Forbes Indonesia 2013 February (e-magazine full)

Money & Medicine • OJK’s Muliaman Hadad

Indonesia

www.forbesindonesia.com

february 2013

VOLUME 4 ISSUE 2

GROWTH
STORY

Teddy Rachmat
builds Triputra into
a commodities
powerhouse

RP 50,000


Leading you to Indonesia
For over two decades, Bank Mayapada has proven to be a strong and reputable bank
in Indonesia. We offer a wide range of financial services to meet our clients’ personalized
business needs supported by state of the art IT and knowledgeable staff. With over than
170 branches in 19 provinces in Indonesia, Bank Mayapada will continue to serve the ever
growing economy in Asia.


www.bankmayapada.com
Mayapada Tower, Ground Floor – 3rd Floor

Jend. Sudirman Kav.28 Jakarta 12920 – Indonesia
Phone : +62 21 5212288, +62 21 5212300


contents — february 2013

volume 4 issue 2

Indonesia

p PAGE 34

“A partnership
enables you to
have a check and
balance. In tennis
or badminton, a
single player can
not win against
double player.”
—TEDDY RACHMAT,
OWNER OF TRIPUTRA GROUP

8 | FACT & COMMENT // Steve Forbes
Obama’s ugly foreign policy legacy.

10 | CURRENT EVENTS // David Malpass

The battle to limit government: America needs to win now.

healthonomics
14 | Hospitals Calling

The country is in the midst of an unprecedented drive to expand the hospital industry.
By Ulisari Eslita

18 | Good Health For All

Hasbullah Thabrany’s long desire to ensure all Indonesians have access
to healthcare is about to be realized.
By Sonya Angraini

20 | Beyond Drugs and Drugstores

Long known for its drugstore chain, Kimia Farma under Rusdi Rosman
is now undergoing a major expansion.
By Renjani Puspo Sari

22 | Extreme Makeover

Marcus Pitt is revamping the Soho Group to better compete
as the healthcare system undergoes its own transformation.
By Jeffrey Hutton

24 | Healthcare Outlook 2013 // Frost & Sullivan
On the brink of major transformation.

issues & ideas
26 | Taking the Reins

As the first chairman of the OJK, Muliaman Hadad explains how the agency will operate.
By Sonya Angraini

30 | The Fight Over Papua’s Savanna

Developing Papua’s Merauke area could help the country but plans to do it are controversial.
By Renjani Puspo Sari

32 | fresh thought // Taufik Darusman
And then there were ten.

COVER Photograph by
ahmad zamroni / Forbes indonesia

2 | FORBES INDONESIA february 2013

33 | global viewpoint // Jennie S. Bev
Post-industrial network synchronization.


february 2013 FORBES INDONESIA | 3


contents — february 2013

volume 4 issue 2

cover story
34 | Growth Story

Teddy Rachmat has been a success as both a top executive and an entrepreneur,
and one of his few regrets is not being more of the latter sooner.
By Gloria Haraito

companies & people
42 | Keeping It Simple

Under Jerry Ng, BTPN’s focus on core businesses and
customer service are keys to its performance.

p PAGE 42

“It’s the same
thing with
pensioners, if they
are healthy they
will live longer
and remain as
customers.”
— Jerry Ng,
BTPN FINANCIAL ADVISOR

By Ardian Wibisono

46 | The Strata Succession

With his brother and now his son, Raj Kumar put a non-Chinese face
on the Lion City’s real estate map.
BY NAAZNEEN KARMALI

50 | property perspectives // Todd Lauchlan
Jakarta: it’s good to be number one.

51 | marketing insights // Hermawan Kartajaya
Changing the game in 2013.

philanthropy
52 | Lessons of the Forest

Butet Manurung learned to teach in new ways
to reach her students in the Sumatran jungle.
By Ulisari Eslita

THE WORLD’S MOST POWERFUL PEOPLE
54 | Power Players

There are 7.1 billion people on the planet. These are the 20 who matter.

58 | inside the koch empire

They control one of the world’s great companies. Liberals (and competitors) may hope
they go away, but Charles Koch and his brother David are just getting started.
By Daniel Fisher

66 | reality check // James Kallman
Daring to dream of things that never were.

forbes life
68 | In the Rough

In Cempaka, miners still look for diamonds using traditional methods.

p PAGE 52

“I lived together
with them and
shared everything.”
—BUTET MANURUNG, SOKOLA
“JUNGLE SCHOOL” FOUNDER
4 | FORBES INDONESIA february 2013

72 | Power Slide

The sport of drifting is becoming bigger in the country.
By Yessar Rosendar

74 | Pick Of The Litter

Craig Jackson owns and runs the hugely successful Barrett-Jackson Collector Car
Auction. The best part about his job? He gets to keep a few cars himself.
By Hannah Elliott

78 | the eye // Yessar Rosendar


february 2013 FORBES INDONESIA | 5


FORBES INDONESIA

Indonesia

Editorial Department
Chief Editorial Advisor Justin Doebele
Editor-At-Large Taufik Darusman
Senior Writers Ardian Wibisono
Writers Ulisari Eslita, Gloria Haraito,
Renjani Puspo Sari
Reporters Sonya Angraini, Yessar Rosendar
Art Director Mirna Lidya Aprilla
Photo Editor Ahmad Zamroni
Executive Assistant Seli Widiati
Editorial Intern Adelia Anjani Putri,
Arya Satya Nugraha, Hamish McNicol
Business Department
Publisher Jusuf Wanandi
Associate Publisher Grace Wong
Circulation & Subscription Manager Andriansyah
Circulation Executive Desi Yulieta
Production Manager Mudafid Riyanto
Senior Adv. Manager Tanti Jumiati
Senior Adv. Sales Executive Hilman Ahmad
PR & Event Manager Rafki Ismael
Executive Assistant Marketing Nancy Heryana
Accounting Manager Indrawati Sonjaya
Accounting Supervisor Inge Stephanie
Accounting Executives Ary Purnomo
Administrative Assistant Fitriyah
PT Wahana Mediatama
President Director Millie Stephanie

Vice President Director Victoria Tahir
President Commissioner Jonathan Tahir
Vice President Commissioner Maria Lukito
Forbes Media LLC
Chairman & Editor-in-Chief Steve Forbes
President & CEO Mike Perlis
Chief Product Officer Lewis D’Vorkin
President & Publisher, Forbes Asia
William Adamopoulos
Editor, Forbes Asia Tim Ferguson

FEBRUARY 2013 • Volume 4 Issue 2
FORBES Indonesia is published by PT Wahana Mediatama under
a license agreement with Forbes LLC, 60 Fifth Avenue, New York,
New York 10011. “FORBES” is a trademark used under license from
FORBES LLC.
©2010 PT Wahana Mediatama ã â2010 FORBES LLC, as to material
published in the U.S. Edition of FORBES. All Rights Reserved.
©2009 FORBES LLC, as to material published in the edition of
FORBES ASIA. All Rights Reserved.
FORBES INDONESIA is published monthly, 12 times per year.
Copying for other than personal use or internal reference or of
articles or columns not owned by FORBES INDONESIA without
written permission of FORBES INDONESIA is expressly prohibited.
CONTACT INFORMATION
Forbes Indonesia: Menara Sudirman 19th Floor Suite 19D,
Jl. Jendral Sudirman Kav. 60, Jakarta 12190. Tel: (021) 522 6828,
Fax: (021) 522 7208. Website: www.forbesindonesia.com
: Forbes Indonesia Magazine
: @forbes_id

Subscriber Enquiries: Please contact Circulation Division. SMS to
0817 0109 777, email: Or visit
www.forbesindonesia.com to subscribe or advertise. Single copy
price Rp 50,000, local subscription rate
Rp 420,000 + postal fee (Jabodetabek) for 12 issues.

6 | FORBES INDONESIA february 2013

SIDELINES

N

Next Year’s
Other Big Event

ext year is in the spotlight due the presidential elections. But an equally
important event is slated to happen in the same year, the effects of
which will perhaps be as profound as those coming from whomever
wins the election. What is the event? The introduction of a system guaranteeing
universal healthcare coverage to all citizens—starting first with the poorest of
the poor and then extended to everyone. The Badan Penyelenggara Jaminan
Sosial (BPJS) will be a grand experiment—on a global scale. When implemented,
it will reportedly be the world’s largest “single-payer” national health scheme,
meaning one agency will be responsible for collecting the premiums and paying
the bills.
Improving the health of its citizens has long been a point of pride for the
country, which has made enormous progress in areas such as infant mortality
and life expectancy over the years. The introduction of the BPJS can be seen as
another step—and a big one—in this important journey. If all goes according to
plan, the BPJS will be the catalyst for a wholesale renovation of the country’s

healthcare system. Along with creating more rationalization in pricing for
healthcare practices, it should also drive more consistent, and higher, standards
for care nationwide. The reform will create huge new demand, thus providing
a reason for entrepreneurs and investors to deliver the supply—across a wide
spectrum of goods and services. Geography should be less of a barrier to quality
care, as there will be new incentives to build facilities in areas where before
there were none.
The articles in this package on healthcare cover the various aspects of this
coming revolution, from an interview with Professor Hasbullah Thabrany who
is the intellectual father of the BPJS and has worked hard to see it become a
reality, along with preparations underway at a leading state firm—PT Kimia
Farma—and a leading private one—PT Soho Group—to prepare themselves for
this coming transformation of the healthcare sector. The change cannot come
too soon. Having a vital healthcare sector is a critical part of any developed
economy—as an industry that creates many high-paying and high-value jobs and
also as one that underpins the health, literally, of the economy.
Whatever happens in the next few years will no doubt be watched closely by
others to see what lessons can be learned from Indonesia’s grand experiment.
Ensuring that everyone can feel secure about getting adequate healthcare when
needed is no small accomplishment. F

Justin Doebele
Chief Editorial Advisor



february 2013 FORBES INDONESIA | 7


FORBES INDONESIA

FACT & COMMENT — STEVE FORBES
“With all thy getting, get understanding”

Obama’s Ugly
Foreign policy legacy
BY STEVE FORBES, EDITOR-IN-CHIEF

Afghanistan’s mercurial president,
Hamid Karzai, came over for a visit to
discuss future U.S. troop levels in his
country. The White House vibes on this
are bad: President Obama wants no U.S.
presence in Afghanistan after next year.
He did the same thing in Iraq in late 2011,
pulling out all U.S. forces. Given U.S. war
weariness, such actions score well in the
polls, but they point to bloody troubles for
the U.S. in the future. Obama’s desire to
reduce the U.S. global presence to the scale
of, say, Belgium is deliberate but betrays an abysmal,
murderous ignorance of history and global realities.
Without a strong U.S. political/military presence
around the world instability increases as antiAmerican, antimodern forces violently assert
themselves. We’ve seen this movie before in the
isolationist 1930s and again in the 1970s, when the
U.S. seemed to be in terminal decline. We are not the
world’s policeman, but we are the best guarantor of
peace and stability.
Take Europe, a continent that was wracked by

constant conflict for centuries. Today a major war
there is inconceivable. This new reality wouldn’t exist
if it weren’t for the security umbrella the U.S. has
provided since the end of World War II.
Or look at Asia. North Korea is becoming
increasingly belligerent, and China is more truculent
with its neighbors. Alarm bells are going off in
neighboring countries. Vietnam, for example, has
made abundantly clear that it wants an increasing,
not a decreasing, U.S. military presence in that part of
the world. Vietnam and China had a brief but violent
military flare-up in 1979. Japan’s new prime minister
has made clear his desire for Japan to embark on its
first major rearmament program since World War II.
Would it really serve the purpose of global peace to
have Japan engaging in a major military buildup, as
8 | FORBES INDONESIA february 2013

well as becoming a nuclear power? Do
we really want the instability of increased
tensions and the possibility of armed
conflict in the region?
Our unnecessary withdrawal from
Iraq is destabilizing that already shaky
part of the world. Iran is using Iraq as
a thruway to supply arms to the Syrian
government, which has killed 60,000 of
its unhappy citizens. Iraq itself may break
apart in communal conflict. A meaningful
U.S. troop presence in Iraq would have

been a beneficial check to Iranian belligerence and
would have given more credibility to our warnings to
Tehran to cease its race for nuclear weapons.
Bugging out of Afghanistan after overstretched
U.S. forces have achieved considerable success in
stabilizing much of the country will only mean that
the Taliban and al Qaeda get another shot at taking
the country. Doesn’t anyone remember where
the 9/11 plot was hatched? Moreover, the vacuum
we create in Afghanistan will mean more trouble
in neighboring Pakistan, where moderate forces
are already on the defensive. Their boldness and
numbers would grow if they felt the U.S. was “staying
the course” in their part of the world.
Can Afghanistan defend itself against Islamist
militants? Probably not, just as Western Europe
during the Cold War could never have defended itself
against the Red Army without American help. The
U.S., nearly six decades after the Korean War, still
maintains a presence in South Korea. Those troops
are the only reason North Korea hasn’t again tried to
take over the South.
We’ve made plenty of mistakes in our foreign
policy since WWII, but there’s no gainsaying the fact
that our refusal to retreat into isolation, as we did in
the 1930s, has made the world a far safer and
infinitely richer place. F


Travel Management Experts

www.smailingtour.co.id

Comfortable & Relaxing
Tour Packages
Head Office:

Branches:

SMAILING TOURS AND TRAVEL SERVICE
Jl. Majapahit No. 28 Jakarta 10160

Bursa Efek Jakarta
5153040
Graha Irama
5207610
Wisma Iskandarsyah 7235120
Kelapa Gading
45845533

Add and follow our social media for best deals
Senayan City
Salemba
Wisma Soewarna

72781656
3161645
55912999

@smailingtour

Smailing Tour
february 2013


FORBES INDONESIA | 9


thought leaders
david malpass —­current events

The battle to limit government
America needs to win Now
America greeted 2013 numbed
to the absurdity of 0% interest
rates, endless Federal Reserve bond
purchases and $1 trillion deficits.
President Obama imposed a January
fiscal deal that added $4 trillion to the
projected national debt, on the surreal
claim that the U.S. government
doesn’t have a spending problem.
His Cabinet and policy choices show
satisfaction with the status quo and a
state of denial over the dangers ahead.
In December he made the claim of
national well-being: “Our economy is
really starting to recover, and we’re
starting to see optimistic signs.”
However, per the U.S. census,
inflation-adjusted median household

income has fallen for more than a decade, a stunning national failure. The
federal debt has topped $16 trillion,
which is more than our entire GDP.
Much of the increase is being funded
by the Fed’s $1.6 trillion in dangerous
overnight debt to the banking system.
Meanwhile, the once staid European
Central Bank has propped up Europe by
piling increasing amounts of debt on its
books from underwater banks and governments. And Japan’s new government
has just launched a new round of deficit
spending and is set to order the Bank
of Japan to buy more Japanese government debt, despite Japan’s world-record
245% debt-to-GDP ratio.
Central banks have become the
world’s biggest speculators. The Fed
in 2012 earned $91 billion in profit on
its $55 billion in equity capital. That’s
more than ten times the normal privatesector profit rate and was achieved by
leveraging its liabilities up to nearly $3
trillion, a 50-to-1 debt-to-equity ratio.

cut spending. This leaves us with a grim
prognosis and no treatment plan.

Battle for Power

The Fed’s interest rate bets are a zero-sum game—the Fed wins, while the
losses are borne by underpaid privatesector savers. Worse, the policy of manipulating interest rates to artificially
low levels has interrupted the vital market-based connection between interest

rates and investment decisions. This
creates economic distortions that slow
growth and will take years to unwind.
The result hits U.S. living standards. Despite gigantic debt-fueled
government transfer payments, Americans are suffering from a five-year
stagnation in inflation-adjusted disposable income, which is expected to
continue into 2014. The deterioration
is due to weak labor markets, bigger
government, artificially low interest
rates and the policy of weakening the
dollar in the hope that it will become
so cheap it becomes attractive.
Instead, one industry after another
has shifted new investment to nonJapan Asia, where currencies are more
dependable, the legacy burden of retirees is lighter and national debts are not
at a crisis stage.
Our daily newspapers are filled with
the struggle over the debt limit, but it’s
written to harm fiscal conservatives, not

The battle we now need to wage includes debt but is even bigger: to create
an enforceable process for limiting federal power. The Constitution provides
a degree of protection through the
Tenth Amendment’s reservation of undelegated power to the states and the
people, but this hasn’t translated into
limits on government spending or debt.
Some focus less on the Constitution, hoping that boundaries
will emerge through culture, moral
government and political compromise; others argue directly for bigger
government. Some expect the bond

market and a downgrade in our credit
rating to force limits, which seems
unlikely given weaker conditions in
other countries. They’ll fail first.
These approaches leave a vacuum
in restraining government growth
and debt. Rather than negotiate in
that framework, our government and
citizens must overturn the existing
rules and create a workable new debt
and spending limit, guided by the
Constitution and the rule of law.
The President has said he doesn’t
want to cut spending. His party should
then be held to account—they should
prepare to vote for a series of shortterm increases in the debt limit with
no spending cuts attached. If that
becomes politically unpopular, as it
probably would, they should offer
spending cuts and work out bipartisan
amendments to the debt limit so that it
forces spending restraint rather than
default or government shutdown. F

David Malpass, global economist, president of Encima Global LLC; Paul Johnson, eminent British historian and author;
Amity Shlaes, director, the 4% growth project; and Lee Kuan Yew, FORMER prime minister of Sing­apore, rotate in writing this column.
To see past Current Events columns, visit our Website at www.forbes.com/currentevents.

10 | FORBES INDONESIA february 2013

february 2013 FORBES INDONESIA | 11


12 | FORBES INDONESIA february 2013


Indonesia

healthonomics

overview //// bpjs //// kimia farma //// soho group //// column

Money &
Medicine
ealthcare in Indonesia is undergoing a historic
transformation, which should be accelerated by
the introduction of the new universal healthcare
coverage scheme, the BPJS, next year. Major
changes are underway in the hospital sector, in
pharmaceuticals and in virtually all other areas of healthcare. As
noted in this package, the country still faces many challenges, but
for entrepreneurs, these can also be opportunities. The government has to play its part as well, to ensure that it provides the
right policy mix to underpin the continued growth and success of
the healthcare industry.

H

illustration by eko bintang for forbes indonesia

february 2013 FORBES INDONESIA | 13


//// healthonomics

overview

Hospitals Calling
The country is in the midst of an unprecedented drive to expand

N

ot enough hospitals. That statement summarizes one of the most
urgent problems in Indonesia’s healthcare industry. With a 240 million
population, the country has only 1,721 hospitals and 148,125 beds,
according to Ministry of Health data released in 2012. Put into context,
Indonesia is near the bottom of Asia for its hospital beds to population
ratio, with just six hospital beds per 10,000 people, well below
Malaysia’s 18 and India’s nine, according to World Health Organization
figures. Yet challenges can be opportunities. Entrepreneurs and the
government are now in the midst of a major construction boom to build
out the country’s hospital sector. “The hospital business
will be better than pharmaceutical industry in the future,”
says Boenjamin Setiawan, the founder of PT Kalbe Farma.

14 | FORBES INDONESIA february 2013

Images.com / Corbis

the hospital industry. By Ulisari Eslita

february 2013 FORBES INDONESIA | 15


//// healthonomics

BEDTIME
Indonesia ranks at the bottom
of eight countries in Asia.
“That’s why everybody is starting
to build hospitals.” He is putting his
words into action, as Boenjamin now
owns the Mitra Keluarga chain of 12
hospitals, which he is busy expanding
by two new hospitals a year.
Meanwhile, Siloam Hospitals,
which operates 13 hospitals, will
add 50 more hospitals by 2017 and
will spread from its base in Jakarta,
to Kalimantan, Sulawesi, Sumatra,
and other locations. “We will open
hospitals in Makassar, Kupang,
and Ambon. We must go where
other people don’t go,” says Gershu
Paul, president director of Siloam
Hospitals, which is owned by the
Lippo group.
Last month, Siloam Hospitals
opened a hospital in Balikpapan.

Equipped with 240 beds, the $20
million investment will aim to cater to
the expatriates who work for oil and
gas companies there.
Besides Siloam, Pertamina, the
national oil company, will also add
another hospital in Bogor. It is a
joint venture hospital with property
developer Sentul City and will start

Entrepreneurs
and the
government
are now in the
midst of a major
construction
boom to build out
the country’s
hospital sector.

16 | FORBES INDONESIA february 2013

Hospital Beds
(per 10,000 people)

Japan

137

China

42

1

Singapore

31

2
7

Brunei
5

26

6

4

Thailand

21

3
8

Malaysia

18

India

9

Indonesia

6

Source: World Health Organization, 2011

operation this year. Another property
developer that will enter the business
is Intiland by operating the National
Hospital in Surabaya. The hospital,
which has 179 beds, represents a
Rp 500 billion investment. Another
state firm that is entering the hospital
business is pharmaceutical maker
Kimia Farma, both by starting its own
hospitals and acquiring hospitals from
other state firms.
Meanwhile, the Ciputra group
already entered this sector in
2011 with its Ciputra Hospital in
Tangerang. Ciputra is not the only
tycoon to join in the hospital boom.
Billionaire Eka Tjipta Widjaja
from the Sinar Mas group operates

Eka hospitals in Tangerang and
Pekanbaru. Recently, the Eka
Hospital has developed a relationship
with the Mayo Clinic in the U.S.,

to provide telemedicine services.
This service allows patients to be
remotely diagnosed by doctors in the
Mayo Clinic.
Another billionaire owner is
Dr. Tahir, owner and founder of
Mayapada group and co-owner of the
license to publish this magazine, who
also operates two Mayapada hospitals
and is looking to further expand his
hospital group.
The hospital growth is also
coming from international players,
which could accelerate from 2015
when they will be allowed to own
up to 70% of a hospital, and will be
allowed to open public hospitals with
more than 200 beds.
“This liberalization will create
competition in health services.
Patients will get better service since
the competition between hospitals


FEELING BETTER?

The number of both hospitals
and beds is on the rise.

that more companies in the sector
will seek to raise financing through
the capital markets.

Medical tourism

2007

1,033

122,295

2008

1,079

128,750

2009

1,202

141,603

2010

1,299

143,428

2011

1,370

148,125

Source: Ministry of Health, 2012

will be very stiff,” says Vice Minister
of Health Ali Gufron Mukti.
The agreement will not only apply
to hospital ownership but also to
healthcare, allowing foreign medical
professionals, such as doctors, nurses
and dentists, to work in the country, a
practice that is currently illegal.
The rise of the hospital sector is
also gaining the attention of the investment community. PT Sarana Meditama Metropolitan listed its shares
last month in an initial public offering, selling 180 million new shares.
The company operates the Omni
chain of hospitals, which makes Sarana Meditama the first publicly listed
hospital chain in the country. The
proceeds of the listing will be used to
expand the chain and pay off debts. As
investors become more comfortable
with the hospital industry, it is likely

A

nother area driving the
growth of hospitals is medical
tourism. Some 600,000 Indonesians went abroad in 2012
to get treatment, according to the Ministry of Health, and
spent $1.2 billion on this care. Most
went to nearby cities such as Singapore, Bangkok, Guangzhou or Penang. Singapore is especially popular
with Indonesians, given its proximity and the high quality of care there,
with Singapore ranked the sixth best
place in the world in terms of care
by the World Health Organization.
According to consultancy McKinsey,
the main drivers of medical tourism
are cost savings and access to better
technology and care.
This trend shows that Indonesians
are willing and able to pay for better
care and will travel to get it, implying
that if the same level of care was
available closer to home, they would
be likely to stay in the country and
spend those funds with a local facility.
As Indonesia develops its
expertise in hospitals, it is possible
that medical tourism may reverse
direction, with foreigners coming to
Indonesia to seek low-cost care as
they now do in countries such as
China, India and Thailand. Hospitals

on the resort of Phuket in Thailand
market themselves as health vacation
spots—tourists can come there for a
checkup or other service while
enjoying some time off before or after
their visit to the hospital. After all,
rest and relaxation is one of the best
forms of medicine. F

FUELING
THE BOOM

Indonesia’s healthcare industry has
huge potential to grow. According
to researcher Frost & Sullivan
research, the medical market in the
Asia Pacific region will grow 151%
to about $3 trillion by 2020—yet
Indonesia has one of the lowest per
capita spends on healthcare of any
country in Asia, just 2.4% of GDP,
while others in Southeast Asia, such
as Malaysia and Thailand, spend
above 4% of GDP. Much of the
growth in healthcare spending will
be driven by the middle class, who
are able and willing to spend more on
healthcare. Indonesia’s middle class
is expected to grow 21% annually
this year and next, according to

consultancy Frost & Sullivan.
Apart from that, starting on
January 1, 2014, the government
will implement a new National
Social Security System (SJSN) that
includes the Badan Penyelenggara
Jaminan Sosial (BPJS) mandating
universal healthcare coverage for
citizens and expatriates.
“The implementation of the
SJSN and the BPJS has to be
supported by a sufficient supply
of hospitals and beds, or else they
will be hard to achieve,” says Agung
Laksono, the coordinating minister
on social welfare. This new system
will also enlarge the healthcare
industry growth in the next five years.
According to a Ministry of Health report, there are still about 20% or 46
million who lack any form of health
insurance, which is a large market
to be filled. With the BPJS, even the
poorest will have access to care, as
their coverage will be paid directly
by the government if they qualify for
fully subsidized medical care. Those
with jobs will pay premiums split
between themselves and government
that are charged on a sliding scale
according to monthly income.

february 2013 FORBES INDONESIA | 17


//// healthonomics

Good Health
For All
Hasbullah Thabrany’s long desire to
ensure all Indonesians have access to
healthcare is about to be realized.

I

By Sonya Angraini

f you go to a hospital, most likely you will be asked for a
guarantee of payment before you receive treatment, including a
down payment upfront. This familiar scenario means many are
unable to get proper treatment, as they lack the funds or insurance
to cover the costs of treatment. Solving this problem is at the root
of the new universal healthcare system, the Badan Penyelenggara Jaminan Sosial (BPJS), that is mandated to go into effect in
2014 under the new National Social Security System (SJSN) law
passed in September 2004. “People want a sense of security when
it comes to healthcare,” says Hasbullah Thabrany, a professor of
health at the University of Indonesia who first developed the idea
of the BPJS in 1999 and has championed its implementation.
The BPJS is expected to help standardize healthcare costs
in Indonesia. “We don’t have a benchmark for healthcare costs,
so hospitals and clinics set different rates,” says Hasbullah. The

government has established several schemes for healthcare but none of
them provide universal coverage, resulting in inefficiencies, overlapping
systems as well as gaps. These schemes include Jamkesmas, providing
health insurance for the poor; Askes, for civil services; and Jamsostek
to help manage pension funds and death benefits for workers both in
the public and private sectors. Yet none of these schemes cover contract
workers, an example of a missing gap in coverage.
The BPJS will combine all existing systems into one, starting in
2014, and extend coverage to all Indonesians and expatriates who
have worked in Indonesia for at least six months, as well as collect all
payments for healthcare services. In brief, the BPJS will centralize
both payments and collections for the country, making it reportedly the
world’s largest “single payer” system in the world. For the very poorest,
the government will fully subsidize their healthcare, at an estimated
cost of about Rp 26 trillion a year—a small amount compared to the fuel
subsidies, which cost around Rp 300 trillion a year. “Energy subsidies
actually favor the rich over the poor. If the government really wants to
help the poor, the BPJS is one of the ways,” says Hasbullah.
For those who don’t qualify for free healthcare, Hasbullah says the
payment system for the BPJS will be divided into three tiers according
to monthly salaries: those making above Rp 10 million, those making
between Rp 10 and 5 million, and those earning below Rp 5 million. For
the first tier, they will pay 5% of Rp 7.5 million per month (Rp 375,000).
For those in the second tier, they pay 5% of Rp 5 million per month

18 | FORBES INDONESIA february 2013

(Rp 250,000). Lastly, for salaries below
Rp 5 million, the premium will be 5% of
Rp 2.5 million per month (Rp 125,000).

For all three tiers, employers will pay
60% of the cost and the individual the
rest. “By paying this premium, people
don’t have to worry about getting good
healthcare because no matter what the
problem, BPJS will cover everything, including all the medicine,” says Hasbullah.
The implementation will start in
January 2014 with free coverage for the
poorest and by 2019 will be extended to
the entire population. The BPJS will be
an independent body and the Supreme
Audit Agency (BPK) and the parliament
will provide supervision. Despite debate and protests over the required payment schemes, Hasbullah says it was
necessary to charge for the BPJS’s coverage. “There’s no use to have the BPJS
if the government ended up paying all
the costs,” he says. He explains that the
body will seek to be self-financing. Any
excess of premiums over costs in one
year will be carried over into the next
financial year to cover new expenses.
To help pay for itself, the BPJS will
invest any excess monies in a fund
managed by an investment committee.
The BPJS will be divided into
two units. The first will be the BPJS
Kesehatan for healthcare, and the BPJS
Ketenagakerjaan for accidents, pension
funds and death benefits. Another thing
to consider for the implementation of
BPJS is the healthcare infrastructure.

The BPJS is meant to stimulate a
growth in the healthcare industry. The
availability of universal coverage means
there will be an incentive to develop
more healthcare facilities and services
around the country, even in remote
areas. While the number of hospitals
and clinics has been increasing over
the last few years, the developments
have mostly happened in urban areas.
Hasbullah sees the trend shifting. “The
BPJS creates demand for healthcare, so
it will prompt the supply side because
people in rural and remote areas can pay
for medical treatment,” he says. “There
will be a redistribution in paramedics
and health facilities.”

bpjs


AHMAD ZAMRONI / FORBES INDONESIA

To be sure, most are now close to
some form of a healthcare facility. The
latest survey by the Health Ministry shows around 94% of households
are within a five-kilometer radius of
health facilities. Other data shows
that Indonesia now has 90,000 physicians, which means the ratio is one
doctor for 3,000 people. Out of that

3,000, only around 15% need medical treatment in one month. Divided
by 20 working days in each month,
it means doctors will have an average of 22 patients per day. In terms of
hospital beds, Indonesia is still lacking behind other neighboring coun-

tries such as Malaysia and Singapore.
A report by the World Health Organization in 2012 shows Indonesia has
a ratio of six hospital beds per 10,000
people, compared to 18 in Malaysia
and 31 in Singapore. The ratio is also
far below the global average of 30
beds per 10,000 people.
Expanding healthcare will be
good news for healthcare providers,
medical equipment manufacturers
and pharmaceutical firms because
there will be a larger market for their
products and services. The BPJS will
also set standards for the healthcare
industry to ensure the quality and

consistency of coverage around the
country. “In the long run, the BPJS
will control everything related to
healthcare in the hope that there will
be a more integrated system,”
Hasbullah explains. In the meantime,
private insurance firms can grow
bigger once the BPJS is implemented
and they can provide additional

treatment on top of the BPJS coverage, he adds. Hasbullah realizes that
the implementation of the BPJS over
the next three years will be a bumpy
road. “There will be protests due to
the coming changes but that’s not
something unusual,” he says. F

Hasbullah Thabrany can be considered the intellectual father of the BPJS.
He first developed the concept of the BPJS back in 1999, at the start of the
reformasi period, and then joined a team formed three years later by former President Megawati Soekarnoputri to create the blueprint for
a social security system in Indonesia. From that start, he has continually sought universal healthcare for the country. He is also one of the
most respected health experts in the country. After graduating from the University of Indonesia in 1980, he got both his masters and a
doctorate in health economics and social security at the University of California Berkeley. After returning to Indonesia in 1995, he served
as a director of the University of Indonesia while also teaching on healthcare-related topics. He has published four books on health and
insurance and written more than 80 articles on these topics for national and international journals. He is also developing his own clinics
in Bekasi and other areas surrounding Jakarta, which can serve as models for BPJS compliant-clinics.

HEALTHCARE SUPPORTER

february 2013 FORBES INDONESIA | 19


//// healthonomics

Beyond Drugs
and Drugstores

A

Long known for its

drugstore chain,
Kimia Farma under
Rusdi Rosman is now

undergoing a major

expansion.
By Renjani Puspo Sari

20 | FORBES INDONESIA february 2013

s head of the oldest pharmaceutical company in the country,
President Director Rusdi Rosman of PT Kimia Farma has a legacy to
uphold. He was appointed May last year with a mandate to continue
ongoing reform of the state-owned firm and prepare it for the new
national health scheme, the BPJS, which will launch in 2014.
With roots tracing back to 1817, Kimia Farma has focused
mostly on pharmaceutical production and operating a chain of
pharmacies—call it drugs and drugstores—in its most recent years.
In 2001, it went public and just in the last four years investors have
bid up the stock by more than 400% in hopes of better days ahead.
Rusdi, who served formerly as Kimia Farma’s finance director,
has been busy implementing a major expansion program that will
be one of the biggest transformations of the firm in its near-two
centuries of existence. Kimia Farma is expanding into hospitals
and hotels, and upgrading its chain from simply dispensing drugs

KIMIA
FARMA

AHMAD ZAMRONI / FORBES INDONESIA

to providing a range of services along
with drugs.
If the transformation process
is successful, Kimia Farma should
emerge as a much more profitable
business. “The margin in the
pharmaceutical market is too low.
In the future, we foresee Kimia
Farma can become even bigger in
the healthcare, by combining our
drugstores with the other services,”
says Rusdi. Currently the firm has
net margins of 5% on revenues of Rp
4.06 trillion for 2012. In comparison,
privately held PT Kalbe Farma has
margins of about 13% on Rp 13 trillion
revenues estimated for 2012. Rusdi
says Kimia Farma is going to start
building 100 clinics and 66 outlets
in Java and other islands, as well as
opening hospitals and hotels.
The start of the new universal
health system known as the BPJS
should help the expansion plans says
Rusdi. The BPJS will allocate massive funds for raising the quality of
care, Rusdi says. Although BPJS will

initially affect mostly lower-income
communities, it will be gradually expanded to include all Indonesians by
2019. The Ministry of Health Affairs
may allocate as much as Rp 700 billion for training health workers and as
well adding hundred of thousands of
beds for hospitals and clinics.
This trend will play well with
Kimia Farma’s move into hospitals.
This growth will be done in a joint
venture with PT Prakarsa Transforma
that was signed in March last year.
Kimia Farma will own 60% of the venture and Prakasa Transforma the rest.
The joint venture will start with
the launch of a specialized liver
center in Jakarta, expected to open
this year with about 200 rooms. It will
be the first specialized liver center in
Indonesia. Total investment to build
the facility is estimated to be around
Rp 280 billion. Once this hospital is
finished, the joint venture will look to
open two more hospitals in Denpasar
and Makassar, followed by three more
in Bandung, Medan and Surabaya.

To build mass, Kimia Farma will also
acquire at least five more hospitals
owned by other state firms. Thus,
within a few years, Kimia Farma will
have gone from zero to 10 hospitals,

if all goes as planned. These hospitals
are generally run by state firms whose
core business is not in healthcare,
thus the idea is to consolidate these
hospitals under Kimia Farma to
allow for new efficiencies and better
medical care.
According to Rusdi, Kimia Farma
has actually long planned to expand
into the healthcare business but only
this year implemented the plan. Part of
the rationale for the expansion is that
hospitals, hotels and revamped pharmacies have higher margins and less
competition than the low-margin competitive field of making drugs, especially the type of generics and unbranded
types produced by Kimia Farma.

DEBT BUSTER
From 2008 to 2011, Kimia Farma has
slashed its debt by more than 80%.
(In billions of rupiah, for year to Dec. 31).

2011
25 billion
2010
48 billion

2009
68 billion

2008

150 billion

Source: www.markets.ft.com

The expansion plans are costly.
“You need to be bold to spend the
capital for new infrastructure. This
year, our capital expenditures are
really big at Rp 660 billion. Normally
we just spent Rp 60 billion,” says
Rusdi. He estimates Rp 400 billion
of this capex will be allocated for a
new plant in Jakarta while the rest is
going to revamp the drugstore chain.
The company did a rights issue last
year, selling 20% of new shares to the
public, to help fund new ventures.
Kimia Farma’s debt levels have also
declined, from Rp 150 billion in 2008
to well below Rp 50 billion today.
Stretching from Aceh to Papua,
Kimia Farma’s 436 drugstores will
soon be renovated to provide services
along with drugs. “Each outlet will
provide a minimum level of service,
equal to puskesmas [a local government clinic], a doctor, and operated in
24 hours. A higher end clinic will have
dental services and services for mothers and babies,” says Rusdi. The network is still expanding in size, Rusdi
notes, with the company now franchising them to speed growth. Kimia
Farma has about 10 franchises, including three outlets in Malaysia, in a joint

project with PT Averoes.
The expansion moves are already
paying dividends. Last year, the
company’s net profit exceeded
Rp 200 billion, a record amount.
Kimia Farma’s core business is
not without strengths. It is the only
company authorized to make medicines that contain narcotics. The
company also controls large plantations for quinine, a raw material in
many pharmaceuticals, and iodium
mining in Sidoarjo.
Rusdi knows there is some risk
in the expansion strategy. He notes
that Indofarma and Biofarma, also
state firms, are also under pressure
to raise their performances. As a
listed state-owned company, Rusdi
has to find a growth strategy to please
investors with an obligation to serve
the public interest in the healthcare
industry. F
february 2013 FORBES INDONESIA | 21


//// healthonomics

Extreme
Makeover

22 | FORBES INDONESIA february 2013

Marcus Pitt is revamping the Soho Group to
better compete as the healthcare system
undergoes its own transformation.
By Jeffrey Hutton

soho
group


AHMAD ZAMRONI / FORBES INDONESIA

D

uring his time
as a management consultant
working on behalf of pharmaceutical maker
PT Soho Group,
Marcus Pitt
would spend up
to half the year
traveling from
his native Melbourne, Australia for his client.
But three years
after taking over the helm of Soho
Group as its first expatriate president
director, he now spends virtually all
his time in Jakarta.
That’s because in the coming
months—if all goes to plan—the company will unveil an overhaul of its business: starting with a joint venture partner as early as this month, breaking

ground at its new factory, eyeing the
bond markets for the first time, and refreshing many of its products. And all
this before capping it off with an initial
public offering slated for 2015.
The efforts underscore the coming shakeup in Indonesia’s Rp 43 trillion pharmaceutical market. As the
government plans to roll out universal
healthcare under the BPJS scheme,
Soho risks losing share to rivals if its
products and services aren’t what the
doctor ordered. “This is about the
pharmaceutical industry providing a
huge increase in the volume of product to healthcare providers,” Pitt says.
And there’s plenty of room
to grow. Indonesian spending on
healthcare is just 2.4% of GDP versus
6% for the world average according
to the World Bank. By 2016, 87
million more Indonesians will join
the ranks of the middle class—making
at least $5,000 a year—compared
with the number in 2010, according
to drugmaker Novartis. Combined,
these various factors mean a major
expansion of the healthcare industry
is on the way. To be sure, such juicy
prospects have drawn increased

competition from domestic and
international healthcare players,
chipping away at Soho’s annual rate

of revenue growth from 24% in recent
years to around 17% expected for
the year to December 2012, which
are currently at $420 million (Soho
is still majority owned by Tan Eng
Liang, the son of the founder who
started the company in 1946).
By the end of the month, Soho
plans to unveil a joint venture with
a partner who will buy around 40%
of Soho subsidiary Ethica, Indonesia’s first maker of injectable drugs.
The aim, as Pitt explains, is to tap into
the partner’s research and development expertise and their portfolio of
drugs, paving the way toward developing cancer-fighting medicines and
treatments tailored to a patient’s genetic makeup. In exchange, Soho will
provide the partner with access to the
Indonesian market, including Soho’s
network of 1,500 marketing representatives in the country. There has been
no lack of suitors, say bankers working on the deal. “The group is compelling. There’s been a lot of queries,”
says Barclay’s Gomos Silitonga.
Soho is also slated to start work
on a new sterile production facility
at a 20-hectare site in Bekasi, then
gradually moving staff from its
current factories in East Jakarta.
Future products planned with the
joint venture partner will also be
made on the site. Tougher domestic
and international drug regulation,
longer approval processes for drugs

as well as stiff price competition has
added to the company’s incentive
to find a joint venture partner, Pitt
explains. Increasingly government
agencies are leaning on drugmakers
to keep a lid on price increases and
force potential providers to compete
for contracts through online open
tender contracts. “Right now and
into the future, it’s getting more
sophisticated and more challenging
to make those products,” Pitt says. “It
makes sense for us to find a partner
where we can work together.”

Indonesian
spending on
healthcare is
just 2.4% of GDP
versus 6% for the
world average
according to the
World Bank.

The company is aiming to appoint advisers later this year to guide
it toward an initial public offering in
the next two years to raise funds for
manufacturing and expansion plans,
Pitt says. The company is also mulling selling bonds to replace more expensive bank debt. “We’re testing the
waters,” Pitt says about selling bonds.

Soon after taking over as head
of Soho, Pitt put human resources,
information technology and corporate
finance for the group under the
control of the holding company. Other
changes include refreshing its line
of dietary supplements including
Diapet Anak, giving its brand and
packaging a new look. Rising incomes
and a fickle young buyers are pushing
Soho to make its health supplements
stand out. Examples include overthe-counter medicine in powder form
rather than in pills, and new flavors
for energy drinks.
The main point of Pitt’s work is to
grab more of the rising middle
classes’ disposal income. “The
drivers, the security guards, they’re
starting to get a little bit more money
now and they’re more likely to spend
it,” says Rogelio La O, managing
director for consumer health products. Expanded medical coverage and
more disposable income will put
nimble companies in the sector in the
driver’s seat, Rogelio says. “We’re at a
tipping point. Everything in this
market is about to open.” F
february 2013 FORBES INDONESIA | 23