Jackie Chan: Philanthropy's Hardest Working Man

Hong Kong star Jackie Chan races around Asia to brighten a sick child's day or help disaster victims.

by Ron Gluckman 

Another long day is nearly over, and Hong Kong action star Jackie Chan is beat. And no wonder: The day before, he made an overnight dash to Beijing, carrying a torch in a run to promote the upcoming World University Games in Guangzhou. Landing in Hong Kong he rushes straight to a series of photo shoots, appearances and dubbing duties for Kung Fu Panda 2. Rubbing his eyes, it's clear he needs a break. But he still has one more appointment, this time with a special opponent.

Dayne Nourse flew in from Salt Lake City in the U.S. to show Chan his moves. He hardly looks like a formidable foe, especially to anyone with Chan's kung fu skills. However, Hong Kong's top hero has a weakness for such adversaries. Nourse, 14, stands waist-high, when he stands. Mostly, he sits in a wheelchair, crippled by brittle bone disease. The Make-A-Wish Foundation flew him to Hong Kong. Meeting idol Jackie Chan is his final wish.

The ultimate pro, Chan responds with a performance that has all eyes misting up at a Chinese dinner he hosts for Nourse and another Make-A-Wish teen, Keisha Knauss, at a west Kowloon restaurant. Chan makes silly faces and flirts with Knauss, then teaches kung fu moves to Nourse. "He's really cool," Nourse gushes afterward. "I knew he was nice from his films, but I had no idea how nice he would be. This has really been a dream come true."

At the banquet filled with friends, Chan bounces from table to table, the perfect host. But he dotes on the teens. Knauss calls him "my boyfriend" to much laughter, but for one special day he really is. Earlier Chan took the teens around his Clearwater Bay film studio, showered them with souvenirs and demonstrated daring stunts. "I know how important this moment is," he confides during a moment away from the youngsters. "If I can help them to live two more days, or two more years, whatever it takes. This is what makes me happy."

Chan, 57, punched his way to fame in scores of cheap sock 'em flicks through the 1970s in Hong Kong before becoming the city's first Hollywood star in the 1990s. Today he's more than an entertainment juggernaut with more than a hundred films, television and cartoon shows, and record albums to his credit. In a city obsessed with commerce, where billionaires are celebrities, this grade school dropout is a Hong Kong icon. In earlier times it was hard to walk a block without seeing his face on a poster or product advertisement. The same now holds true in the rest of China, where he's often on hand opening cinemas, hosting variety shows and making appearances.

Unlike so many pretty boys in the Hong Kong industry, which was the biggest in the world after Hollywood until the 1990s, Chan rose from rags to riches and did it his own way--performing death-defying stunts himself. As a global star with international hits such as Rush Hour, he claimed fees of up to $25 million a picture. More important, he altered the formulaic way Hong Kong made and marketed films. "Jackie Chan helped create the Golden Age of Hong Kong cinema in the 1980s and subsequently was part of the Hong Kong talent that succeeded in Hollywood and international cinema," says Roger Garcia, executive director of the Hong Kong International Film Festival. "He helped shape how the world today looks at Hong Kong movies."

Some critics term his films trivial, panning Chan's cheesy mix of comedy, action and positive themes. Yet the blend has proven box office appeal; his fans span the globe and defy categorization. In December his Facebook page topped 10 million fans. Even critics concede that he injected life into Asian action films with his martial arts mastery.

Along the way Chan has been transformed from stuntman and fighter to unlikely leading man and role model. However slapstick the script, his films usually have strong moral messages. He often defends underdogs or urchins. Invariably his movies are clean-cut, without sex scenes or graphic violence--call it Kung Fu Disney with Confucian characteristics.

What is less known is how fame has transformed Chan into one of Asia's premier philanthropists. Others may give more or get more attention, but probably nobody works harder for more causes than Chan. "Every time we ask him to do an event, he agrees without any question," says Anthony Lau, director of the Hong Kong Tourism Board. Chan has been the face of everything from no-smoking campaigns to cleanup efforts. Lau recalls requesting the star's appearance in Japan two years ago. Chan was working in remote China but flew 30 hours straight to the event. "The next day, he made the journey back--another 30 hours." read more...

(taken from forbes.com)

New Age Timber Tycoons

Illegal logging in Kalimantan (Starling Resource)

Harvesting the forests has enriched many. Two entrepreneurs are trying the opposite, aiming to make millions selling carbon credits for not cutting down the trees.

by Ardian Wibisono 

In a remote corner of Kalimantan, two entrepreneurs are trying to develop the country’s largest carbon trading site using $10 million of their own money. It is a bold plan, one that could bring many times that investment or— possibly—lose everything. And the two aren’t sure which scenario will materialize. “You can say I’m smart or just plain dumb. I’m so smart that I know what is going to happen or too dumb to realize that I shouldn’t be doing this,” says Dharsono Hartono, President Director and sole owner of PT Rimba Makmur Utama. His partner, Rezal Kusumaatmadja, runs environmental consulting firm Starling Resources based in Bali.

Their Katingan Peat Conservation Project covers 227,000 hectares, an area three times that of Singapore, nestled between two rivers in a relatively untouched section of Kalimantan. While there are some two dozen carbon trading projects in Indonesia, most are driven by eco-motivations and involve an NGO or government agency. Katingan is the only major one set up to make a profit. “We are purely private investors, trying to make this into a business. It’s difficult,” admits Dharsono.

The pair graduated from Cornell University, Dharsono getting a master’s in financial engineering then spending several years as an investment banker for JP Morgan in New York. Rezal got a master’s in urban planning from the University of Hawaii before setting up Starling Resources. Meeting in Cornell, they separated only to bump into each other ten years later at a conference in Bali in 2007, where Rezal told Dharsono of carbon trading’s potential. “Dharsono is the one who translated my idea into a business,” says Rezal. “He said the opportunity had to be taken.” Aside from his idea, Rezal also contributed his family network, as his father is the former Minister of Environment Sarwono Kusumaatmadja.

It took two years for the pair to select the area. In June 2009, the Forest Ministry said Dharsono’s Rimba Makmur Utama could have the site with a 60-year concession once environmental studies, now finished, are approved by Jakarta. The pair hope that approval will come next year. Once it does, Dharsono will need to pay $5 million for the concession fee. With the setup and running costs, the total investment climbs to $10 million. One big cost is the survey work, validating how much carbon is there worth trading—complex process of drilling deep into the carbon deposits in at least 100 different sites across the area. To get to the sites, the monitoring teams have to hike through the tropical heat and thick jungle. “The most challenging part is how to survey the area, and having enough samples so that we can get accurate carbon measurement in the area,” says Dharsono.

The effort is probably worth it. From a carbon trading perspective, Katingan is a nearperfect site. It’s classic Borneo forest, complete with a large population of endangered orangutans and other exotic fauna. As important, it’s peatland, the world’s densest natural storage system for carbon. Composed of compacted dead plant matter, peatland is found in only 3% of the earth’s land area. Indonesia, however, is home to an estimated 20 million hectares of peatland scattered in Sumatra, Kalimantan and Papua. Much of those valuable carbon deposits are destroyed, however, as peatland gets used up by logging, plantations or mining. By some estimates 40% of Indonesia’s total annual carbon emissions are coming from the destruction of peatland.

The more peatland is destroyed, however, the more valuable Katingan becomes. Dharsono estimates the site could hold as much as 800 million tonnes of carbon. Although carbon credits are currently selling around $8 a tonne on carbon credit markets, that doesn’t mean Dharsono owns a fortune worth $6.4 billion. Most of that can never be sold under the arcane rules of carbon trading.

Dharsono figures that when he can finally start selling credits, perhaps in another two years, it will be one or two million tonnes at most. To be sure, at $8 a tonnes, that’s $8 to $16 million a year, which would quickly recoup most or all of his sunk cost of $5 million, plus other investments and any additional running costs. Even with a 20% government tax on any profit, and 20% more to aid local communities, the pair would still have enough to live well. Dharsono feels prices can only go up, as demand increases and carbon supplies dwindle—he’s looking forward to the day when carbon credits sell for as much as $20 a tonne. In 2009, some 21 million tonnes of carbon credits traded hands for $130 million ($6 a tonne average), according to a recent study by U.S. nonprofit Forest Trends. On the other hand, he admits: “What if there are no buyers?”

First the pair have to get the site qualified for carbon trading. They are asking to be paid, in effect, to not cut down the trees and develop the area, generating a credit that can be sold to offset someone else’s carbon emission. It’s a tricky business to measure. The two are trying to meet a complex set of standards, many of which are still in flux or not yet finalized. “Progress has been made in development of international standards and verification system for the voluntary market” as Dharsono put it in a recent Rimba Makmur Utama powerpoint slide.

To help develop his plans, Dharsono has been talking to Australia’s Macquarie Bank and the World Bank to build support. “We’re pleased to be working with the Katingan project, which aims to be a world-leading demonstration of how forests can be retained by using carbon finance,” says Brer Adams, senior manager at Macquarie in charge on carbon financing. There’s also the possibility that some multinationals would like to fund the project for the corporate governance bragging rights. The U.S. Clinton Foundation, for example, has already helped support the surveying work. “We have a good site, I’m sure there are many who’d like to help us,” says Rezal.

Despite their business focus, the two also don’t mind the positive benefits of Katingan. “We are not just exploiting the environment like previous generations. This business feels right because we are doing a good thing,” says Dharsono.

(taken from Forbes Indonesia)

Getting Bin Laden

What happened that night in Abbottabad.

by Nicholas Schmidle 

Shortly after eleven o’clock on the night of May 1st, two MH-60 Black Hawk helicopters lifted off from Jalalabad Air Field, in eastern Afghanistan, and embarked on a covert mission into Pakistan to kill Osama bin Laden. Inside the aircraft were twenty-three Navy SEALs from Team Six, which is officially known as the Naval Special Warfare Development Group, or DEVGRU. A Pakistani-American translator, whom I will call Ahmed, and a dog named Cairo—a Belgian Malinois—were also aboard. It was a moonless evening, and the helicopters’ pilots, wearing night-vision goggles, flew without lights over mountains that straddle the border with Pakistan. Radio communications were kept to a minimum, and an eerie calm settled inside the aircraft.

Fifteen minutes later, the helicopters ducked into an alpine valley and slipped, undetected, into Pakistani airspace. For more than sixty years, Pakistan’s military has maintained a state of high alert against its eastern neighbor, India. Because of this obsession, Pakistan’s “principal air defenses are all pointing east,” Shuja Nawaz, an expert on the Pakistani Army and the author of “Crossed Swords: Pakistan, Its Army, and the Wars Within,” told me. Senior defense and Administration officials concur with this assessment, but a Pakistani senior military official, whom I reached at his office, in Rawalpindi, disagreed. “No one leaves their borders unattended,” he said. Though he declined to elaborate on the location or orientation of Pakistan’s radars—“It’s not where the radars are or aren’t”—he said that the American infiltration was the result of “technological gaps we have vis-à-vis the U.S.” The Black Hawks, each of which had two pilots and a crewman from the 160th Special Operations Aviation Regiment, or the Night Stalkers, had been modified to mask heat, noise, and movement; the copters’ exteriors had sharp, flat angles and were covered with radar-dampening “skin.”

The SEALs’ destination was a house in the small city of Abbottabad, which is about a hundred and twenty miles across the Pakistan border. Situated north of Islamabad, Pakistan’s capital, Abbottabad is in the foothills of the Pir Panjal Range, and is popular in the summertime with families seeking relief from the blistering heat farther south. Founded in 1853 by a British major named James Abbott, the city became the home of a prestigious military academy after the creation of Pakistan, in 1947. According to information gathered by the Central Intelligence Agency, bin Laden was holed up on the third floor of a house in a one-acre compound just off Kakul Road in Bilal Town, a middle-class neighborhood less than a mile from the entrance to the academy. If all went according to plan, the SEALs would drop from the helicopters into the compound, overpower bin Laden’s guards, shoot and kill him at close range, and then take the corpse back to Afghanistan.

The helicopters traversed Mohmand, one of Pakistan’s seven tribal areas, skirted the north of Peshawar, and continued due east. The commander of DEVGRU’s Red Squadron, whom I will call James, sat on the floor, squeezed among ten other SEALs, Ahmed, and Cairo. (The names of all the covert operators mentioned in this story have been changed.) James, a broad-chested man in his late thirties, does not have the lithe swimmer’s frame that one might expect of a SEAL—he is built more like a discus thrower. That night, he wore a shirt and trousers in Desert Digital Camouflage, and carried a silenced Sig Sauer P226 pistol, along with extra ammunition; a CamelBak, for hydration; and gel shots, for endurance. He held a short-barrel, silenced M4 rifle. (Others SEALs had chosen the Heckler & Koch MP7.) A “blowout kit,” for treating field trauma, was tucked into the small of James’s back. Stuffed into one of his pockets was a laminated gridded map of the compound. In another pocket was a booklet with photographs and physical descriptions of the people suspected of being inside. He wore a noise-cancelling headset, which blocked out nearly everything besides his heartbeat.

During the ninety-minute helicopter flight, James and his teammates rehearsed the operation in their heads. Since the autumn of 2001, they had rotated through Afghanistan, Iraq, Yemen, and the Horn of Africa, at a brutal pace. At least three of the SEALs had participated in the sniper operation off the coast of Somalia, in April, 2009, that freed Richard Phillips, the captain of the Maersk Alabama, and left three pirates dead. In October, 2010, a DEVGRU team attempted to rescue Linda Norgrove, a Scottish aid worker who had been kidnapped in eastern Afghanistan by the Taliban. During a raid of a Taliban hideout, a SEAL tossed a grenade at an insurgent, not realizing that Norgrove was nearby. She died from the blast. The mistake haunted the SEALs who had been involved; three of them were subsequently expelled from DEVGRU.

The Abbottabad raid was not DEVGRU’s maiden venture into Pakistan, either. The team had surreptitiously entered the country on ten to twelve previous occasions, according to a special-operations officer who is deeply familiar with the bin Laden raid. Most of those missions were forays into North and South Waziristan, where many military and intelligence analysts had thought that bin Laden and other Al Qaeda leaders were hiding. (Only one such operation—the September, 2008, raid of Angoor Ada, a village in South Waziristan—has been widely reported.) Abbottabad was, by far, the farthest that DEVGRU had ventured into Pakistani territory. It also represented the team’s first serious attempt since late 2001 at killing “Crankshaft”—the target name that the Joint Special Operations Command, or JSOC, had given bin Laden. Since escaping that winter during a battle in the Tora Bora region of eastern Afghanistan, bin Laden had defied American efforts to trace him. Indeed, it remains unclear how he ended up living in Abbottabad. read more...

(taken from The New Yorker) 

Somalia's Sea Wolves

By Alex Perry / Galcayo

  Guarding the Loot A pirate in the Somalian 

  town of Hobyo stands against the backdrop 

  of a hijacked Greek freighter

  Photograph by Mo Dahir (TIME)

I have arranged to meet our pirate, somewhat incongruously, in the desert. I board a 1960s prop airplane that smells of goat and is piloted by four portly Russians. After a series of short hops across Somalia's northern wastes, we touch down on a red-dirt strip outside the town of Galcayo. The government in the capital, Mogadishu, doesn't control even half that city, let alone the hinterland, and the day before we arrive, seven people die in a gunfight in Galcayo. So at the airport, I hire eight men with AK-47s at $15 a day each, then drive across town to the high-walled aid-group compound where I'm staying. I am here to talk to a pirate king called Mohamed Noor, better known to his shipmates as Farayere, or Fingers. I want to ask Fingers why, when Somalia's pirates face an international armada at sea, when some 1,000 pirates have been arrested and scores more have died, piracy is still rocketing.

Fingers arrives alone. He is skinny and sun-creased for his 32 years. We introduce ourselves, tea is poured, and Fingers indicates I should start. How do you organize a pirate attack? I ask. There are no fixed pirate crews, Fingers replies. Instead, a few investors pool the money to hire two skiffs with fast outboards, employ five to 10 young men with guns — whoever shows up — and buy them enough food, water and fuel for a month. The investors then send their pirates out with orders not to return until they have captured a ship. That's it. Hundreds of pirates never return at all, says Fingers. Some drown at sea. Many more run out of food, water or fuel and die, starved and parched, adrift on the ocean. 

"One time there was this group I knew that ran out of food and a guy died — and the other guys ate him," Fingers says, speaking in Somali through an interpreter.

"They ate their friend?" I ask.

Fingers laughs. "It's not a crime if you're about to die," he explains.

Fingers says he has invested in scores of pirate crews. I want to know about the ships he has captured and ransomed himself. In five years, he says, there have been two. The first earned him a split of $75,000, the second $280,000. Of that $355,000, he invested $50,000 in a money-lending business in Nairobi, the capital of neighboring Kenya. That still leaves more than $300,000, a sizable haul anywhere but a fortune in Somalia, the world's most failed state, a place that has been at war with itself for 20 years and where annual incomes are normally measured in the hundreds of dollars. Yet when I examine Fingers, I see no signs of wealth. He is squatting on the floor and is dressed like any East African deckhand: cheap thongs, a thin shirt and an old kikoi.

"Fingers," I ask, "where did all the money go?" 

"Gone," he laughs.

"You spent it all?"

"I bought houses and cars. I bought a couple of Land Cruisers. I spent the money on friends. I enjoyed it. Now it's gone. That's why I'm still a pirate. I need the money. Besides, it's fun." Then Fingers shrugs and gives me a look that says: What did you expect from a pirate? Responsibility?

The Somalia Syndrome
straddling the trade route between East and West, the Indian Ocean has been a favored haunt for pirates for centuries, as pirate graveyards on Réunion and the Seychelles attest. But Somali pirates are a relatively recent phenomenon. When Ibn Battuta visited Mogadishu in the 14th century, it was the pre-eminent city of the Berbers and noted for its merchants and clothmakers — and Somalis would have been more prey than predator.

That's all changed now. Somalia hasn't had a central government since 1991. In some 20 years of civil conflict, the fighting has morphed from battles among local warlords and Islamist militias to war on the U.N. and the U.S. to, today, the African Union against al-Shabab, an affiliate of al-Qaeda. The chaos and lawlessness such a history implies inevitably reduce the chances of earning a legitimate wage and turn illicit trades like arms dealing, drug smuggling and piracy into industries.  read more...

(The story is taken from TIME Magazine)

The King of Clicks

Andrew Darwis rejected a $50 million offer to keep his Kaskus site independent.

By Aditya Wikrama and Ardian Wibisono

Last year, a major international internet company offered Andrew Darwis $50 million to buy his Kaskus.us site, which would have been the most ever paid for an Indonesian website. After a few weeks of talks, Darwis told them no thanks. (The company was reportedly Yahoo but neither Andrew nor Yahoo would comment.)

Crazy? Perhaps. But Andrew is fiercely independent. “I didn’t like the offer because I’m afraid our brand would have been diluted if we had been bought,” he says, “I cannot accept that.” Andrew says he has rejected no less than six offers in the last few years.

The investor interest in the site is obvious. Kaskus is the biggest internet site in the country, with 2.5 million registered users, 288 million posts and a reported 17.5 million page views a day. It ranks as the country’s sixth most popular site—lagging only global giants Facebook, Blogger, Yahoo and Google (both Google.com and Google.co.id), according to internet ranking company Alexa. Kaskus is well ahead of its nearest rival, Detik.com, which ranks number 11.

Kaskus has estimated revenues of Rp 36 billion, which increased 250% in 2010. Asked about the $50 million valuation, Andrew said the price included factors such as number of unique visitors, membership size, and potential added revenue streams such as payment systems. Another site, 411sites.com, puts an even-higher value of $66 million on Kaskus.

The biggest evolution of Kaskus may be just starting: e-commerce. The site had always had informal buying and selling, with members posting things for sale that others would buy. Now the site is beginning to build its e-commerce capabilities and make them mainstream. Its forum for transactions, called FJB, is strictly between users and Kaskus doesn’t get any revenue from the transactions. However, Kaskus last year introduced Kaspay, which provides secure online payments for users. The site also sells e-pulsa, online credits for prepaid mobile phones, reportedly $3.6 million a year. It has also just added KasAd, which allows smaller advertisers to place ads on the site. The company says its system, similar to Facebook’s ad system, could be used by traders or small businesses to sell goods through the site.

Kaskus has humble beginnings. Andrew, 31, started Kaskus in Seattle in 1999, with two other Indonesian students as cofounders while he was studying multimedia and web design at the Art Institute of Seattle, later getting a Master’s degree in computer science from Seattle University.

Kaskus was initially meant as a simple forum for Indonesian students overseas. Andrew’s startup capital? A web hosting fee of $7 a month. The name is an abbreviation of “kasak-kusuk” or chit-chat.

However, the site long remained a sideline for Andrew, who took a job as a programmer with the Seattle-based site Lyrics.com. The site generated a small profit as Andrew sold banner ads to pay for the hosting and other costs. Users created the content for free. Two other co-founders left to pursue other interests.

Everything changed in 2008, when Andrew’s cousin Ken Dean Lawadinata visited him from Indonesia. He urged him to move back to Jakarta and run Kaskus as a serious business. Ken sensed that Indonesia’s internet community was on the verge of a major boom. The site was morphing into one used primarily by Indonesians back home rather than overseas students, and had 350,000 registered members. Andrew was reluctant: “I had a good living in Seattle, working as programmer for Lyrics.com. So why I should leave behind all these good things in Seattle?”

Andrew agreed to come back but only if he didn’t need to manage the daily operation. “So Ken become the CEO, I’m the CTO [Chief Technology Officer], and Danny become the CMO [Chief Marketing Officer],” Andrew explains. That year, PT Darta Media was incorporated, and the site was located on servers inside Indonesia. Andrew owns 41% of Darta Media, Ken 39%, with the remaining 20% owned by other partners of the site.

The site immediately ran into trouble with the government, which had just passed Law No. 11/2008 against Indonesian sites carrying porn. The Kaskus home page says that it stands for “freedom of speech.” One of the most popular forums on Kaskus at the time was BB17, which included pornographic images and discussions. Other forums posted pirated software, encouraged gambling, or held wide-open discussions on sensitive topics like race and religion, which was also forbidden in the new law.

Andrew took the difficult decision to close down the discussions, ban pornography and hire monitors, known as momods, to keep the site clean. Instead of hurting usage, membership grew and, importantly, Kaskus started attracting top-tier advertisers such as Toyota, Indosat and Bank Central Asia. Before this move, most advertising had come from online gambling sites.

“We had to change from being a community forum filled with porn content, and kick out major advertisers that were online gambling firms,” says Andrew. To also spiff up its image, Andrew moved offices. “We first had our offices in the Kota area of North Jakarta but no advertising agency would come there, so we moved to Melawai in South Jakarta, which is more acceptable,” says Andrew.

This year, Kaskus plans to do major upgrading of the software engine that runs the site, one which was developed inhouse. “Our own engine will give us more scalability,” says Andrew.

To support the upgrade, Kaskus plans to hire more staff, from 40 now to about 100 by the end of the year. Andrew intends to remain profitable, despite the new expenses. “We’ve always been profitable from the start, but most of our profits are reinvested to buy and upgrade our servers to keep up with user growth and traffic,” he says.

Although Andrew doesn’t want to sell the entire company, he is not against selling a piece of it. “We are working on a deal to sell a minority stake to a local conglomerate, which we cannot name yet. The transaction should be completed in a couple months,” says Andrew. “Most investors we’ve met insist on a quick return on investment. We were surprised that this local investor shares our vision to develop Kaskus over the long term.” The local investor is rumored to be the cigarette maker Djarum, although Djarum declined to comment. 

Andrew says the upgrade and added staff will keep Kaskus competitive. Among his rivals are some with deep pockets and major resources, such as a planned local e-commerce site by Japanese e-commerce giant Rakuten in partnership with media group MNC. Another is Plasa.com, owned by PT Telekomunikasi Indonesia. Despite saying no to his own buyout, Andrew is glad Yahoo acquired local site Koprol, as it’s a good sign for the future of Indonesia’s internet community. “We like the Koprol deal, as it will motivate local startups to work harder,” says Andrew. 

(the story is taken from Forbes Indonesia Magazine)

Success in the Bag

©Jonathan Kantor/Getty Images

 In less than a year, Sugianto Tandio has captured 80% of the market for shopping bags used by Indonesia’s biggest retailers. Now he’s breaking into the U.S. market.  

By Ardian Wibisono

Sugianto Tandio has risen far fast. In less than a year, his company PT Tirta Marta has become the largest maker of plastic shopping bags for major retailers like Carrefour and Hero, controlling an estimated 80% of the market. His edge? Tirta Marta’s bags are 100% degradable using proprietary technology developed by Sugianto, yet cost almost the same as conventional plastic shopping bags.

To spiff up their eco-credentials, the country’s biggest retailers, including Alfamart, Bata and Giant, have all signed up for the bags, marketed under the Oxium brand. As upscale grocer Kem Chicks says on its bags: “Switch to our eco-friendly fully degradable plastic bags.” Also driving the switch was an agreement signed February by the Indonesian Chamber of Commerce and Industry (Kadin) and the Jakarta city administration to encourage retailers to phase out regular plastic bags starting next year, and instead offer non-plastic bags or degradable bags. Sugianto’s bags perfectly fulfill the latter guideline.

Now that Sugianto has captured a big chunk of the Indonesian market, he is eyeing the even-bigger U.S. market. After regular trips to the U.S., he’s already gotten some impressive customers, such as the Mall of America, retailer Club Monaco and sportswear maker Hurley. In the U.S., Sugianto is selling a different bag, the Ecoplas, made from tapioca and which biodegrades in ten weeks. To prove it, Sugianto sometimes buries his Ecoplas bags in the ground, and then dig them up a few weeks to show the degradation.

The bag is also price competitive, costing one third that of rival bags made from corn starch -- although Ecoplas still costs about 15% more than ordinary plastic bags. Oxium bags, in contrast, are close to the price of regular bags, but not as eco-friendly. They are only “degradable,” meaning they will crumble into a fine powder in two years but don’t fully disappear like a Ecoplas bag (see illustration).

Source: Tirta Marta

Sugianto is no stranger to plastic. His family company Tirta Marta, of which he owns 60%, has been in plastic manufacturing since 1971, making everything from traditional shopping bags to agricultural seed bags. With 300 staff, it has sold to clients such as Unilever, Motorola and Hitachi. Sugianto learned to appreciate innovation from U.S. manufacturer 3M, where he worked as an engineer for five years in the U.S. before returning to Indonesia in 1994 to take over the family firm (3M is known for innovative products like Post-it Notes).

In 2000, he started work on his bags. The lack of demand for such bags back then didn’t bother him. “Green business will eventually be a good business as awareness of environmental issues grows,” says Sugianto of his rationale for starting the research. Still it took eight years and millions in research to develop the technology. Eventually he developed a special additive, which makes up about 10% of the plastic used in the bag, that speeds up the breakdown of the plastic from hundreds to just two years. The Ecoplas bag, in contrast, is a more straightforward mixture of tapioca starch and other ingredients to form a plastic. To make the bag more politically correct, Sugianto uses only organic tapioca bought from farmers under fair trade principles. Sugianto claims it is also more durable than the corn starch-based competitor.

Development of the bags also came at a heavy cost to the company. In 2006, high oil prices drove up plastic manufacturing costs that, combined with the millions spent on research, put a huge strain on Tirta Marta’s finances. That year he sold 40% of his company to U.S.-based private equity firm Aureos Capital for $5 million, valuing the company at the time at $12.5 million. “We were facing difficulties because price hike of raw materials,” says Sugianto. “So we decided to seek a partner.” The Aureos involvement provided not just cash but also marketing expertise, and Aureos hopes one day to take Tirta Marta public. “We're lucky to find this company and have the opportunity to invest in it. It has strong potential since it developed a product that no other Indonesian company has,” says Aureos spokesperson Harianto Taruna.

Sugianto’s breakthrough came in June 2009 when one of the country’s largest convenience store chains, Indomaret, became his first customer. His sales pitch was simple -- just try the bag, it won’t cost any more than a regular one. So Indomaret did, and discovered that sales improved when they used the Oxium bags. Today Indomaret buys 201 tonnes of Oxium bags a month to supply to the 4,200 stores in its chain.

All told, Sugianto is selling more than 3,000 tonnes a month of Oxium bags, and revenues have hit $10 million. Demand is so strong that he has had to farm out production to ten other companies to meet his targets (Tirta Marta gives them the special additive to produce Oxium bags). Rivals, however, have noticed Tirta Marta’s success. A competing degradable plastic made by Canadian firm EPI is being used by upscale grocer Ranch Market in its bags. Petrochemicals giant Chandra Asri is said to be developing its own degradable plastic. “Competition is always good, it makes us more motivated,” says Sugianto, who closely guards his technology, discouraging reporters from visiting his factory where he makes the bags. He also has to monitor his quality control – once discovering a wholesaler had branded ordinary plastic bags as Oxium (the wholesaler was promptly fired).

Sugianto says the market has been barely tapped in Indonesia. After dominating the major retail market, Sugianto is looking to sell his bag in other sectors that use plastic bags, such the huge informal retail market. He estimates that he has tapped a mere 2% of the total potential market in the country. He is also applying his Oxium technology to other forms of plastic beside bags. “We are currently developing molded products using degradable plastic to be marketed soon,” says Sugianto. With his newfound success, Sugianto has learned that his plastic is fantastic. 

(the story is taken from Forbes Indonesia Magazine)