Asia: The Untouchables – Indonesia's Widjajas
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Asia: The Untouchables – Indonesia's Widjajas

Default? What default? Asia Pulp & Paper, Sinar Mas and the Widjaja family, once pariahs of the international financial markets, have bounced back with a vengeance. Are the memories of the banks financing them too short? Or are they backing a group that can deliver on both its repurposed business and environmental credentials?

Untouchables main-350

Illustrations: Britt Spencer

by Sara Webb

Indonesia’s enormous Sinar Mas group seems to be on a roll. Owned by the Widjaja family, one of the richest in the country, it is expanding in some of Jakarta’s most important, or priority, economic sectors. It has clinched eye-popping deals and borrowed billions of dollars in recent years to build the world’s biggest pulp mill as part of an ambitious expansion in southeast Asia, China and the UK. Yet it was not that long ago that this group was considered a pariah by the international financial community. In 2001 its New York-listed crown jewel, Asia Pulp & Paper (APP), called a debt standstill on nearly $14 billion of bonds and loans. That made it the biggest default by an emerging markets corporate name – a dubious record that APP still holds to this day.

What followed was a protracted and bitter battle between APP and an assortment of international creditors, many of whom had sharply competing interests. Among those fighting to get their money back were the Indonesian Bank Restructuring Agency, which was created to save Indonesia’s banking system during the Asian financial crisis in the late 1990s, and a group of mainland Chinese banks that had lent over $1 billion to APP’s Chinese mills and which formed a separate creditor group. 

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