and 18, 1988
Place: Hotel Tiefenau, Zurich, Switzerland
Interviewer: Yoshihara Kunio
A Brief Profile of Oei Tjong Tjay
Oei Tjong Tjay is the last son of Oei Tiong Ham, born in Singapore in 1924. His mother is Ho Kiem Hoa Nio (or Lucy Ho), the seventh wife of Oei Tiong Ham. Oei Tjong Tjay received primary education in the Netherlands, and secondary and university education in Switzerland. He then went to the United States for graduate study in economics. He returned to Indonesia in 1948, and managed its operation for several years after his half-brother Oei Tjong Hauw died in January 1950. He left Indonesia in late 1957, but headed its board of directors until 1961 when the Indonesian government took over the Indonesian operation of Oei Tiong Ham Concern. In the next few years, he organized a legal defense to fight the confiscation in Indonesia. He now heads the Kian Gwan group in the Netherlands and lives in Switzerland.
Could you tell me about your mother's family background?
My mother was born to one of the richest families in Semarang, Central Java. But they lost their fortune and moved to the center of the city. As far as I know, the big house we lived in, which was called "palace," had belonged to her family. After their family fortune declined, my father bought that house.
In her childhood did she go to a Dutch-medium school and speak Dutch at home?
She must have gone to a Dutch-medium school, because she spoke fluent Dutch. She could not have spoken Dutch at home during her childhood, because I know my maternal grandparents did not speak Dutch. They spoke Chinese and Malay. We all used to talk to them in Malay.
Did you and your brothers speak to her in Dutch or Chinese or Malay?
Until my father died in 1924, I am told my eldest brother Tjong Ie (born in 1918), sister Twan Nio (born in 1920), and second eldest brother Tjong Bo (born in 1922) spoke Chinese at home. My father was very conscious of his Chinese background. He was reputedly the first Chinese in the Netherlands East Indies to cut the pigtail. He and later other Chinese cut the pigtail as a sign of rebellion against the Manchus who had imposed the hair style on the Chinese. You know, the Ch'ing dynasty which ruled China at that time was not a Chinese dynasty, but a Manchu dynasty. My father would have brought us up in Chinese. But he died in 1924. My eldest brother was six, sister was four, second brother was two then. After his death, we switched to Dutch, and all of us were brought up in Dutch.
Could you tell me a little about her method of bringing up her children? Did she adopt a method different from those of the other wives of Oei Tiong Ham?
She was definitely much more modern than the other wives. She was very much aware that she had to give Western education to her children to break away from the still feudal, colonial life of the Netherlands East Indies. She thought that if we stayed there, we would simply be spoiled by the money and power of Oei Tiong Ham Concern. So, in 1931 when I was seven, she took us to Europe for the first orientation tour. And after returning to Java and staying there until 1933, we moved to Holland. But after three years there, she realized that it was not the correct place for our upbringing, being the metropolis of the colonies. So, we moved to Switzerland, which she thought would be a much better place for a truly international education.
What do you think made her different from the other wives? They seemed more content with their life in Semarang.
It may have been due to her upbringing or personality. After she married my father and came into the possession of money, she insisted that all her brothers and sisters should get complete education, and paid for this.
You told me that her family fortune went down. Did this have anything to do with her attitude towards her children? For example, to educate her children so that they would not waste away the money they would be inheriting.
Maybe, but I am not sure. As Mrs. Wellington Koo also mentions in her book, she was a very frugal person. She was very much aware of the importance of money. This may have been due to the loss of family fortune during her childhood. But what is more important to consider is her personality. I'll give you a few illustrations of her personality. Since my father was the richest man in Semarang, it was an honor at that time for any Chinese girl to be picked as a concubine, but when he approached my mother, she first refused. She finally gave in, but it had taken him a long time. So, apart from the vicissitude of family fortune, there must have been something else which influenced the development of her personality. Up to her death, for example, she was always studying. Since she was rich, there was no need to do so, but she was always working or studying. She was studying Italian and all kinds of language.
How old was she when she died?
She was 64. She was born in 1901 and died in 1965.
Where did she die?
She died here in Switzerland.
Did she live in Switzerland?
Yes, she lived in Lugano, a town in the southern, Italian-speaking part of Switzerland. That is another point. The other wives lived with their families in the old-fashioned way. My mother for a while stayed with my unmarried brother in Bangkok, but then she wanted to be completely independent, which was unusual for a Chinese woman of her age. When we heard that she wanted to leave Bangkok, we were living in Holland, and asked her to live with us. But she said, "No, I don't want to impose myself on your family." Then we said, "All right. You do not have to live with us. You live in another apartment in Holland." But she said "No," and lived all by herself in Lugano, which was far away from her children. She wanted absolute independence. So, there must have been something in her character which made her different from the other wives.
Do you think the Dutch-medium education had anything to do with it? She may not have gone very far, but even to finish a Dutch-medium elementary school was considerable education for a Chinese girl at that time.
Yes, but there must have been some innate character which made her different. Otherwise, it is difficult to explain her decision to get away from the comfortable life in Semarang for the education of her children in Holland and then to move to Switzerland when she found out Holland was not the right place for her children, and her efforts to learn Italian or other things even when she was old. She had this push and drive for self-improvement.
What did she think of university education? Was it only your brothers who received university education among the sons of Oei Tiong Ham?
She thought that we had to have complete Western education. That is why we moved to Europe. So, all of us received university education in the West. The children of the other wives were all educated in Semarang, and secondary education was the highest they could receive there.
When and where were you born?
I was born in Singapore in 1924. I was born on June 21 that year, about three weeks after my father's death. He died on June 3.
Why were you born in Singapore?
My father moved there in order to write his will which could be executed under the British law. Under the Netherlands East Indies law, it was not possible to disinherit children. The same thing is true today all over Continental Europe. There is a "legitimate" part of inheritance for all children. In Switzerland today, for example, about three quarters of your wealth have to go to the wife and children when you die, though a quarter is free. My father did not want all of his children to inherit his business, but under the Netherlands East Indies law, he could not disinherit some children. So, he moved to Singapore where the Anglo-Saxon law applied. Under the Anglo-Saxon law, it was possible to disinherit children. You must have heard that such and such children were disinherited in Britain and the United States because they were playboys or for some other reasons. But this is not possible in Continental Europe. This is a major difference between the Code Napoleon and the Anglo-Saxon law.
My father moved to Singapore to write his last will. This will was later attacked by the 17 children who were disinherited. They argued that the father had moved to Singapore only temporarily, that he had been still domiciled in Java, that therefore, he could not disinherit them from his wealth. So, they started a court case, and this went on until 1939. We came to a settlement at that time. Each of the 17 children got 400,000 Netherlands East Indies guilders or about 250,000 US dollars. It is equivalent to a few million US dollars today. A Packard car, a luxury car at that time, sold for about 2,000 guilders. So, with 400,000 guilders, it was possible to buy 200 Packards. Today, a luxury car would cost at least about 25,000 dollars. So, 200 times 25,000 dollars is five million dollars. This is the today's equivalent of the 400,000 guilders each of the 17 disinherited children received.
Where did you spend your childhood? Did you grow up in Singapore or spend some time in Java?
My father's body was taken back to Semarang for the funeral. So, all of us went back there. I was only a few weeks old at that time. In the next seven years, we stayed in Semarang and lived in the big house I have told you about. In 1931, we went to Europe.
Who do you mean by "we"?
My mother and her five children-one daughter and four sons.
Then, you came back to Java again, didn't you?
Yes, we did. Then, my eldest brother, Tjong Ie, was sent to Holland to live with a Dutch family. We stayed in Semarang for two years, and then in 1933, all of us moved to Holland. We started our education there. But we did not like it there very much, so we moved to Switzerland, where we received secondary and university education.
How about elementary education?
It was in Holland. That is why we still often speak Dutch among ourselves.
How long did you stay in Switzerland?
In 1939 we planned to go back to Asia because war had started in Europe. We wanted to take a boat from Genoa, Italy, so we were planning to take a train going there from Switzerland, but the southern frontier was closed, so we could not get out of Switzerland; we got stuck there. In a way, this was lucky. We missed the war entirely: we spent the whole war period in Switzerland.
Did you then go to university in Switzerland?
Except my eldest brother, Tjong Ie. He went to secondary school in Holland, and went to university there. In fact, he was educated differently from the others. My sister and three other brothers all went to secondary school here, and started university. My sister finished university here, and my second eldest brother, Tjong Bo, received a doctorate in economics from the University of Zurich. Another brother, Tjong Hiong, started university education here, and in 1945, immediately after the war, he went to Stanford to study aeronautical engineering. In 1946,1 also left Switzerland for the United States to study.
Was this before you received your BA or after that?
There is no BA degree in economics in Switzerland. In economics, you either get a Ph.D. or nothing. There is no intermediate degree. In Geneva, there is an intermediate degree called "licencie," which is equivalent to somewhere between BA and MA. Since I had done one year of economics in Zurich and two years in Geneva at L'Ecole des Hautes Etudes Internationales, at the New School of Social Research in New York, I was considered to have finished BA and so started studying for MA.
When did you come back to Indonesia?
I planned to go for Ph. D., but my eldest brother Tjong Ie said that I had to go back and work for the company, so I went back in December 1948. That was right before the second police action of the Dutch against the Indonesians. The Indonesians were fighting for independence, and the Dutch had two police actions. The second one took place right after I went back. In this, the Dutch won militarily, but they lost politically in the United Nations. As a result, Indonesia became independent in 1949. Officially, Indonesia had declared independence in August 1945, a few days after the Japanese surrender, so the Indonesians consider that they became independent at that time, but the transfer of sovereignty, or kedaulatan, took place in 1949.
3. Joining Kian Gwan in Indonesia
What was Tan Tek Peng doing when you joined the company?
He was executive director of the company. He was the most powerful man there, next to my half-brother Oei Tjong Hauw. You know he had started in our company as a simple bookkeeper.
When did he retire from the company?
In 1950, when Tjong Hauw died, I was in charge of the personnel department. I was given the post since I studied personnel management in the United States. But you know the personnel problems in Asia are quite different from those in the United States, so what I studied in the United States was not very relevant. But anyway, I was in charge of the personnel department when Tjong Hauw died, and for a while, his son Ing Swie and I were jointly managing the company. We had a retirement age of 55, and Tan Tek Peng was reaching the age at that time. He did not want to retire, but I stuck to that rule. I think he retired in either 1952 or 1953. But he remained as commissaris. That is, he remained as director without executive power. After him, Tjoa Soe Tjong became executive director.
Do you think Tan Tek Peng was a capable and loyal manager?
He was a loyal manager. All of our managers were loyal because of their pride of belonging to Oei Tiong Ham Concern. However, I cannot say that he was very capable. When I joined the company, organizationally it was in a mess; the whole financial structure had gone to pieces.
Maybe, that was not his fault. The Indonesian government had begun intervening in the economy, and this must have created a lot of problems for the company.
No. Those problems were internal. All our people, including Tjong Hauw, had gone through difficult times during the Pacific War, but not much was destroyed at that time because the Japanese took over the Netherlands East Indies very quickly. But after the Japanese defeat, there was this interim period when the Republicans were fighting for independence against the Dutch who wanted to regain the colony. In this period a lot of our assets, including some sugar mills, were destroyed.
But these did not have anything to do with Tan Tek Peng, did they?
No, but in this period, all of our managers had exhausted themselves. They should have gone on four to six months vacation to recover, but instead, all of them held onto their jobs, and were simply too tired to understand what was going on. Then, our chief account, Dr. Djie Ting Liat, was given the permission to live in Holland because he wanted his children to study there. This caused a financial chaos in our company. Even from Jakarta, it was difficult enough to update the financial condition of our company, whose operations spread over a few thousand miles from Medan to Macassar, with a lot of offices, factories, and plantations in between, with a staff of 2,000 to 2,500 in offices plus several thousand workers in factories. But since the chief accountant lived in Holland, it was impossible to get up-to-date information on the financial situation of our operations. So, the financial reporting of our company was in a big mess.
Did Tan Tek Peng allow Dr. Djie Ting Liat to go to Holland? And did you think that he should not have let him go?
Yes. The final approval was given by Tjong Hauw, but Tan Tek Peng was also responsible for this.
What was Tjoa Soe Tjong doing when you joined the company?
He was deputy executive director of the company. After Tan Tek Peng, he was the most powerful executive.
Do you think he was a capable and loyal manager?
My brother Tjong Ie does not think so. He thinks Tjoa Soe Tjong was incapable and disloyal. And he thinks that Tjoa Soe Tjong wanted the confiscation of 1961 so that he could become the top man. But on this, I completely disagree with my brother.
Then, do you think he was a loyal manager?
Yes. He was, in a way, a strange person. He talked a lot, and may have been opportunistic in his business policy. He was not quite sure of what to do. But I know my brother had strong personal dislike for him. I think it was in connection with Tjoa Soe Tjong's attitude toward his Dutch wife. My brother had two wives. The first was this Dutch wife. I don't know whether they were officially married at that time, but Tjoa Soe Tjong said that he could not receive her as Mrs. Oei Tjong Ie as long as they were not married.
I understand his second wife is Chinese. Does she come from a Chinese family in Indonesia and did this have anything to do with the animosity between your brother and Tjoa Soe Tjong?
No. She is a local Singapore girl.
What were the strengths of your brother Tjong Hauw in business?
I think his strength was his diplomatic touch and charm. His organizational ability was not much. But he was an extremely suave person. You know my brother Tjong Ie was condemned to death by the Japanese kempeitai during the occupation period. Tjong Hauw somehow managed to save Tjong Ie's life.
Did he get along well with the Japanese authorities at that time?
I think so. To give you an illustration of the charm of Tjong Hauw. One time, he was called in by Japanese authorities and asked whether he was for Chiang Kai Shek, the enemy of the Japanese on Mainland China, or for Wang Ching Wei, the Japanese puppet there. He replied, "I am neither for Chiang Kai Shek nor for Wang Ching Wei. If you come to my office, you will see a portrait of Sun Yat Sen." Since Sun Yat Sen, being the founder of modern China, was a neutral person for all sides including the Japanese, my brother got away with that answer.
How well did he get along with Indonesian leaders such as Sukarno, Hatta, and Suban-drio?
The Indonesians came to power in 1949, and Tjong Hauw died in January 1950. So, he had only a short time to deal with Indonesian political leaders.
But he must have dealt with them during the Revolutionary period from 1945 to 1949.
But the big cities such as Jakarta, Semarang, and Surabaya, where our major offices were, were in Dutch hands. Our offices in Yogyakarta and Solo were the only ones in the Republican-controlled areas. There, we had to deal with Indonesians, but I don't think Tjong Hauw did it himself. Our company had the stigma of being a little pro-Dutch. Being a big company, we were more or less in the camp of the big five Dutch trading companies (Jacobson, George Wehry, Borsumij, Internatio, and Lindeteves). We were the only Chinese company of that rank. Since all political and economic powers were in Dutch hands at that time, Tjong Hauw had to befriend Dutch authorities in order to get licenses and permits. So, we were automatically classified with the Dutch companies by the Indonesians. There was also an incident which made them think we were pro-Dutch. Our biggest sugar factory at Redjoagoeng near Madiun in Central Java was in Republican hands. We knew that a bomb had been planted in the factory. In order to save the factory, my half-brothers Tjong Yan and Tjong Ik asked General Meyer, the Dutch military governor of Central Java, to send a patrol to the sugar factory to save it. This kind of action, which was done to save our properties, was interpreted as us being pro-Dutch. You cannot blame a proprietor for trying to save his property.
Since you came back to Indonesia in December 1948, you had a little over one year with him. Didn't you observe how he dealt with the new Indonesian leaders in Jakarta?
I was in Semarang, and he was in Jakarta. So, I cannot say how close he was to them, but he couldn't have been very close yet. If he had had time, he would certainly have developed close relations.
What new ventures did Tjong Hauw undertake before he died? Was he groping for a new direction for the company?
No. That was one of his weaknesses. He and his managers, such as Tan Tek Peng, were too tired to try to do anything new. For example, they hardly used bank credits. They went on the assumption that Oei Tiong Ham Concern didn't need bank credits. If you had a sugar factory with a peak in production, the only logical thing to do was to borrow money. You know, in Indonesia the lands which supplied sugar cane to a mill belonged to the farmers, not to the sugar mill, so you needed money to pay to the farmers when the harvest season came, if you wanted to get their cane. It did not make any sense to keep money idle for the rest of the period for the sake of meeting the peak demand. The only logical thing to do was to use bank credits. On top of that, Indonesia was clearly moving to an inflationary period. Debts remained the same while their value was declining, but we were not using any bank credits. This restricted the operation of our company very much. For example, we could make a lot of money in importing goods since many goods were scarce in the country and almost any imported goods sold for good profits, so the reasonable thing to do was to borrow money from banks to finance imports, but we had not been doing it. At that time, you had to get a quota allocation to import goods, but being a big trading company, we would not have had any trouble in getting more quota allocation, but because we did not use bank credits, we were not exploiting our potential. And a lot of our working capital was tied up in sugar stocks, and because much of these was burned, pilfered or simply taken away by the army, our working capital had disappeared. In effect, we had a large organization without much working capital. So, after Tjong Hauw died, we scrutinized and analyzed our policy, and took bank credits up to our limit in order to create working capital.
Did you approach state banks for credits?
For our sugar factories, we obtained credits from the state bank, Bank Indonesia, but for our other businesses, for example, for the trading business of Kian Gwan Indonesia, we approached foreign banks such as the Dutch bank, Nederlandsche Handel-Maatschappij (NHM), and the British bank, Chartered Bank. At that time, state banks were few and were not as powerful as they are today.
Did your new ventures with Indonesians or with the Indonesian government in the postwar period come after Tjong Hauw died?
Yes, they came after his death.
How did he take the change in the business environment, especially government intervention in the economy, after independence?
He had only one year between the transfer of sovereignty and his death. But in general, in view of his suave personality, he would not have had any difficulties at all. The people who had difficulties in adjusting to the new environment were our professional managers such as Tan Tek Peng and Liem Ghik Djien. They were very pro-Dutch. Tjoa Soe Tjong and a number of other professional managers, however, had absolutely no difficulties at all in adjusting to the new environment. Tjoa Soe Tjong was the person to whom Indonesians listened very well.
Your brother Tjong Ie in Singapore says that your Bahasa Indonesia was poor. How was your Bahasa when you joined the company?
My Bahasa was poor. It was non-existent when I joined the company in December 1948. I did not speak a word of Bahasa Indonesia. In 1949,1 took a few lessons. I had to learn Bahasa. But at that time, the language had not been well developed. Bahasa Indonesia was first Malay, and then beautified and developed by those prefixes and suffixes. In January 1950 Tjong Hauw died, so I got the whole load on my shoulders, and I did not have time to learn Bahasa anymore. And the bad luck was that until the Ali Sastroamidjojo government of 1955, everything was done in Dutch. The Indonesians also spoke Dutch. None of them spoke good Indonesian. Government circulars started in Dutch, and they were translated into Indonesian, but the Indonesians couldn't understand the translation, so they had to get it retranslated into Dutch. There was a big joke at that time: "Let's get the original document and the retranslation, to see whether the original and the retranslation are still the same."
Your brother in Singapore was bringing up the question of your language because he thought that the military were important in Indonesia at that time and that it was impossible to develop close ties with them without knowing Bahasa Indonesia.
Yes, he criticizes me, saying that I did not have enough popular contacts. But at the time, a number of military leaders spoke good Dutch. And until the fall of Sukarno, the military were not so powerful as my brother thinks. The people who held power in the Indonesian government were politicians. My brother dealt a lot with the rebel, Ventje Sumual, in Sulawesi. He did a lot of smuggling with him. But I didn't like it. I told him a number of times that being a big company in Indonesia, we could not go along with people like Sumual. They were smugglers, rebels, and revolutionaries. I told my brother if he wanted to do business with them, he should do it independently of Kian Gwan. I told him to set up another company for that kind of business. He did not listen, and the result was a few of our people in Indonesia went to prison.
Did this get exposed during the Sukarno period and affect your Indonesian operation?
Yes, it did affect our business in Indonesia. A few people got into jail because of that. My brother never believes that, but it did affect our business. One of our people who was working for Heap Eng Moh Steamship got into jail. Another was our import manager. He was taken to jail on the wedding day of his daughter. As you know, my Singapore brother is a very impetuous and outspoken person. He said he did not believe in hiding. I said that it was not simply a matter of hiding. There were a lot of vulnerable interests in Indonesia. And we were also representing the Indonesian government in rice purchase. We were importing 200 to 300 thousand tons of rice every year, which brought in a lot of money. I told him that we could not do two things together: to represent the official government and deal with its rebels. At a certain point, my brother agreed to it, and he set up a trading company called "Sukadjaja" in Singapore. This made me a little happy since it could camouflage his deal, but then I found that the shareholders of the new company were his wife and managing director, Lie Keng Hoeh. That is my brother's style. He does not believe in camouflaging. He does things in the open.
Did the incident go beyond the imprisonment of a few of your people?
Yes. For example, Mr. Iskaq, who was Minister of Economic Affairs, took away our rice agency.
Was that because of the Sumual affair?
Yes, that is at least what he said. Maybe, he wanted a bribe. We managed to get our agency back. But what my brother was doing in Singapore put us in a very difficult position.
When you returned to Indonesia, how did reality differ from your expectation?
Reality did not differ from my expectation, because I did not know what to expect. I wanted to know first what was going on.
You must have been an idealistic young man, just out of college. You must have had some expectation.
My ideal was to go back to China. Having studied political science and known a little bit of the Indonesian situation, I knew that our future in Indonesia would not be very good. The only way for us to become big was to go to the place where a national flag could protect us. In industrialized countries like England, immigrants could become naturalized and develop big business, but in young nationalistic countries like Indonesia, especially for the Chinese, it was not possible. So, I wanted to work in China, but I was assigned to our Indonesian office.
Did you have a problem in adjusting to the new Indonesia?
"Adjusting" is not the right word. I had trouble in living in Indonesia because it was often humiliating.
In what way was it humiliating?
Whenever I brought up a new project, the Indonesians would say, "Ha, Kian Gwan. You always think of money. You have to think socially." That is all right. I didn't find it too humiliating. On a tennis court, I got into a small dispute with an Indonesian. He said, "I know who you are. You are with Kian Gwan." He happened to be the head of the secret police. He ordered me to go to his office at seven the next morning. I had to wait in his office until two in the afternoon. At two in the afternoon, that was the time he went home, he told me to come back at seven the following morning. If I had not gone back, I would have had it. So, I went back every morning. This went on for two weeks. At another time, when I was driving with my wife, I got shot at by a soldier. I also had a dinner invitation from President Sukarno. I had been telling my staff that if I had an invitation from Sukarno, they should say I was out of town. But if he invited me weeks ahead, I could not easily refuse it. I could get away from his invitation if it came in short notice. For the invitation to a fund-raising party for the sports stadium Sukarno was building for the Asian Games, I was on the list of people who were supposed to pay 100,000 rupiah, which would be equivalent to 50,000 US dollars today. We just had to pay. There was nothing we could do about it. And the military could also come to arrest you. On one Chinese New Year's Day, I was swept into jail.
I think it was in 1951. They cut the exchange rate from one guilder to one rupiah to one guilder to three rupiah. Inflation was becoming rampant. So, the Indonesian government cut the value of its currency to one third of what it had been. Sensing that this would happen, I sent a cable to our offices not to sell their stock, since it would be worth more in the near future. The cable was intercepted, and since it was sent under my name, I was taken in for questioning by government authorities, who wanted to know how I got the information. I said I did not get it from any particular government source. I said I could feel it. After all, I was in business, and felt the pulse of the economy.
I did not mind these things much since my character had been formed. I knew that I had to play along with their game, though it was not very pleasant. But if my children had to grow under that sort of circumstance as second or third rate citizens, I really had to worry. This was the most difficult thing for me in adjusting to Indonesia. And there were all sorts of kidnap threat at that time. I am sure that not all of them were done by Indonesians. Most of them seemed to have been done by Chinese. Still, that did not make our life easy. On top of that, as I told you, since our chief accountant had been living in Holland, our financial record was in absolute mess. We were two to three years behind. Nobody knew what was exactly going on. To rebuild our factories and get them going, we had to know where possible finances were.
How would you characterize the major differences in personality between you and your brother Tjong Hauw?
I would start by saying that we had similarities. We were diplomatic. The question is much easier to answer if you are asking my differences with my brother Tjong Ie in Singapore. Tjong Ie is outspoken and impetuous. I am careful and slow. I would characterize myself as diplomatic, but Tjong Ie calls it "hypocritical."
I asked that question because you took over the Indonesian operation from Tjong Hauw, not from Tjqng Ie.
One of my differences with Tjong Hauw was in personnel policy. I had seen under him that the company had been getting disorganized since our staff had been given promises which they were not very sure we were going to keep, and were not promptly rewarded for what they did to the company. In the case of the chief accountant Dr. Djie, he must have accumulated a lot of promises from Tjong Hauw. When he persuaded Tjong Hauw and Tan Tek Peng to let him go on leave, he went to a distant country (Holland) for a long time. This sort of thing created organizational chaos. So, when I took over, I did not keep my staff waiting on promises. I promptly rewarded them if they did something good for our company.
After Tjong Hauw died in January 1950, the chief accountant came back from Holland and told me that he had a promise for 100,000 guilders from Tjong Hauw. Back in the mid-19208, after my father died in Singapore, our family faced a huge estate tax since the tax rate under the Anglo-Saxon law was heavy. The chief accountant saved us several million dollars. My brother Tjong Hauw should have rewarded him for this at once, but he gave him a promise of handsome rewards in the future. Still in 1939, when war started in Europe, the accountant had not been yet rewarded. However, at this point, my brother promised that he would give him 100,000 guilders, which was about 60,000 to 70,000 US dollars at that time. But my brother kept him waiting on this promise. So after he died, Dr. Djie asked me to pay him 10% of that sum. He even threatened to blackmail me with the information he came to know through his work. This sort of pending case was rampant in the company. All kinds of people had promises. For example, Tjoa Soe Tjong came to me and said that he had a check from the company which he was not supposed to cash because the company was short of liquid funds. I told him to cash it right away. To give promises and make people waiting on them was a bad personnel policy. After I took over, I changed it and did not keep things pending. This was one big difference between Tjong Hauw and me.
Another thing I started was using bank credits. In the inflationary setting, it was foolish not to borrow. It was better to incur debts since the value of the debts had been declining over time. I borrowed money from banks to create working capital which I used for the new ventures I started with Indonesians and for stepping up the trading activities of Kian Gwan. Tjong Hauw had stuck to the old Chinese business policy of not borrowing. Oei Tiong Ham Concern always had enough money in the prewar period and did not have to borrow, but the situation changed after the war. This financial inertia may have been due to the fatigue on the part of Tjong Hauw and his staff who had gone through difficult times during the war and Revolutionary periods.
The policy to use bank credits gave us a right start. With the help of our Dutch import manager, we applied for bank credits, and used them to import a lot of goods. Then the rupiah devaluation (from one to one to one to three) came, and we suddenly made a lot of profits in rupiah and had enough working capital. But we continued to borrow for our imports, and borrowed also for the export of Indonesian produce, such as rubber. This export business generated a lot of income for our overseas offices.
When was your headquarters moved from Semarang to Jakarta?
Legally and officially, it was never moved. That is why the court case after the government confiscation took place in Semarang. The de facto move to Jakarta must have taken place in 1947 or 1948, before I joined the company.
In Jakarta there is a district called "Asemka." Was it where your headquarters was?
Yes. We had two entrances: the official front entrance and the back entrance. I remember we bought a house for bookkeepers at the back entrance. We used to say that if the military police were in front of the official entrance, we should use the back entrance. Behind us was the Chinese business district Glodock, and we were facing the Dutch business district. Right in front of us were Javasche Bank (which became Bank Indonesia in 1951) and Nederlandsche Handle-Maatschappij or NHM (which later became Algemene Bank Nederland).
4. After Tjong Hauw's Death
When Tjong Hauw died in January 1950, you were in Semarang, weren't you?
Did you go to Jakarta right after this?
How was the succession problem decided?
To answer this question, I have to go back to my father's will. The will stipulated that nine of his sons would inherit his business: the four sons from my mother, the four sons from Oei Tjong Hauw's mother, and Oei Tjong Swan from my father's third wife (The Tjik Nio). But the will was not to be executed until his last child, which was me, came of age. Since I was born in June 1924, it could not be executed until the mid-1940s. But when that time came, it was war time, and after the Pacific War ended, the Revolutionary period began, so the execution of the will was postponed for another few years. In the meantime, Oei Tjong Hauw must have realized the danger of our company being a family company, so he kept his brothers away and remained as the only powerful person in the company. And he tried to change our articles of association in a way that the presidency of the company would automatically stay with his branch of the family. So, his eldest son, Oei Ing Swie, who was brought up in Indonesia and had become arrogant because of the power of his father, automatically thought himself as the next president of the company.
The will was originally entrusted to three persons. One was Oei Tjong Hauw, another Oei Tjong Swan, and the third was my mother. Tjong Hauw and Tjong Swan, born to the earlier wives of my father, were old enough to work for him before his death. My father knew that the two brothers did not get along very well and could not gang up against my mother, who was weak as a trustee, not knowing anything about business. So, he thought that either one would most probably act as a protector of my mother out of rivalry. In the early 1930s, however, Tjong Swan sold his share to the estate and pulled out. I don't know whether he wanted to do so voluntarily or Tjong Hauw pushed him out. Anyway, after his pull-out, there was no balancing factor. The successors were split into two equal groups: my mother's four sons and Tjong Hauw and his three other brothers. But being an active manager of the company, Tjong Hauw was in a much stronger position than my mother, and he tried to solidify this and make it permanent by changing the articles of association. My mother was warned about it by someone internal to the company, and engaged a lawyer to fight it in court. So, I remember her going to London in 1939. She succeeded in preventing Tjong Hauw from changing the articles of association.
When he died in 1950, a bit of struggle started between his son Ing Swie and myself. At that time, I was the only one on our side living in Indonesia. For a while, there was no captain of the ship. I said, "This is absolutely crazy. We have no policy, we have no financial review. We must have an annual shareholders' meeting." So, I initiated an annual shareholders' meeting in 1951, and in that meeting, I said, "You have to decide on the President Director of Indonesia. You have to choose one person. You can choose either Ing Swie or me." They chose me and I became President Director.
But the friction between him and me did not completely go away, though I was officially his boss. After all, as a shareholder, being the successor of his father Tjong Hauw, he had as much weight as I did. So, I said to Tjoa Soe Tjong, "This is very bad. If we are not one voice toward the outside, playing against each other, that is the worst thing which can happen to a company. I can understand how Ing Swie feels. Although I am officially his boss, he may think that I am not objective enough. So, I propose a board of three, consisting of you, Ing Swie, and me. We three will discuss all important matters, each of us gives his opinion, and we always come to a decision. And once a decision is made, we stick to that decision. Although I am President Director, if I am in the minority, I'll accept the decision." Tjoa Soe Tjong played his role in this three-man board in a very loyal way. From this experience also, I completely disagree with my brother Tjong Ie on his assessment. You know, in an Asian country it is very difficult for an employee to tell his owner-boss that he is wrong when he is wrong. Tjoa Soe Tjong was an exception. He was willing to tell me, "You should not do that," when he thought that I shouldn't be doing that. It was not always pleasant for me, but being inexperienced in Indonesia, I often listened to him.
Haw many years older was he than you?
About 20 years older. And he was very much experienced in doing business in Indonesia.
What was the educational background of Ing Swie?
He had a BA in economics from an American university.
How about Tjoa Soe Tjong?
He had a degree in economics from Rotterdam, equivalent to MA in the American system.
Did you become an Indonesian citizen?
No. I could not become an Indonesian citizen. In order to become an Indonesian citizen, you had to have been a Dutch subject (Holland's onderdaari). If you had been a Dutch subject, you could opt for either a Dutch passport or an Indonesian passport. Since I was born in Singapore, I wasn't a Dutch subject, and therefore I could not become an Indonesian citizen. Originally, I had a Kuomintang passport. Then, I got a British passport. I qualified for it since I was born in Singapore which was a British colony.
Did the fact that you were not an Indonesian citizen make it difficult for you to head the company?
Yes. When the Indonesian government took over Dutch companies in December 1957, starting with KPM, we thought that my citizenship position would cause problems for our company, so we made Oei Ing Swie, who was an Indonesian citizen, President Director. But we had the written agreements that the three-man board I told you about would remain as the top decision-making body; that we would come to a decision in the same way; and that Ing Swie would act as President Director towards the outside, but among ourselves I would remain President Director.
Could you have become naturalized if you had tried?
It would have been possible. But by the mid-1950s, when the citizenship question became important, I had decided that Indonesia was not the country where I wanted to live.
Don't you think you could have prevented the confiscation of 1961 if you had become a citizen?
No. As I told you, a few years earlier, my nephew Ing Swie, who was an Indonesian citizen, was appointed as President Director of Kian Gwan, but this did not affect us favorably at all. Citizenship did not make any difference.
Your brother in Singapore says that Tjong Hauw asked all of you to become Indonesian citizens and turn in your foreign passports. Is this true?
It could not have been true.
Did you ever discuss having an Indonesian figurehead?
Yes, we did. We wanted to appoint an Indonesian director, but we did not want him to be just a figurehead. I think we were a little too honest in this regard. We said, "If we want an Indonesian director, we don't want just a figurehead and pay a salary. We want someone really good." We approached several people. For example, we approached Engineer Darmawan at the Bank Indonesia. But none could accept our directorship.
Maybe, they thought that if they became director of Kian Gwan, they would endanger their political position. Politically, they had a lot to lose by becoming director of a capitalist institution, which was reputedly pro-Dutch. At the time, the country was becoming increasingly socialistic and anti-Western, and there was a great deal of stigma attached to a capitalistic institution like Kian Gwan. So, we could not find a proper Indonesian director.
Did you try to do anything else to Indone-sianize your operation?
Yes. In a socialist country like Indonesia at that time, if we were visible as an owner of big assets, we were always in the limelight. So, we had to disappear as an owner, and our new policy in Kian Gwan became as follows: "We withdraw from everything, and we set up joint ventures with Indonesians with minority holdings like 15 to 20 percent. We then become their manager." This policy made sense for us also, because if we were not a good manager, they could kick us out, so we had to strengthen our management. Under this policy, we set up a pharmaceutical company, Phapros. We held only 15 to 20 percent equity in this company, but we acted as its manager. Altogether, we set up six or seven joint ventures.
Who were the partners of these joint ventures? Was the Indonesian government your partner in most cases?
No, the Indonesian government was our partner only for Krebet Baru. This was a sugar milling company set up with Bank Industri Negara, to rehabilitate the mill destroyed during the Revolutionary period. The Indonesian sugar cane growers realized that to process their canes in a factory would give better results than in their own little mills. But they did not have capital, so the government took their share through Bank Industri Negara, the government-owned reconstruction bank, and was to transfer gradually its holding to the cane growers. The agreement to set up a new mill was reached in November 1953.
In all other joint ventures, our partners were Indonesian individuals. For the pharmaceutical company, we chose our partners from among medical doctors. At that time, there were about 3,000 doctors. Also, there were about the same number of lawyers. We thought that these were the people who had money or were making money and had the right connections and that these were the people who did not know what to do with their money despite the ongoing inflation. So, we took our partners from these groups.
How about the machinery trading company you set up, Api. Who were its Indonesian partners? Were they also doctors and lawyers?
Our Indonesian partner was Soedarpo Sastrosatomo. He later took over a foreign shipping company (I believe it was Isthmian Steamship Company), and built the present Samudera group of shipping companies. At that time, he had strong connections with PSI, Partai Sosialis Indonesia, of which his brother was a leader. Our policy was, in general, to support PSI. We had close ties with Soetan Sjahrir and Professor Sumitro Djojohadi-kusumo of PSI.
Who were the other PSI-related or asli businessmen you tied up with?
Mr. Wibowo and Bintang Soedibyo, for example.
Ideologically, weren't you closer to Masyumi which supported private enterprise? Or was their Islam orientation objectionable to you?
We had close relations with some Masyumi leaders such as Mohammad Roem and Sjafruddin Prawiranegara, but a number of others who were very Islamic-oriented, especially those who belonged to Nahdatul Ulama, were too violent. We liked their free enterprise policy, but did not like their Islamic orientation.
How could you get along well with a socialist party like PSI?
It was more like a democratic socialist party. Its leaders were business-minded and pragmatic.
Whom did you approach first in PSI and who made the contact?
We approached first Wibowo and Soedarpo, and then Professor Sumitro. These contacts were made by Tjoa Soe Tjong.
Going back to the succession problem. After Tjong Hauw died, who headed the whole operation, including the overseas subsidiaries? Did you become the head by becoming President Director of Kian Gwan Indonesia, which was possibly the parent company of the overseas subsidiaries?
I became President Director of our Indonesian operation, and because of this, appeared to be the head of Oei Tiong Ham Concern. But I was not heading the overall operation. This created a lot of friction between me and my brother Tjong Ie in Singapore.
Could I interrupt you for a moment before you go further. Was there a company called "Oei Tiong Ham Concern" which acted as the holding company of your group?
No. There was no legal entity called "Oei Tiong Ham Concern." The name "Oei Tiong Ham Concern" is a little misleading. The best thing to do is to regard it as the group name for our businesses. So, Oei Tiong Ham Concern is the same as Oei Tiong Ham Group. Kian Gwan was a trading company and, at the same time, held shares in some companies in our group, but it was not the ultimate holding company of our group. It was founded by my grandfather as a trading company, and this became the best-known company in our group. At one time, my father took over sugar mills and created a company called " Algemeene Maatschappij tot Ex-ploitatie der Oei Tiong Ham Suikerf-abrieken." From this originated the term, "Oei Tiong Ham Concern," but this was not a legal entity.
Your brother in Singapore says that he was chairman of Oei Tiong Ham Concern which included the Indonesian companies. Is this correct?
That is a difficult point, and that is why a lot of friction came between us. As I started to explain to you, I was appointed President Director of Kian Gwan Indonesia. But since it was the biggest company in the group, the outside people thought that I was President Director of the whole group. The matter was never brought up formally among ourselves, but I could feel friction. There was also another angle to the problem. There were a lot of problems between our group and the other group. So, at a certain point, we decided to appoint two co-chairmen; in the Confucian style, the eldest of the other group Tjong Tjiat was elected as financial coordinator and the eldest of our group Tjong Ie as commercial coordinator. On the basis of this, my brother Tjong Ie considered himself chairman of our group.
Why were you appointed as President Director of Indonesia, the most crucial part of the whole group, despite the fact that you were the youngest among your brothers? Didn't the other brothers want that job?
My brother Tjong Ie was in Singapore. Before that, he was in Shanghai, but after the Communist takeover, he moved to Singapore. I don't think he wanted to move to Jakarta. All of my brothers had more or less settled down in the places where they were operating. Tjong Tjiat in Amsterdam, Tjong Yan and Tjong Ik, who had been always inseparable, in New York, Tjong Ie in Singapore, Tjong Bo in Bangkok, and Tjong Hiong in Brazil. So, the only contention was between Tjong Hauw's son, Ing Swie, and me. Later on, Tjong Ie wanted to take over Indonesia, but the other group did not like him. They thought he was too impetuous. They did not trust anyone in my group except me.
Did Oei Tiong Ham Concern function effectively under two co-chairmen?
Not really. I'll give you an example. In 1956, we faced bankruptcy in Brazil. My brother Tjong Hiong got into big trouble because of over-trading. He was very aggressive in coffee and coco trading. Because of this, in a short time he became a large trader in this field, but he was operating on thin ice, and finally got into big trouble. The company went into receivership, and this became a big thing in the international trading circle. If a chairman meant anything, he should have gone to Brazil to settle the matter. But neither of the co-chairmen wanted to go there. We had been operating on big bank credits, and if the matter in Brazil were not solved satisfactorily, bank credits to the other offices could be seriously affected. Since they did not want to go, I don't think they proved themselves worthy of chairmanship. I had to go to Brazil for six months to settle the matter.
When did you start the co-chairman arrangement?
It came about around 1953. We had the first shareholders meeting in 1951. At this time, I was appointed as President Director of Indonesia. Then a couple of years later, we appointed two co-chairmen.
To what extent did the professional managers such as Tan Tek Peng and Tjoa Soe Tjong influence the succession?
No influence at all. The succession was discussed among our brothers and Tjong Hauw's son, Ing Swie. There was no room for our professional managers to interfere.
In managing Kian Gwan in Indonesia, how much freedom did you have? Or to put it in another way, did the Oei family begin losing control of Kian Gwan after Tjong Hauw's death to the professional mangers such as Tjoa Soe Tjong?
Absolute freedom. Of course, as I explained earlier, I set up the three-man board consisting of Ing Swie, Tjoa Soe Tjong, and me, and we had to discuss all important matters among the three of us in order to make decisions. But this does not mean that we lost control of our Indonesian operation to Tjoa Soe Tjong.
Was there a plan to open ownership to professionals around 1960?
No, although as a matter of principle, I believe in that. In my businesses in the Netherlands today, all of my professional managers are shareholders. But in Kian Gwan Indonesia, we did not do that. Once, I proposed to our shareholders that we go public and separate management from ownership, but this was not accepted. So, instead of making Kian Gwan a public company, I started new ventures with outsiders, and allowed our professional managers to take shares. In Api and Phapros, for example, our professional managers had some shares.
Your brother Tjong Ie says that the Indonesian management team did not understand the big change which was going on in the country at that time. How would you react to this?
To an extent it was true. For example, I and also Tjoa Soe Tjong could not go out with military people and get drunk with them. Tjong Ie could do that. He is a super-contact man. Tjong Ie could open many doors, especially with military people.
I want to go over again the division of function between you and your brother Tjong Ie. Is it correct to say that you were in charge of the Indonesian operation while he was of the overseas subsidiaries of the Oei Tiong Ham Concern?
I was in charge of Indonesia. He was in charge of Singapore. And more or less, he was in charge of our offices in Bangkok and Hong Kong. He was not, however, in charge of our offices in New York and Amsterdam where our other half-brothers were.
So, the arrangement was that different brothers were in charge of different offices, without much central coordination? Is this correct?
Yes, it was something like that. However, I tried to set up central management. I proposed to Tjong Ie that we should have monthly, or at least, quarterly financial reports to know what was going on. Then I said that someone had to travel to various offices to verify their financial reports. But he didn't believe in it at all. So, we never had proper financial control. I proposed to Tjong Ie, "You become commercial chairman and I would act as secretary general and do the traveling." I had traveled often. For example, I went to Brazil for several months. As early as 1952 I went there. But Tjong Ie did not believe in the division of work. He believed one person could do everything: he could be a contact man, public relations man, commercial man, and financial man. But that is not possible. You must have the division of labor. He is the best contact and public relations man there is. But he is not an organization man. Organization is more in my field. I don't drink, so I am not a good contact man. If you cannot drink, it is very difficult to make contacts with military men. We should have divided our work, but this was simply not carried out.
Was it Kian Gwan which was confiscated in 1961, or was it Oei Tiong Ham Concern?
As I explained earlier, Oei Tiong Ham Concern did not exist as a legal entity. All our businesses in Indonesia were placed under the sugar company, Algemeene Maatschappij tot Exploitatie der Oei Tiong Ham Suiker-fabrieken. What the Indonesian government confiscated was this legal entity. With its confiscation, the Indonesian government took over not only our sugar mills but also Kian Gwan, our trading company, and our other businesses such as rubber plantations, remil-ling and biscuit factories, a stevedoring company, and Oei Tiong Ham Trust (the former Oei Tiong Ham Bank which had been acting as our internal bank but was converted into a trust company after I joined the company). The Kian Gwans overseas were not under our Indonesian companies. They were held by our shareholders separately. Kian Gwan Amsterdam was under Kian Gwan Indonesia until 1955, but we took the precaution to separate it from Kian Gwan Indonesia. So, the Indonesian confiscation affected only our businesses in Indonesia. Tjong Ie says in his interview that we were not prepared for the Indonesian confiscation, but this is definitely not true. All our overseas offices had been separated from Kian Gwan Indonesia by the time of the confiscation.
What do you remember of the Benteng Program which discriminated the Dutch and the Chinese in favor of asli traders in the allocation of foreign exchanges? Did the Benteng Program cause serious problems for Kian Gwan?
The allocation of foreign exchanges in certain fields, such as textiles, was reserved exclusively for asli businessmen, but this did not affect us much. We had complete peace with that. That did not bother us at all.
Didn't you deal in textiles much?
No. Neither did we trade in general consumer goods assigned to asli businessmen. I said at that time that the only chance for our survival was to create several thousand Indonesian millionaires. There were a few million Chinese and about 120 million Indonesians, but business was dominated by the Dutch and the Chinese and there were few Indonesian businessmen. Our only chance was to have several thousand Indonesian millionaires next to us. In a socialist state, we could not survive. So, I thought it was a good idea to promote Indonesian en-trepreneurship. If they could handle textiles and general goods, there was no need for us to do that. So, our company supported asli businessmen; we gave them finances and also tied up with them in new ventures. We supported people such as Bintang Soedibyo, Wibowo, and Soedarpo. We could survive if we withdrew from the fields they could handle and they became successful businessmen. We could go into more technical fields they could not handle. For example, we set up the machinery trading company, Api, and the pharmaceutical company, Phapros. We could survive only if we would upgrade our business. We were willing and able to do that. Even here in Switzerland, the country cannot survive if it still concentrates on mass production. It survives and prospers since it specializes in certain fields. This is what we were doing in the 1950s. In the case of pharmaceuticals, we first started pharmaceutical imports and then went into their production. We opened the first pharmaceutical factory. Public health was important, and this was an entirely new field which asli businessmen found difficult to engage in themselves.
How about rice import?
Rice import was a political thing. It was first handled by the Dutch trading company, Inter-natio. Then the Dutch became persona non grata, so we became the government rice importer. We could get supplies from Bangkok and Rangoon. There, my brother Tjong Hiong and Tan Tjin Kwan were instrumental in making contacts. Some Indonesians tried to handle rice import, but they were cheated simply because of the lack of experience. But we were very aware that what happened to the Dutch would happen to us. We knew that sooner or later the rice business would go to asli traders.
Was this after the nationalization of Dutch companies in 1957?
No, it was before that. It was the period from 1952 to 1956.