Asia's Wealth Club 1857881621, 1864484020

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who in business the top 100 Billionaires in I §

E R

Hiscock

First published in Great Britain, the United States and Asia by Nicholas Flrealey Publishing Limited in 1997

36 John Street London WCIN 2AT, UK

17470 Sonoma Highway Sonoma California 95476, USA

Tel: +44 (0)171 430 0224 Fax: +44 ron71 404 8311

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Text © Geoff Hiscock 1997 Portrait illustrations by Eric Liibbecke © Nicholas Brealey Publishing Limited 1997 The right of Geoff Hiscock to be identified as the author of this work has been asserted in accordance with the Copyright, Designs and Patents Act 1988. UK ISBN 1-85788-1624 British Library Cataloguing in Publication Data

A catalogue record for this book i.s available from the British Library. Library of Congress Cataloging~in-Publication Data Hiscock, Geoff Asia's wealth club : a who's who of business and billionaires /

Geoff Hiscock.

P-

cm.

Includes bibliographical references and index. ISBN 1-85788-162-1 (he)

1. Billionaires--Asia--Biography. 2. Businesspeop1e--Asia-Biography. 3. Upper cla.ss families--Asia--Biography. I. Title. HC411.5.A2H57 1997 3U5.5'234'09225 [B]--DC21

I

97-9103 CTP

Iuintly published in Australia with Allen 8: Unwire

9 Atchison Street, St Leonards NSYA' 2065 Australia Tel: (612) 9901 4088 Fax: (612)9906 2218 http: / Iwww.alle¢n-unwin.com.au National Library of Australia Cataloguing-in-Publication Data ISBN 1 86448 402 0 338.709225 A catalogue record for this book is available on request.

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording a d / or otherwise without the prior written permission of the publishers. This book may not be lent, resold, hired out or otherwise disposed of by way of trade in any form, binding or cover other than that in which it is published, without the prior

consent of the publishers. Printed and bound in Great Britain by

Biddle Ltd, Guildford and King's Lynn.

Contents Map Acknowledgements

vi viii

Part One: Who? Really VV-ho In Business

l The Nature of Guar xi 2 Starting with Food .... from Seeds to Satellites 3 The Fujian Connection 4 5 6 7 8 9 10

2 19 27

Filipino Money-Go-Round

41

Hong K o n s Land Barons

52

Star Wars - the Thirst for Water and Lnformation

65

Malaysia's Power Plays

74

Korean Car Wars

84

Singapore Laps up the Luxury

105

'First Family' Fortune - the .. Suharto Children

114

I I A Sultan's Wealth Beyond Measure

127

1 2 India's New Money, Of d, Tensions 1 3 Billi on-Dollar Babies the Next Generation

135

- .

144

Pafft Tif/0: The Wealth Club Explanatory Note Profiles of the Top 100 Billionaires in Asia

160 166

Notes and References Bibliography Index

302

294

304

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Household incomes above US$1000, 1995-2000 Market

1995 Households in millions and % of total

Japan South Korea

49.6 11.1 5.6

91

Hong Kong

1.3

73

Singapore Malaysia Philippines Thailand Indonesia China India

0.8 0.8 0.4

15

Taiwan

0.8 0.9 6.8 4.5

79 85

78 2-5

4.5 1.8 1.8 1.9

2000 Forecast

Annual

households (m) average market

and

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of total

growth (%)

53.2 12.4

96 85

1.4

6.2 1.4 1.0

90 77 88

2.1 4.4

1.8 1.1 2.0 2.5

30 6 11 4.5 5

17.5 20.9 20-9 22.2 25.0

6.5

29.8

20.8 16.6

2.4 1.1.

Source: EIU Country Forecasting Service

outskirts of Manila is for cheap-as-chips shoppers, Go wants volume, volume, volume, so that he can keep prices way down for his customers. With per capita income still only USIB1100 a year - compared with US$4000 in neighboring Malaysia and US$2700 in Thailand - Go figures that the Philippines' 70 million people will have a large low-income component for many years

to come. Go and Gatchalian provide a striking contrast to Villar. Where Villar has had a single rinded desire for the past 20 years to become the world's biggest home-builder, Go and Gatchalian have seen a life outside property. Both have a fascination with aviation; Go has his own helicopter for flitting between his six shop~ ping malls and. his own slice of the upscale action the Evercrest golf resort outside Manila and the Evercrest White Cove beach resort in Batangas province6 .--

For his part, Gatchalian launched into aviation with Air

46

As1A"§s WEALTH. CLUB

Philippines in March 1995. He set up the domestic carrier for a tilt at one of the Philippines' biggest taipans: Lucio Tan (another Xian en immigrant), who controls the long~established Philippine Airlines. Another domestic carrier with overseas aspirations, Grand International Airways, appeared at about the same time. One year later, there was even more competition for Tan and Gatchalian in the shape of John Gokongwei, who established Cebu Pacific Air as a low-cost, no-frills airline, with a declared ambi.tion to be PAL's main rival within. five years. The competition from Gokongwei was an interesting counterpoint. Gatchalian holds a sizeable stake in Philippines Commercial International Bank, which is controlled by John Gokongwei and media tycoon Eugenio Lopez [69]. Gatchalian's bu.siness spread. is nothing if not diverse' besides property, aviation and banking, .his interests extend to plastics, energy, exploration and cocoa estates. His land bank includes 3' low'-cost housing estates in the provinces of Cavite, Bulacan and Cebu, an.d more upmarket projects in central Manila such as the 37 hectare New City Plaza commercial centre. Gatchalian is yet to crack the billionaire status, but claims to be closing fast on his property role models like Gokongwei and the other mall-master, Henry Sy. Fujian-born Sy, acknowledged as the nation's retail king with nine department stores and five malls in h.is flagship SM chain, built the Philippines' first mega-mall, SM City in 1985. That was such a huge success that h.e quickly followed with more, including the SM Megamall in Manila's

Mandaluyong city At 1500 metres long and. six storeys high, it is Asia's biggest mall; more than 300,000 people drop in daily to gawk, shop and plays Sy pulls the crowds with a combinaticm. of entertainment (cinemas, video game halls, ice-skating), a huge range of goods and relatively low prices." It wasn't always like this for So In 1937, aged 12, he emigrated from Fujian with his parents, worked in the family store in Manila and later, while studying at university, made his first business foray with a shoe-selling operation after the war. In 1948 he opened his first shoe store and by 1960 had created ShoeMart -

FHIPINO MONEY-GO-ROUND

47

the forerunner of his SM empire today that includes the listed SM Prime Holdings (operator of the malls) and listed SM Fund, which he said in March 1996 would be transformed from an investment fund into a property and development company to be known as SM Development. A third listed company is Fortune Cement. So took SM Prime public in June 1994, raising 4.7 billion pesos in an initial public offering. The Sy family still holds a massive S per cent of the shares, worth more than US$2.0 billion on SM Prime's market capitalization of US$2.6 billion in early 1997. Sy's main vehicle is his 100-per-cent-owned holding company, SM Investments Corp, which covers a spread of more than 25 companies in seven main business sectors: retail merchandising, malls, banking and finance, securities, real estate, manufacturing, and tourism and entertainment, Sy, like most of his entrepreneur colleagues, has a controlling interest in a bank. In. his case it i.s Bar co de Oro, but in addition he has amassed a controlling 14 per cent stake in China Banking Corp, and smaller stakes in Far East Bank Hz Trust Co (controlled

by Gokongwei) and Philippines National Bank. He also holds part of the property-based Ayala Corporation." Sy's six children (four sons, two daughters) all have a specific

or

role in the business- Henry looks after real estate, while the eldest child and Sy's apparent successor, Teresita Sy-Coson, 43, is president of Shoemart Inc and Bar co de Oro. While Sy's offshore

investments include a property development in the family's ancestral home of Xian en in China's Fujian province, the

Philippines remains his focus. In May 1996 he announced four new malls to open in 1997-98, including three in Metro Manila and one in lloilo in the central Philippines. At the SM Group's Manila Bay reclamation project, Sy said that he would build his biggest mall yet

.

-

the Mall of Asia, destined to be the centrepiece

of the 60 hectare commercial and residential "Boul evard 2000' project along Rotas Boulevard-" Despite newcomers like lose Go and William Gatchalian, Sy's main competitor in the mall wars has always been John Gokongwei, the Cebu~born ethnic Chinese tycoon who built his

48

AS1A'S WEALTH CLUB

'Ln

first mall in Manila 1987, two years after Sy's SM City. In the turbulent days after the fall of President Ferdinand Marcos in 1986, real estate in the Philippines was cheap but there were few takers. Gokongwei saw the potential and bought land in the nowbooming Ortigas business district, where he built his Robinson's Galleria mall. Today, it draws 40 million shoppers a year. Gokongwei was born in 1927 into a wealthy trading family originally from China." Gokongwei's grandfather Pedro Gotiaoco set up Cotiaoco Hermanos in the nineteenth century and built it into one of the biggest enterprises in Cebu. But the family fortune was lost during the war and by the 1940s it was Gokongwei's responsibility to feed six siblings during the difficult years of the Japanese occupation. He started his business career as a small wartime trader, buying and selling rice, cloth, scrap metal - anything he could get his hands on. After the war, he moved into food processing, initially setting up a cornstarch factory called. Universal Corn Products with his brothers. From there he ventured into textile production, property development, retailing and, later, banking, aviation, petrochemicals, infrastructure and telecommunications. Along the way, Gokongwei managed to give himself a decent education, with an MBA from De La Salle University, and attendance at Harvard Business SchooI"s advanced management program. Gokongwei even made a tilt at the nation's biggest blue-chip corporation, San Miguel, in the 1970s, but was rebuffed by the controlling Soriano family after building - and later selling - a 4 per cent stake."

His holding company for a host of subsidiaries and affiliates is the listed ]G Summit, which had a market capitalization of 1US5E1 .2 billion in early 1997. Other companies in the Gokongwei stable are listed Universal Robina Corp, listed Robinson's Land Corp, PCI Bank, ,PCI Insurance Brokers, PCI Capital Corp and Philippine Commercial Credit Card Inc. In 1993, Gokongwei moved quickly when an opportunity opened up to grab the 40 per cent stake of British-based Cable and Wireless in the new phone company Digitel Telecom. He built that into a controlling 57 per cent stake and the presidency of Digitel, which he said in August

FHJPINO MONEY-GO-ROUND

49

1996 had an expanding subscriber base that would make it the nation's second largest carrier after Philippine Long Distance Telephone (PLDT).12 His power and oil interests are through 20 per cent stakes respectively in First Philippine Power Corp (with old partner Eugenio Lopez) and Oriental Petroleum and Minerals Corp. Gokongwefs latest property developments include Robinsons Tower, a 30,000 square metro block in Makati, and the 81,000 square metre PCIB Tower in Ortigas. Gokongwei's brothers Henry, Ignacio, Johnson and James and sister Lily work in the business with him in Manila and. at home base in Cebu, as do his children, including daughter Robina, after whom his good company Universal Robina Corp is named. Hi.s son, Lance, born in 1966 and a graduate of the University of Pennsylvania's Wharton School of Finance in the United States, is senior vice-president of JG Summit and heir apparent. The Gokongwei family fortune is reckoned to be around us$i.3 billion. With about the same level of wealth and aspirations as the Gokongwei clan are Andrew Gotianun Sr [63] and his family, who control the nation's seventh largest listed company, Filinvest Development Corporation (FDC). Gotianun has a lock on one of the Philippines' biggest property developments: a joint venture deal with the government, covering a 244 hectare site 15km from Makati at Alabang (between Metro Manila and the rapidly ind.us~ trializing Calabarzon area to the south), where it will build a glamorous 'Corporate City'. This massive development, predictably enough, includes a 3 billion peso, 20 hectare shopping mall called

Festival Supermall, designed to win business from Henry Sy and John Gokongwei in the continuing mall wars of the 1990s. Gotianun describes Filinvest Corporate City (80 per cent owned by FDC) as the company's flagship effort and by far its largest project to date." But equally important in the revenue stakes could be Pilinvest's 16 per cent stake in the massive Fort Bonifacio Global City project, which is converting an old military camp in the heart of Manila into prime commercia I. and residential property. Leader of the consortium which successfully bid US$l.6 billion for Fort Bonifacio in January 1995 (ousting the

50

A5IA"S WEALTH CLUB

Ayala clan's bid along the way) was Metro Pacific, controlled by Indonesian tycoon Liem Sloe Liong's Salim Group. Along with Gotianun, Metro Pacific's partners included another substantial Filipino-Chinese tycoon, Lucio Tan. Fort Bonifacio Development Corporation chief executive Ricardo Pascua, formerly with Metro Pacific, said that the Global City project would eventually be three times the size of Makati, with more than 9 million square metros of office and. residential space. Almost two years after winning, Pascua recounted how the

consortium came to bid the precise amount of 33,283.88 pesos per square m.etre. With help from First Pacific's Cantonese treasurer, David Wong, the group worked out some 'nice numbers' in Cantonese that gave the bid the highly focused meaning of 'business-business~easy-money-business-money-money'. So, despite t.he traffic gridlock and inadequate services that hinder Manila's development, the property race is on between Port Bonifacio, Gotianun's Corporate City at Alabang, and Henry Sy's Boulevard 2000 along Roxas Boulevard. Gotianun, who started in business in 1955 by financing used cars, moved into other areas of consumer financing in the l960s, and in 1970 started the Family Savings Bank. By the time the family divested it lil years later, it had grown into the largest savings bank in the Philippines. The Laotian u s now control a commercial bank, the East-West Banking Corp. In May 1996 Andrew Gotianun Sr, who had been appointed chairman of Fort Bonifacio Development Corporation early in

1995, decided that Alabang would need his full-time attention in his capacity as FDC chairman and president. He resigned the presidency of FDCs 70-per-cent-held real-estate subsidiary Filinvest Land Inc in favour of his wife Mercedes, so that he could concentrate on FDC1 Amid the frantic pace of Filipino-Chinese real-estate projects, the conservative Ayala Corporation [34] seem .S to be almost glacial in its approach, even with a youthful president, Jaime Augusto Zobel de Ayala II, at the helm. Harvard-educated Mr Zobel, or JAZA, was just 36 when he

PIIJPINQ MONEY-GO-ROUND

5]

took over from his father, Don ]ai.me Zobel de Ayala, in a smooth transition at the start of 1995.15 That is simply the style of this oldest and richest of the Ill:-tstrados families. Through its 160-year history, the Ayala Corporation has ha.d to steer through some rough political and commercial waters, but has always managed to do so with a minimum of fuss. Even when Ayala Land Inc (ALI) lost out to Metro Pacific early in 1995 in the Fort Bonifacio 'deal of the century', Mr Zobel was not too concerned. 'No regrets' was his simple summary of the result. A year later, h.e had good reason to be pleased: Ayala Corporation reported a record net profit in 1995 of USS5209 million, mainly on the s t r e t c h of a massive US$120 million profit contribution (up 44 per cent) from Ayala Land. The 1996 result was even better group net profit rose 14 per cent to US$236 million. Mr Zobel's father, Don Zobel, spent 36 years with Ayala Corp, including an 11-year term as president that covered the difficult years of the Benign Aquino assassination, the fall of Marcos and the economic disasters of the late 1980s. lust before he stepped down, he called for a greater sense of teamwork in the private business sector.'" -...-

The Ayala family (estimated net worth US$2.3 billion) has interests in real estate, banking, hotels, agribusiness, financial services and insurance, electronics, aviation and telecommunications. The group's 15 subsid.iari.es i.nclude Ayala Land, BPI, Pure Foods Corp, Globe Telecom (a joint venture with Singapore

Telecom), Ayala Life Assurance and Ayala Systems Technology Ayala Land (market capitalization US$6.6 billion in early 1997) is expected to remain the biggest contributor to the family's wealth.. It is developing a complex of high-tech office buildings, starting with Tower One, called the Ayala Triangle in Makati, the glamour financial district that it largely transformed from swamp-

land into Manila's most prestigious address. And long term, Ayala is eyeing a large tract in Canlubang, 50km south of Manila, for a showpiece residen.tial estate. As always, this oldest of clans takes the long view when it comes to creating wealth in the Philippines.

Hong Kong's Land Barons

In our society, yesterdays hawker can be fodny's millionaire; and if he over-reaches his cashflozo and is forced back to his street stall to begin all over again, nobody will think the worse of him but will adrrzire his courngefor trying that hard. Sir David. Ford, Hung Kong Chief Secretary, 1987-931 I-IILE THE FILIPLNO-CHINESE WERE FAST REDEVELOPING METRO

Manila and its environs, their relatives in Hong Kong were contemplating property developments and infrastructure projects of staggering size, such as the US$5 billion airport railway station. project in the Hong Kong central business district. Infrastructure kings like Cheng Yu-tung [37], Lee Shan-kee [4] and Li Ka-shing [6], while targeting the emerging Chinese market,

found that Hong Kong still had plenty to offer. The Chek Lap Koch airport, due to open in 1998, and the associated road, rail, tunnel, bridge and office space projects that go with it, have created one of the biggest building opportunities of the 1990s. The developers who stood ready to share in the spoils of Hong Kong's appetite for advancement in the 19905 had themselves grown large from a succession of postwar land booms and busts. These land barons knew the secret: buy position and b u y amid turmoil, when those around you tear a falling market.

Hong Kong's first land baron, a luckless British naval officer by

Hon(;; KONG/S LAND BARONS

53

the name of Captain Charles Elliot, preceded the billionaire developers of the late twentieth century by more than 120 years. In 1839 Elliot was Superintendent of Trade -- the senior British Government representative in the southern Chinese city then known as Canton (Guangzhou) when the new Chinese Commissioner, Lin Tse-hsu, laid siege to the foreign factories for six weeks. Commissioner Lin, in a bid to stem the illegal but lucrative opium trade into China, demanded that the foreigners surrender their opium stocks. He surrounded their factories, cut off their food and forbade anyone to leave. In the end, Lin got what he wanted -- 20,283 chests of opium were surrendered and destroyed? Predictably, Lin's action infuriated the British Foreign Secretary, Lord Palmerston, who demanded either a commercial treaty to regulate the trade relationship with China, or a small island which could serve as a home for the British, free from harassment. Palmerston's demands precipitated the first Opium. War (1840-42), during which the island of Hong Kong was ceded to the British under the treaty of Chuenpi on 20 January 1841. Elliot took possession of the island and by June was selling off the first plots. Thus began foreign settlement on the barren rock which had seen evidence of human activity mainly maritime based for 6000 years. Although the Chinese Emperor had ceded Hong Kong to .--

Britain's Queen Victoria 'in perpetuity', Palmerston was not

happy with the deal achieved by Elliot. Hong Kong was not the island of his dreams

- h.e saw it simply as

a 'barren island with

hardly a house on it'. For his sins, Captain Elliot was replaced in 1841 and admonished by the imperious Palmerston, who declared: 'You have treated. my instructions as if they were waste Pape1`_13

Waste paper or not, Elliot's successor Sir Henry Pottinger held on to the island and ensured that it would become the main trading post with China. By 1860, after the second Sino~British war, land on the Kowloon side had also been ceded to Britain, and in

54

A5IA'5 WEALTH CLUB

1898, the New Territories were leased for 99 years.

From just over 30,000 people in 1851, the population rose to 880,000 in 1931 - 97 per cent of whom were Chinese. The south~ ere advance of the Japanese into China in the late 1930s sent 750,000 more refugees streaming into Hong Kong between 1937 and 1939, so that by the time Hong Kong itself was attacked by the Iapanese in December 1941, 1.6 million people were in the colony. By war's end the population was down to 600,000, but it rapidly built up again in the late 1940s. When the communists gained the upper hand in the Chinese civil war with the nationalists, another wave of humanity reached Hong Kong. Hundreds of thousands of refugees fled from Shanghai, Guangzhou and other big cities along the South China coast, 'boosting Hong Kong's population to more than 2 million by 1950.4 Then the real work began, of developing a city that could sustain this population. One of the keys to its entrepreneurs' success in those early years was their ability to tap into funds - gold and cash from family sources, or from clan, guild and dialect net~ works, and even from the formal financial world represented by banks like the Hongkong and Shanghai Banking Corporation. By 1996, Hong Kong was home to 185 licensed banks, including 81 of the world's top 100 banks. Despite misgivings about the July 1997 handover to China, business confidence generally was high, and top bankers like Vincent Cheng downplayed any threat to Hong Kong's pre-eminence as the region's financial centre. Shanghai, he said, could never adopt Hong Kong's way of life.5

Cheng, the Hongkong Bank's executive director, sat in his office overlooking Victoria Harbour in mid-1996 and ticked off the slings and arrows of Hong Kong's outrageous fortune over the preceding half a century. It was a sobering list: riots in 1954 and 1957, a bank crisis in 1964; the spillover of the Cultural Revolution in 1967; an energy crisis in 1975; a loss of confidence during the Sino-Bri tish talks of 1982-84, the stock~market crash of 1987, the Tiananmen Square massacre of 1989; and the political arguments of 1993-95. 'The point is, we have seen ourselves weather all these

HONQ, KONC'S LAND BARQNS

55

problems, but economic growth continues. In the same way, we will get through 1997 because the economic fundamentals are still sound/ Cheng said. Adaptability and a willingness to change have been the secrets of Hong I