Jalan Gaya Motor Raya No. 8
Telephone: (62) 21-652-2555
Fax: (62) 21-651-2058
Sales: IDR 30.68 trillion ($3.73 billion) (2002)
Stock Exchanges: Jakarta Surubaya
Ticker Symbol: ASII
NAIC: 336111 Automobile Manufacturing; 321113 Sawmills; 325131 Inorganic Dye and Pigment Manufacturing; 517110 Wired Telecommunications Carriers
PHILOSOPHY: 1. To be an asset to the nation. 2. To provide only the best service to our customers. 3. To respect individuals and promote teamwork. 4. To continually strive for excellence. VISION: 1. To be one of the best managed corporations in the Asia-Pacific region with an emphasis on building competence through human resources development, solid financial structures, customer satisfaction and efficiency. 2. To be a socially responsible corporation and to be environmentally friendly.
1927: Chevrolet founds KN Gaya Motors as its entry into the Asian market.
1954: The Indonesian government takes full control of Gaya Motors as GM exits the country.
1957: The Soerydadjaya family founds Astra International as a grocery trading company and then expands into imports of asphalt and construction materials.
1967: Astra is granted an import license by the new Suharto-controlled government; the company begins importing trucks for sale to the government.
1969: Astra pays $1 million to acquire 60 percent of KN Gaya Motors; the company begins assembling cars for Toyota.
1971: The company receives an exclusive license for Toyota in Indonesia, forming a Toyota-Astra joint venture.
1972: Astra begins production of car batteries.
1985: Astra begins to export company-manufactured automotive components, including spark plugs and Toyota car engines.
1990: Astra International goes public with listings on the Jakarta and Surubaya stock exchanges.
1992: The Soerydadjaya family loses control of Astra International.
1995: Astra begins to diversify its operations by acquiring palm oil, rubber, and other plantations.
1998: The collapse of the Suharto regime and Indonesian economy places 45 percent of Astra under the Indonesian Bank Restructuring Agency (IBRA).
2000: IBRA sells 40 percent of Astra to a consortium led by Cycle & Carriage Ltd.
2003: Astra sells 46 percent of its holding in Toyota-Astra's manufacturing operation, as it restructures around its automotive distribution and motorcycle businesses.
PT Astra International Tbk is one of Indonesia's largest diversified conglomerates. The company's operations have long centered around its core automotive manufacturing and distribution business, which remains its largest division, at nearly 83 percent of total sales of IDR 31 trillion ($3.7 billion) in 2002. The opening of Indonesia's import market at the dawn of the 21st century, especially to fellow ASEAN economic community members, has forced Astra to adapt--in May 2003, the company sold off nearly all of its holdings in its longtime automotive manufacturing joint venture with Toyota. The move, the proceeds of which were earmarked toward paying down the company's $1 billion in debt, refocused Astra primarily on its automotive sales and distribution network, which remains the largest in Indonesia. The company holds the exclusive distribution rights to Toyota (the country's biggest selling brand), Peugeot, Daihatsu, BMW, Isuzu, and Nissan. The company also maintains manufacturing operations for certain Daihatsu and Isuzu vehicles, as well as the exclusive manufacturing and distribution rights for Honda motorcycles, the leading motorcycle brand in the country. Other Astra divisions include Financial Services, mostly to finance automobile purchases, which accounted for 5.4 percent of sales in 2002; Agribusiness, which produced 6.6 percent of sales; heavy equipment manufacturing and wood-based production, which together added nearly 2.5 percent of sales. Nearly all of the company's operations are focused on the Indonesian market. The shakeup of the country's government, including the forced resignation of former President Suharto, has brought new leadership to Astra as well, in the form of Budi Setiadharma, who serves as President Director. Astra International is listed on the Jakarta and Surubaya stock exchanges.
From Juice to Cars in the 1960s
Astra International was founded in 1957, based on a small trading business operated by brothers Tjia Kian Tie and William Soerydadjaya, part of an ethnic Chinese family that had already lived in Indonesia for several generations, adopting the "Muslim" name of Soerydadjaya. The family had begun its trading activities by the 1940s, when it helped supply Indonesian forces, including troops led by Suharto, during the Indonesian war of independence in the 1940s. William Soerydadjaya also enjoyed personal ties with Sumitro Djojohadikusumo, long the country's top economist. The brothers' company initially operated as a distributor of fruit juices and other agricultural and grocery goods, before adding a small export business as well.
Astra's fortunes took off in the early 1960s, with the massive modernization program initiated by then-president Sukarno. Astra entered the import sector, focusing on asphalt and other construction materials needed for Sukarno's public works development effort. Although the Soerydadjaya family remained politically neutral--and built much of its later business empire on its reputation for integrity--it nonetheless carefully adhered to government economic policy.
The rise to power of Suharto in the mid-1960s represented new opportunities for the Soerydadjaya family. While avoiding the cronyism that marked much of the Suharto regime, the Soerydadjayas nonetheless benefited from their earlier support of the Indonesian independence movement. Therefore, in 1967, the company was granted a prized import license, backed by the U.S. government. Initially the company attempted to import electrical generators made by General Motors Corporation (GM), a move that ended amid red tape. Instead, Astra replaced its generator order with GM with a fleet of 800 Chevrolet trucks, which Astra then sold to the Suharto government.
The government then turned to Astra for help in rescuing PN Gaya Motor. Originally established in 1927, Gaya Motor served as Chevrolet's entry into Southeast Asia, operating an assembly plant for Chevrolet vehicles. GM pulled out of Gaya Motor in 1954 with the coming to power of Sukarno's pro-Chinese government, and Gaya Motor then became government owned. By the end of the 1960s, a lack of investment had left Gaya Motor in poor condition, with outmoded production facilities and limited investment funds.
Astra agreed to purchase a 60 percent stake in Gaya Motor in 1969, paying more than the equivalent of $1 million. The move brought Astra into partnership with the Indonesian government. At first, Astra expected to continued to operate under an exclusive assembly and distribution relationship with Chevrolet. That contract, however, was denied the company. Instead, Astra began assembling cars for another, younger carmaker, Toyota Motor Corporation, which was just then seeking to enter the Indonesian market.
By 1971, Astra's connections with Sumitro--then Minister of Trade in charge of allocating the country's exclusive import agency contracts--received the rights to form the joint venture PT Toyota-Astra Motor, which became the exclusive agent for that automotive brand in Indonesia. Once again, Astra responded to the government's economic policy, which focused on so-called "Import Substitution Industrialization," encouraging the growth of industry by requiring that finished goods destined for the Indonesian market be assembled in Indonesia itself, which was backed by restrictions on imports of finished cars imposed in 1969.
Astra quickly built up a list of exclusive agency contracts, adding Honda motorcycles in 1970, Peugeot/Renault in 1972, and Daihatsu in 1973. By the end of the decade, the company had succeeded in capturing some 40 percent of the total Indonesian automobile market.
The company also branched out into office equipment, assembling for Fuji-Xerox in 1970 (and becoming sole agent in 1976). The company became the exclusive assembler of heavy equipment in 1972, adding the Komatsu brand in 1973. The company's rise was aided by new legislation, which included an outright ban on finished car imports by 1974 and an earlier ban on foreign investments in the country's growing automotive industry. (The Astra-Toyota joint venture was allowed to remain because it had been formed prior to the ban.)
Manufacturing in the 1980s
The Suharto government had by then begun to encourage the development of a full-fledged manufacturing industry, enacting legislation favoring the localization of car and motorcycle components. Astra responded by setting up the production of automotive batteries and motorcycle frames by 1973. By the end of the 1970s, the company had added production of electrical equipment, shock absorbers, Toyota car bodies, and car bodies for Daihatsu as well.
Into the 1980s, Astra's range of component production grew to include chassis frames in 1980, brake systems in 1981, rear axles and propeller shafts in 1982, transmissions in 1983, as well as engine assembly for both Toyota and Daihatsu vehicles. By then, the government's attention had broadened to establishing an export market for the country as well. Astra's response was to begin exports of a number of automotive components, including spark plugs and car batteries, as well as Toyota engines and Komatsu forklift frames.
Astra relied on the creation of joint ventures, chiefly with Japanese companies, in order to develop its export operations. The company quickly diversified beyond its core automotive operations, adding computers, televisions, and even, in the early 1990s, semiconductors. Meanwhile, the Soerydadjaya family, and especially William Soerydadjaya's son Edward, had expanded the family's fortune, through Summa International, into a number of new areas, notably property development, tourism, and, in 1989, banking, with the creation of Bank Summa.
By then, Astra had added a number of new brands to its exclusive automotive business, including Fiat, Isuzu, BMW, and Nissan Diesel. These new agencies allowed Astra to capture nearly 50 percent of Indonesia's fast-growing automotive market. Indeed, the country's steady economic growth had created a rising middle class as well as a high-flying wealthy class. At the same time, purchases of motorcycles became widespread among the country's large working class. Astra's control of Toyota and Honda gave it Indonesia's top-selling car and motorcycle brands.
Astra went public in 1990, listing on the Jakarta and Surubaya exchanges. The Soerydadjaya family retained control of the company, with more than 82 percent of its shares. Yet a shadow had begun to form across the family empire. Edward Soerydadjaya's expansion spree had saddled Summa International with debts of more than $350 million--debts that were backed up by the family's stake in Astra International. When Bank Summa collapsed, the Soerydadjaya family lost control of the company it had founded.
Astra then came under control of the Suharto family and its allies, although its management remained, for the most part, in place. William Soerydadjaya had long pursued a number of "modern" management techniques, including a policy of hiring top managers from outside of his own family. Faced with the impending end of the ban on imports of finished cars, which went through in 1993, Astra took steps to improve its own operating efficiency, boosting factory production levels to almost 100 percent capacity. Nonetheless, the Indonesian market remained protected, with import tariffs on automobiles based on the percentage of locally produced parts in the finished car.
Refocusing in the New Century
In the 1990s, Astra turned to a massive investment program to boost its component production, spending more than $800 million through the end of the decade, with another $300 million pledged at the beginning of the next. The investment was part of an effort to boost the technological scope of its automotive production, with the ultimate goal of creating a full-fledged Indonesian car, in response to the Suharto regime's desire to see the creation of a "national" automobile brand.
Astra's Japanese partners proved less than willing to transfer the necessary technology to the company. At the same time, terms of Astra's exclusive agency contracts for the most part barred it from exporting its production beyond Indonesia. Yet the Indonesian market remained relatively small and increasingly vulnerable to the volatile economic climate of the mid-1990s.
Astra took steps to reduce its reliance on the automotive market, which accounted for 80 percent of its sales in the late 1990s, by extending into a variety of diversified areas, including an entry into the agribusiness industry with the purchases of a number of palm oil, tea, rubber, and cocoa plantations in 1995. The company also expressed an interest in moving into the telecommunications sector.
Astra expansion had placed it deeply in debt, and especially burdened by a large load of foreign debt. The collapse of the Asian region's economies and the drastic devaluation of Indonesia's rupiah left Astra unable to pay off the $2 billion in foreign debt that had come due. At the same time, Indonesia slipped into recession, slashing automobile purchases, and sinking Astra into losses of some $200 million by 1998. In that year, the ouster of the Suharto regime placed that family's 45 percent stake in Astra under the control of the Indonesian Bank Restructuring Agency (IBRA), which had been charged with disposing of assets seized after the collapse of the country's banks.
Astra, which came under the leadership of Rini Suwandi (backed by the Suharto family) managed to restructure a large part of its debt payments, staggering them out over a seven-year period. By 1999, the company was once again posting profits. It also had been approached by a suitor seeking to acquire the company, the U.S.-based Newbridge & Gilbert, which happened to be advised by another Soerydadjaya son, Edwin (and who was slated to take Astra's CEO spot on completion of the opposition). Yet Suwandi blocked Newbridge & Gilbert's due-diligence efforts, and the takeover fell through.
In response, the IBRA sacked Suwandi and replaced him with Theodore Rachmat, who had served as Astra's president director and remained an ally of the Soerydadjaya family. By then, Astra faced a new threat, when the Indonesian government, which had joined the ASEAN Free-Trade Area, eliminated preferential tariffs for the country's automobile market. As it now became less expensive to import automobiles than to make them in Indonesia, Astra announced its intention to phase out its automobile and components manufacturing operations in favor of boosting its automotive distribution operations.
The IBRA at last found a new suitor for Astra in 2000, selling 40 percent of the company to a consortium led by Cycle & Carriage Ltd., based in Singapore and controlled by Hong Kong's Jardine Strategic Holdings. Cycle & Carriage, which also distributed Mercedes-Benz cars in the region, had long sought to acquire Astra, making several offers during the 1990s.
Under its new president-director, Budi Setiadharma, Astra restructured its operations, slashing its payroll and selling off a number of its holdings in an effort to reduce its debt still further. By the end of 2002, the company had succeeded in pushing its foreign debt down to $800 million, as well as rescheduling payments on some $200 million that were then due.
In February 2003, Astra launched a successful rights issue, raising more than $160 million--including $80 million from Cycle & Carriage, which boosted its own shareholding to more than 34 percent. That month, the company's longtime partner agreed to inject $180 million into the PT Toyota-Astra joint venture in order to expand its production capacity. Yet that agreement became merely a prelude to Astra's next deal--the sale of 46 percent of its stake in the joint venture to Toyota, leaving the company with just 5 percent. Astra then used the $226 million from the sale to pay down its debt. As part of the agreement, the two sides split Toyota-Astra into its manufacturing and distribution components, with Astra maintaining 51 percent control of the distribution arm.
Astra continued to look for buyers for its components manufacturing operations as it turned toward the new century. With its profits rising strongly, the streamlined company now intended to reinvent itself as Indonesia's leading automobile and automotive components distributor. At the same time, the company remained committed to its fast-growing motorcycle manufacturing and distribution operation.
Principal Subsidiaries: Astra Finance; Astra Industry; Astra Motor; Astra Resources; PN Gaya Motor; PT Toyota-Astra (51%).
Principal Competitors: Indomobil Suzuki International, PT; DaimlerChrysler Indonesia; Mekar Armada Jaya, PT; Krama Yudha Ratu Motor, PT; Prospect Motor, PT; Udatinda Group.
- Butler, Charlotte, Dare to Do: The Story of William Soeryadjaya and PT Astra International, Singapore: McGraw-Hill, 2002.
- Ford, Maggie, "Debt Deal Puts Astra on Track," Asiamoney, February 2003, p. 13.
- "Indonesia's Largest Auto Firm Sells Subsidiary to Toyota," Xinhua News Agency, May 22, 2003.
- Sato, Y., "The Astra Group: A Pioneer of Modernization in Indonesia," Developing Economies, December 1996, p. 247.
- Sheri, Prasso, "Indonesia Sells Off Astra--to Asians," Business Week, March 24, 2000.
Source: International Directory of Company Histories, Vol. 56. St. James Press, 2004.