Indonesia: Why everybody loves Pak Tiko
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Southeast Asia

Indonesia: Why everybody loves Pak Tiko

Over a 20-year career, the still youthful Kartika Wirjoatmodjo has built a reputation as Indonesia’s financial Mr Fixit. Now, the popular banker has a new challenge – to build Bank Mandiri into a domestic leader with aspirations across southeast Asia. Is it his biggest challenge yet?

Kartika Wirjoatmodjo, Bank Mandiri

If there is one person in Indonesia who seems destined to be running its biggest bank, it is Kartika Wirjoatmodjo.

At 44, Wirjoatmodjo may be one of the younger bosses of a major Asian bank doing the regional rounds. But few Indonesians know the mechanics of Jakarta’s state-controlled behemoth Bank Mandiri better than “Pak Tiko”, as the personable Wirjoatmodjo is known to the bank’s 38,500 or so staff, and to his bosses at the highest levels of Indonesia’s government.

Bank Mandiri has defined Wirjoatmodjo’s professional career and he, in significant part, has defined Mandiri. After almost two decades in and around it, he literally knows the bank inside and out.

Flashback to 1999 and the depths of the region’s crippling financial crisis; as a management consultant fresh from an economics and accounting degree at the University of Indonesia in Jakarta, Wirjoatmodjo played midwife at Mandiri’s birth as a bank.

Today, he is Mandiri’s CEO as well as the chairman of the Indonesian Association of Banks, and is one of the leading technocrats to emerge from the post-dictatorship reformasi movement in the wake of the Asian financial crisis.

For his bosses in government, Wirjoatmodjo has also become something of a state troubleshooter and Mr Fixit called in to bang a wobbly bank back into line – twice in the case of Mandiri – or cure the government of a headache in its state-owned enterprises. For now he’s running Indonesia’s biggest bank, but he is surely destined for one of the other top financial posts – perhaps following in the footsteps of Agus Martowardojo, his predecessor at Bank Mandiri who is now governor of the central bank? Finance minister? Or perhaps a higher office? 

In terms of governance separation between bank management and shareholder, I think we have been able to leave behind the integrity issues that were the problem of the 1998 crisis. - Kartika Wirjoatmodjo

After helping with Bank Mandiri’s formation, Wirjoatmodjo formally came on board the bank in 2003 to tame what had become a wayward loan book under Mandiri’s first round of managers. A decade or so later, the emerging technocratic star was tapped by the state to negotiate the best price possible for the bailed-out Bank Century. The bank had been rescued by the state in 2008, claiming several prominent political scalps in the process and had turned into a $1 billion headache.

Now back at Bank Mandiri for the second time, and this time as the boss, Wirjoatmodjo’s brief is again to arrest creeping bad debts, stem slipping profits and position the bank as a regional champion with ambitions beyond Indonesia.

Twenty years on from the financial crisis that defines modern Indonesia, the country has no shortage of problems. The development of the world’s fourth-most populous country – of 265 million people – in terms of its industrialization and the ambitions of its growing aspirational middle class are hindered by ailing infrastructure and widespread corruption. But Bank Mandiri counts as one of Indonesia’s more successful outcomes from that time, alongside the nation’s maturing democracy.

“Indonesia presents as one of the most successful cases of bank restructuring,” Wirjoatmodjo tells Asiamoney. “In terms of governance separation between bank management and shareholder, I think we have been able to leave behind the integrity issues that were the problem of the 1998 crisis.”

In 1998, Wirjoatmodjo, then 25 and just two years out of university, was working as a consultant with the mostly-foreign experts at PricewaterhouseCoopers’ (PwC) financial advisory arm in Jakarta

Indonesia’s banking system was broken. The Asian financial crisis had overwhelmed the region, and infected Indonesia more virulently than elsewhere. During 1997 and 1998, the rupiah collapsed as the central Bank Indonesia abandoned the currency’s fixed dollar peg, and local banks and companies found their dollar-denominated debt suddenly ballooned in rupiah terms overnight. For a time there were near daily runs on banks, as the Suharto regime sought $40 billion in emergency funding from the IMF to keep the country’s deeply-flawed banks afloat somehow.

By mid-1998, the Suharto dictatorship had fallen, leaving Jakarta rioting and Indonesia in tatters. Banks were bust, seized by authorities and placed on life support with the Indonesian Bank Restructuring Agency, the controversial bad bank vehicle hastily convened under IMF conditions.

Kartika Wirjoatmodjo, Bank Mandiri

Wirjoatmodjo’s employer, PwC, had a contract with IBRA to help fix Indonesia’s banking system. PwC and IBRA’s other foreign consultants, such as Boston Consulting, were playing financial god with Indonesia’s economic future. As Wirjoatmodjo recalls to Asiamoney in an interview last month, part of his brief at PwC and later at Boston, was to help assess which banks could be restructured and saved, and which should be shut down.

The meltdown had left four state banks – Bank Bumi Daya, the trade Bank Dagang Negara, the trade finance Bank Exim and the state development Bank Bapindo – each crucial to the functioning of the economy, in severe trouble. IBRA would eventually merge these four as the genesis of a new government-owned bank to be called Mandiri, an Indonesian word suggesting independence.

As Mandiri was conceived, Wirjoatmodjo was completing an MBA at Erasmus University’s Rotterdam School of Management in the Netherlands. On graduation, he returned to Jakarta to take up a new slot with Boston Consulting, which also had an IBRA mandate to advise on bank restructuring.

“I was assigned immediately to Mandiri,” Wirjoatmodjo recalls, “which had just been formed from these four failed state banks, and the government had just injected trillions of rupiah of capital into it.

“At the time, the IMF required Mandiri to have outside consultants who would guide the implementation of performance-based projects to assess this recapitalization effort,” Wirjoatmodjo says. “I was part of that Boston team, for two years building up strategy and capacity, implementing a risk management framework, working on several big internal projects like developing a corporate rating project.”

Former Boston Consulting partner Roman Scott was Wirjoatmodjo’s team supervisor at that time and speaks warmly of Pak Tiko.

“Great guy, (I) love him to death. Everyone loves Tiko,” says Scott who today owns the Singapore-based investment house Calamander Capital.

Another rising technocratic talent at Boston Consulting at that time was Pahala Mansury, who would also become a Mandiri director. He spent 12 years working alongside Wirjoatmodjo in the bank’s finance division and was Wirjoatmodjo’s chief financial officer at Bank Mandiri until May this year, when he left to run Indonesia’s state-owned airline Garuda. Both Garuda and Mandiri are among the stable of companies controlled by the powerful ministry of state enterprises.

Wirjoatmodjo worked as an insider at Mandiri via Boston for three years. By 2003, Wirjoatmodjo had become so crucial to the new bank’s operations that the CEO of the now-secure bank formalized the association by making him head of Mandiri’s strategy and financial analysis division.


In 2011, Wirjoatmodjo was called away from Mandiri by the finance ministry to run the Indonesia Infrastructure Finance fund (IIF), established a year earlier by the ministry with the support of the World Bank and Asian Development Bank.

At IIF, Wirjoatmodjo’s finance minister was the economist Chatib Basri, another well-regarded technocrat associated with post-Suharto reformasi. Chatib had cut his teeth around the middle of the 2000s when he was an advisor during the first term of Sri Mulyani Indrawati, who is once again Indonesia’s finance minister. Chatib, who is a private consultant and president of the IIF fund these days, describes Wirjoatmodjo as “very talented, very bright.”

In 2014, while Chatib was finance minister, he appointed Wirjoatmodjo chief executive at the state’s Indonesia Deposit Insurance Corporation, ostensibly to oversee the clean-up and sale of the troubled Bank Century, which had been at the centre of Indonesia’s most serious banking crisis since the meltdown in the late 1990s.

At Indrawati’s urging, the corruption-riddled bank was bailed out with $700 million in government support in 2008, just as the global financial crisis of that era was starting to reverberate in Indonesia. Amid allegations of fraud and money-laundering, the bailout turned into a nasty political fight in Jakarta and was used by the opponents of Indrawati’s reforms to mount an attack on the clean-broom finance minister. Indrawati eventually quit Indonesia in 2010 to become a managing director at the IMF in Washington, until she was called back last year by president Joko Widodo for a second term as finance minister.

Taken over by the government, Bank Century was re-badged Bank Mutiara and remained on the state books for seven years until Wirjoatmodjo engineered its sale in 2015 to Japanese interests. It has now been reconstituted as Bank J Trust Indonesia.

Bank Mandiri's key numbers
Source: Bank of Mandiri

For Wirjoatmodjo, as for many professional Indonesians, the before and after (the crisis) comparisons are important.

“I think most banks now are run professionally, even the privately owned banks, and by real bankers,” says Wirjoatmodjo. “I think the regulator, with all its pros and cons, has really been able to enforce the implementation of good governance and risk management. It’s much more professional now. The regulator is even enforcing ‘fit and proper’ tests for the ultimate shareholders of banks.”

He cites his experience in selling off Mutiara, the former Bank Century. Indonesia’s regulators were much more professional, he says, specifically drilling down on the background, reputation and viability of the ultimate shareholders of the successful bidder for Mutiara, a largely unknown Japanese firm called J Trust.

“This is the backbone of the changes that have happened since the 1990s,” Wirjoatmodjo says. “That would definitely not have happened before.”

Having lived and worked through the banking crisis, he has a valuable perspective.

“The biggest problem that happened at these banks is the problems actually infected by their own owners,” he says.

“One of the key changes after 1999 was that bank owners realized that they could make a lot of money from the appreciation of their stock price,” he notes. “This is quite dramatic, the bank owner now really focuses on enhancing the bank’s profitability and stability so that the valuation increases. That is a very profound change in the way an owner sees their bank.”

Wirjoatmodjo says Mandiri’s master, the Indonesian government, has arrived at the same realization. 

 “Their investment in our shares is worth a huge amount of money,” he tells Asiamoney. 

So far in 2017, Mandiri’s shares are up 14%, slightly ahead of the Jakarta Composite Index which is up 11%. 

At the time of his interview with Asiamoney in early September, the Jakarta-quoted Bank Mandiri had a stockmarket capitalization of about $23 billion, giving the government’s controlling 60% stake a value just shy of $14 billion. That’s roughly 14 times the amount that the IMF-directed government of the day injected to create Bank Mandiri from four beached state banks in 1999.

“It’s really different from where we were in the past when most of the banks were used to finance unprofitable state development projects. Now we are more market-driven,” he says.

Another change from pre-crisis times, he says, is the autonomy from the state that he has to run the bank.

“In terms of core business, I would say I have 99% autonomy. The 1% would be for deals where we have to negotiate with government on pricing,” he says. 

He gives the example of Medco Energi of Indonesia buying control of US resources giant Newmont Mining Corp’s Indonesian operations last year, which Mandiri helped to finance alongside state-owned Bank Negara Indonesia. That acquisition, a strategic deal, was hailed in Jakarta as Indonesian interests buying back the farm from foreigners: it’s long been the desire of the government to regain control over Indonesia’s bountiful natural resources as well as the subsequent stages of processing and adding value.

“For the rest, all the business decisions are separated from the government. We are run just like a normal, professionally run bank, with normal consultation to a board of directors,” he says.


That said, his first few months at the helm haven’t been easy. When he was appointed CEO last year, Bank Mandiri was feeling the impact of the bursting of Indonesia’s decade-long commodity boom with a pick up in non-performing loans. 

Net profit fell 30% to Rp14.7 trillion rupiah ($1.1 billion) in 2016 , the lowest level since 2011. So far this year, the picture is improving and quarterly profits are up, year-on-year.

Wirjoatmodjo blames last year’s weaker profits on slumping commodity prices, which impacted the bank’s loan book and NPLs. Reserves for impairments more than doubled to just under Rp25 trillion ($1.9 billion) in 2016.

“We had quite a lot of credit costs in that first year, about Rp25 trillion to Rp26 trillion in provisioning, to absorb the impact of the cycle, and that hit our bottom line,” he says.

Pre-provision, Wirjoatmodjo insists that “growth is quite high so we are not too worried about the capability of the company to produce revenue. We have to really begin on reducing our non-performing loan and credit costs.” Indeed net interest income has been steadily rising and is up 14% in 2016.

“This year we see a much better environment though not at the ideal level. But the NPL environment is slightly getting better and we don’t see as much as we saw last year.”

For the first half of 2017, provisions fell 5.6% to Rp9.33 trillion and net profit rose 33.7% to Rp9.46 trillion from a year ago.

“We are quite optimistic that this year we will have positive growth on our bottom line,” he says, adding that Mandiri interest income is “growing at around 12%” before anticipated provisioning.

The ballooning NPL provisioning last year led to an internal re-think, says Wirjoatmodjo. Between 2011 and 2016, the bank’s engine of growth had been the small and medium-sized business or SME sector. But when that began to struggle with the commodity cycle downturn and a heavier weight of loans, Mandiri switched its emphasis to the bigger corporate sector and to consumer and retail banking.

“This has been a quite dramatic change in the portfolio growth,” he says. “Corporate was our core business in the past and has become again our main contributor to growth and revenue.” He also cites the “tremendous growth” in fee income, particularly from foreign exchange and syndicated loans.

On the retail side, Wirjoatmodjo says the bank is beefing up its distribution network. There’s a strong emphasis on consumer financing, notably the emerging mortgage market, car loans and payroll loans. “We are pushing these products very hard and they’ve been growing around 20% year on year”, he says. 

Nationally, Mandiri is second to Bank Central Asia in retail. Wirjoatmodjo says he is “not happy where we are” but he adds that to compete with BCA, Mandiri has been investing in its digital platforms, which the bank was “slower” to do.

“We are the largest lender in the country and we’d like to leverage our relationship with the corporates to get more of the payroll business. Once we get the payroll of the employees we can penetrate the retail segment to provide different types of products – mortgages and so on – to the employees of the corporations.”


During August this year, observant travellers exiting immigration at Singapore’s Changi airport saw something they hadn’t seen before – banner advertisements all around the airport in English advertising Bank Mandiri in slots that an HSBC, a Citi or Singapore’s own DBS might usually fill.

This is unusual territory for an Indonesian bank but Mandiri has recognized it needs to become a regional player, not just an Indonesian bank. For all its regional authority as the anchor nation of the region, with the most people and the region’s biggest economy (southeast Asia’s only G-20 member), introspective Indonesia has never had a bank with any significant business profile beyond the archipelago. The economy didn’t engender sufficient confidence to warrant it, and Indonesians banking abroad have tended to do so with non-Indonesian banks.

Wirjoatmodjo wants to change all that.

“We have to expand in ASEAN but in a profitable and effective way,” he says. “For us, Singapore is very interesting. We want to use Singapore as our hub to issue capital market instruments to support the financing of Indonesian corporates.” Mandiri Securities recently acquired a capital market licence in Singapore, which speaks to Wirjoatmodjo’s ambition to export Indonesian banking beyond its shores.

Wealthy Indonesians have long used Singapore to park billions of dollars worth in assets in the city-state’s banking system, away from prying Indonesian eyes. Not all of the Indonesian money parked in Singapore has been clean, discreet Singapore being the hideaway of choice for the ill-gotten gains from an economy long ranked as one of the world’s most corrupt. Mostly-Chinese Singapore is also the preferred bolthole for much of the wealth of Indonesia’s minority and moneyed ethnic Chinese business community, who have fled there during Indonesia’s periodic anti-Chinese pogroms.

Indonesia’s finance minister Indrawati last year told the country’s constitutional court that Indonesians had secreted $250 billion in assets abroad, with some 80% of that in Singapore. This was before an official tax amnesty, which her office said had unearthed $367.5 billion in declared assets, equivalent to 40% of the Indonesian economy.

Some but not all of it has been repatriated: Wirjoatmodjo tells Asiamoney he believes around Rp700 trillion (or around $53 billion) remains parked in overseas banks, mostly in Singapore. Hence the need to beef up its presence in the neighbouring city-state and use those offshore funds to help finance Indonesia’s infrastructure.

“We also want a licence for private banking because we know that a lot of Indonesians are parking their money there,” Wirjoatmodjo says. 

Indonesia is “struggling” to finance much-needed infrastructure projects, the promise of which helped sweep Wirjoatmodjo’s boss, president Joko Widodo, to power in 2014. Three years into his term, Jokowi, as he’s popularly known, has the job ahead of him to deliver. 

The current loan-to-deposit ratio of Indonesia’s banking system is around 90%, Wirjoatmodjo says, and that’s before the government embarks on a planned $300 billion to $350 billion spend on infrastructure nationwide. Indonesia recently approved a $350 billion budget to fund infrastructure development through to 2019. World Bank president Jim Yong Kim has estimated that Indonesia will need to invest $500 billion over the coming years to meet infrastructure needs.

Another initiative to help finance infrastructure that Mandiri is pushing is what Wirjoatmodjo calls the “global IDR,” or “nasi goreng bonds”, rupiah-denominated bonds for international investors. “We want to open a market offshore for people who want to invest in rupiah-denominated instruments,” he says.

He cites the positive take-up by investors for Indonesian sovereign bonds as a guide to appetite. “We want to add a market for corporate rupiah bonds,” he says. He would also like to see Indonesian state-owned firms listing infrastructural asset-backed securities in Singapore to broaden investor reach and raise funds.

Wirjoatmodjo says the idea is “not necessarily to bring the money to Jakarta but we want to tap into that source of funds to finance Indonesian assets.” That might be a tough sell, with memories of wild swings in the rupiah relatively fresh in investor minds. But Wirjoatmodjo is undaunted. 

“We believe Indonesian people who reside in Singapore will be very keen to subscribe to this kind of instrument,” he says. “We hope the people who have money there will not be worried to have their money in an Indonesian bank.” 

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