Lasting Legacy

Hard work the key for the family behind Singapore-based resources giant RGE

Key Points
  • Interests in pulp and paper to palm oil plantations
  • A family effort to get first-hand knowledge and grow the business
RGE: From plywood to palm oil
RGE: From plywood to palm oil

Sukanto Tanoto is the charismatic and hardworking founder behind Singapore-based RGE (Royal Golden Eagle). While it was his vision and passion that led the resources giant to the size and scale it is today, building up the family business was and still is very much a team effort.

Together with his wife, Tinah Bingei Tanoto, they worked together to grow RGE and their four children spent much of their youth on the palm oil plantations, observing their parents at work.

His youngest child Anderson, who is a director at RGE, recounted some of his early memories.

"I spent four or five summers actually in Kerinci, in Riau for example or in the plantations," he said. "It was fun as a young kid being in nature, being fascinated by large structures wearing hard hats and going through the different canals and the rivers."

The Tanoto family at an oil palm plantation.
Courtesy: Tanoto family

It is a similar memory shared by Sukanto's second youngest child Belinda, who is a member on the Tanoto Foundation Board of Trustees.

"Growing up, we always go to the back to the fields and to the plantation… so we always have this very strong emotional connection to the business," she said.

The roots of RGE go back to 1967 in Medan, Indonesia, where a young Sukanto honed his business skills. A tough family situation forced him to take over his father's spare parts supply business and his entrepreneurial journey started a few years later.

RGE, previously known as Rajah Garuda Mas, started in the plywood business. Slowly, it branched out into palm oil as well as to pulp and paper. Today, the company is a resources heavyweight with operations spanning seven groups and a growing presence in Southeast Asia, China, India and Brazil and assets exceeding $18 billion.

This year, RGE and its founder Sukanto, celebrate their 50th year in the business.

"From that humble beginning, he's managed to build a business that's grown… from the local level, to the national, to regional and global. And I think the biggest lesson that I learned from him is that sense of perseverance and hard work… that entrepreneurial spirit is something that we appreciate and we look forward to preserving in the future generations." Belinda said.

A palm oil plantation on September 21, 2016 in Indonesia.
Lana Priatna | Barcroft Media | Getty Images

It was 20 years ago, during the Asian Financial Crisis that was one of the biggest tests of Sukanto's entrepreneurial journey. He recalled having to divest a 50-50 venture with a European partner in China.

As a result, Sukanto brought in almost $1 billion back to Indonesia and felt it was the right strategic decision for "short term pain, long term gain."

Anderson remembered that it was not an easy decision for his father and that's a lesson the family still holds closely.

"To me that takes ... vision and also it takes guts ... he always tell me one thing that you can have the best machines in the world but if it's not complete, it's equivalent to scrap," Anderson said. "So we have to complete the project so he took that gamble. And sold one of our assets in China just to reinvest in Indonesia and it has paid off because this is where we are right now."

Currently, three out of the four Tanoto kids work for RGE, but Tanoto policy meant they had to gain experience outside before joining the family business. Anderson worked as a consultant at Bain & Company, while Belinda spent a year as an analyst at Morgan Stanley.

"I learned a lot about how to manage a relationship with the Chinese stakeholders which I eventually used and applied when I was a salesperson for the family business based out of Shandong in China," Belinda said.

Sharing the same last name as the founder however, does not equate to a leadership role; each of RGE's business units is run by a professional CEO. In addition, when it comes to succession planning, the topic is one that the children remember discussing since they were teenagers.

Anderson and Belinda both reiterated the Tanotos' view that keeping it in the family isn't as important as finding the right people.

"Succession planning is a business succession planning for us… it's not about having a family member running the company, (it) is who's the best person to be able to run the company … we don't differentiate professional managers or a family member that's working in a company ... it's capability based rather than in title based," Anderson said.

Catch the second season of Lasting Legacy, Thursdays in June, on CNBC Asia at 17:30 SIN/HK and on CNBC EMEA at 23:30 CET.

Correction: This article has been updated to reflect the correct spelling of Kerinci and the number of Tanoto kids who work for RGE. Multiple quotes have also been clarified.