What makes Robert Kuok distinct from his contemporaries is the geographical diversity of his businesses. Like many Asian conglomerates, the Kuok Group does not focus on a certain sector — instead, they cast a wide net over agriculture, logistics and shipping, hospitality, real estate, and digital infrastructure. Unlike the majority of Asian conglomerates, however, the Kuok Group does business in six continents. While Kuok found initial success in sugar trading, he later expanded outside his primary country of Malaysia and Singapore, a risky move due to a lack of political and economic protection.
Nevertheless, Kuok has been remarkably successful at this global expansion. This was especially so in Indonesia, where he was able to enter its flour milling and sugarcane industries through JVs (Joint Ventures) with local operators, as well as in his Shangri-La hotel chain.
This case covers how he expanded his empire.
After Kuok's breakthrough profits on the international sugar trading scene in the early 1960s, he dabbled in new markets like flour milling, shipping, aviation, and steel. However, he felt limited by the size of Malaysia’s (and Singapore’s) domestic markets. Every industry that he expanded into felt too small, like clothes he continuously outgrew. In Kuok's own words:
In Malaysia, I always felt like a little fish swimming in shallow waters. As soon as I tried to dive, I would hit the concrete bottom of this man-made pond. So you need to swim laterally all the time. You couldn't go down deep. In the fishing world, the best fish are those that can dive deep, like the tuna. If I could only dive deep — and that could easily take up 20 years of my life — I might not even have the energy to go sideways. But in Malaysia, the only choice open to me was to expand sideways, so I swam as fast as I could.
If I had been fortunate enough to be born in Indonesia, I would probably have taken a different course. There, the waters are deep; the fish are plentiful. Whatever industry I would enter in Indonesia, which has a huge population and landmass, would last my family three generations. So I envied what the businessmen of populous Indonesia were able to do.
Unsurprisingly, Kuok turned early towards the archipelagic nation.
Kuok had brushed shoulders with the traders of Indonesia way before his big break in 1963. His first Indonesian deals weren't done in the country itself, but in the commodity trading houses of London in 1962, with JV Drake (note the "JV" here is just part of their name). The Kuok Brothers did a few joint accounts (deal-by-deal partnerships with unwritten arrangements) with them, with the first trade involving 30,000 tons of sugar. Kuok recounts:
Drake was an established international trader; we were just learning the ropes. By running joint accounts, instead of acting as an agent, we became a principal. We get the offer; we buy, you sell, and we share profits. Through this strategy, we strengthened the bond between ourselves — an emerging Southeast Asian Chinese firm based in Singapore — and one of the leading sugar brokers in the City of London.
Kuok was also aided greatly by a competent Indonesian trader that they had recruited in 1958, Piet Yap. While he initially traded sugar for a Dutch trading house, Kuok saw potential in Yap’s ability to speak Dutch, Bahasa Indonesia, and English. (Consequently, Yap would play an important role in Kuok's dealings in Indonesia for the years to come). Yap formed a close relationship with Sudarso, who was the director of Gula Negara, the Indonesian National Sugar Board. Sudarso trusted them and treated them almost like partners, giving them offers well and above commercial terms.
While Kuok temporarily turned away from Indonesia after his unprecedented profits in sugar trading, he eventually turned back to the country in the late 1960s.
Kuok was particularly interested after Suharto came to power in 1967. Whilst the previous (and founding) president of Indonesia, Sukarno, played an important role in freeing the country from Dutch colonisation, he neglected the economy in favour of playing politics. What this meant was that in the last few years of his presidency, hyperinflation had set in. In 1965, for instance, the price of rice was believed to be rising at an annual rate of 900 per cent.
In contrast, when Suharto took office in 1967, he tapped a group of western-trained economists and quickly implemented free market mechanisms. Suharto also requested large amounts of foreign aid, which worked in tandem with his earlier policies to boost the economy. In January that year, he announced the Foreign Investment Law, which stated that "foreign capital should be made useful to the maximum to accelerate the development of the Indonesian economy and utilized in the fields and sectors in which investment of Indonesian capital is not or not yet available within a short time to come." These weren't simply empty words — incentives and privileges were offered as well. For example, foreigners prepared to invest at least US$ ...
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