The ultramodern Trakindo building looks like it should be in the central business district rather than a suburb of Jakarta. But the location is where the Hamami family's business, Tiara Marga Trakindo (TMT), has been since 1971, when it began selling Caterpillar tractors. That longevity and respect for tradition is a testament to the guiding philosophy of the family and its business interests. "My father always dreamed of having his business last for 100 years. Anybody can have a family business, but only a few can stand for generations," says TMT Chief Rachmat Mulyana Hamami, known by his nickname, "Muki."
His clan has been researching role models around the globe. Muki reels off names such as the Michelin family, whose members still have a role at the French tire company, and Japan's Kikkoman soy sauce company, still headed by descendants of the original founders of 1603.
Normally low-profile Muki has decided to go public about his family's quest for a lasting business foundation as an example for others. The adage about rags to rags in three generations has an unfortunate ring of truth. "It's better to do this while the family is still intact," he urges. "Don't wait until it is already falling apart."
The Hamamis decided on a family constitution (Family Law), a document that took four years to craft through 2008. It followed many discussions, some of them blunt, among the family about various aspects of their enterprise, which has earned them the No. 10 spot on our list of Indonesia's richest at $2.2 billion.
Such talks are hardly common in Indonesian families, but Muki says they were necessary to get the buy-in from the entire clan. Professor John Ward, a family-enterprise expert from the Kellogg School of Management in the U.S., helped steer the drawn-out process. The constitution drills so deep as to set the dates for regular meetings.
Muki's journey toward creating a built-to-last family business started long ago. At 47 he is the third of four children of founder Achmad Hadiat Kismet "Met" Hamami who, although blind at age 81, still treks to headquarters each workday. Three of the offspring are in the business, while a sister is a dentist. The group is divided into four parts, with the first and still core business being Trakindo Utama, the exclusive Cat distributor in Indonesia. Cat and market leader Komatsu have 75% of the country's heavy-equipment market.
The other three TMT businesses are in leasing, investments and energy. Muki says the total TMT Group, of which he is president director, will book $3.2 billion revenue this year, from slightly above $2 billion in 2010, and is on track to hit $6 billion by 2015. Trakindo Utama has been closely held from the outset. But the family is planning taking ABM, the energy business, public in December.
After finishing his studies in the U.K., Muki worked for two years at Standard Chartered Bank there. Although he later worked at a Caterpillar distributor in Canada, he originally had limited operational ambitions. "Unlike my father, I wanted to invest in companies and buy and sell them. I told him I wanted to enjoy life [by now]."
Then his father suddenly lost his sight to a glaucoma attack in 1999. It happened during a stressful period when he was shuttling back and forth to Singapore trying to restructure $118 million of company debt on the heels of Indonesia's financial crisis. Finding no banks willing to help, his father paid all the debts from family resources and remained debt free until 2009.
Starting at Trakindo as group credit controller in 1990, Muki went on to various management duties. In 2009 ABM and MahaDasha, the consulting services unit, were spun off. Muki took on ABM; younger brother, Bari, Trakindo; and first-born sister, Mivida, MahaDasha.
ABM's initials are an abbreviation of the names of the second generation: dentist Ana, Bari, Mivida and Muki ("Bari" is also a nickname--his formal name is Rahmat Sobari Hamami). A holding company, it includes a number of sub-businesses such as coal production and power. "Its growth should be faster than Trakindo because it is in a really attractive sector," says Muki.
Taking ABM public is also part of the family constitution. Muki feels that if the group is public, it could provide easily tradeable assets in case later generations would like to take the business in a new direction or leave it altogether. "With a market price they can easily sell to their siblings or any family member, or the company could buy their stock," he says.
The other business, MahaDasha, is meant to be a diversified play on the country's development, with interests in property, IT and consumer businesses. For example, the family has a longstanding policy to own the land under TMT Group offices, and with 150 sites the company has built up considerable landholdings.
But Muki is careful to stress the primacy of the Caterpillar business. After losing pole position to Komatsu, Muki is encouraged by Cat's new focus on Asia, with Richard Lavin, the company's group president for construction industries and growth markets, recently moving to Hong Kong to better engage with the region.
"Our bread and butter is heavy equipment," says Muki.
Met Hamami's first career actually was airborne, as an elite jet pilot in the navy--an Indonesian "top gun," which included training in the Royal Netherlands Air Force program in Europe. Although he rose to become the Indonesian military's youngest colonel in the late 1960s, he took early retirement after souring on endemic corruption in the ranks at the time.
With little savings he started a tutoring business, giving private math lessons to students at home. It was a tough time for the family. Muki and his siblings had to help out by selling Popsicles to local kids. But a politically well-connected family friend put Met into a state investment-fund job, where he dealt with Caterpillar.
The U.S. giant was unhappy with its dealer in Surabaya and saw Met as appealing substitute with his military background and clean reputation. First, however, he had to take evening business classes, often studying until midnight.
It paid off. Construction and development was booming under then president Suharto. In 1972 Met got his first real competition from tycoon William Soeryadjaya, whose Astra Group became the dealer for Japan's Komatsu (a relationship that continues). Yet there was plenty of business to go around. That same year Freeport Indonesia, a unit of Freeport-McMoRan, commenced its operations in Papua and became one of Trakindo's biggest clients. The logging and oil and gas industries also became major customers.
Although Caterpillar enjoyed an 80% market share for a while, Komatsu gained ground, especially in the mining sector, apart from Freeport. Today Komatsu has about half the market, and Caterpillar is number two with 25%. Remaining competitors include Hitachi. "Now Caterpillar has changed," says Muki. "It will focus more on Asia. I think we will be number one [again] in 2015. We have the ammunition."