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Power Titan: Jos Parengkuan

Jos Parengkuan of Syailendra Capital on learning from Lipp Group’s Mochtar Riady and surviving a market crash

“For me, power is the ability to get people to listen to your ideas and vision, believe in them, and then willingly support you to execute those ideas,” declares Jos Parengkuan. “In many ways, I see power as being very much a function of trust.” Parengkuan is the founder and President Commissioner of Syailendra Capital, an independent fund management firm providing value-added investment solutions to clients.

“Just over 10 years ago, my partners and I started this fund management firm, literally from nothing,” he says. “Through hard work, persistence and creativity, Syailendra has been consistently profitable from year one, and today we are managing funds totalling close to 9 trillion rupiah. “That’s pretty impressive. What I am most proud of, however, is not the amount of money we are managing or the profit we are making every year. I consider the trust we’ve earned from clients and the high degree of loyalty from our employees as our biggest achievements. After all, this is a trust business.”

About 80 percent of the capital Syailendra manages has come from institutional investors like pension funds and insurance companies, and also from foundations and some publicly listed companies. “Actually, the kinds of services that we provide to client is not that much different from the others,” says Parengkuan. “Except that, in this kind of business, you try to differentiate yourself from the competition by doing little things here and there, on top of providing good services to the clients. So, performance is one thing, but it’s not the ultimate thing in this business.

“Most of our clients are institutional clients. They expect you to visit them regularly, and to provide them with market updates and insights that not many people are talking about. On top of all that is the need to provide them with the solutions they require. Because everyone’s financial needs are becoming increasingly complex nowadays. Not everyone wants to see a high return only. Sometimes, they come to you with a different kind of problem and they need your expertise to help them solve it. So, you have to be creative. I believe that one of the differences about Syailendra is that we are quite creative in providing solutions to our clients.”

Parengkuan has 27 years of experience in the capital markets, encompassing equity research, investment banking and fund management. A graduate of City University Business School in London, he began his career with Citibank in Jakarta, before joining Lippo Securities as a research analyst in 1990. In 1999, he joined Danareksa, Indonesia’s leading local investment banking firm, to co-head the firm’s equity institutional sales before taking charge of its fund management business in 2000. He established Danareksa’s wealth management arm in 2003.

Why did Parengkuan quit his promising professional career and go out on his own? “When I graduated from business school in London back in 1999, to be frank, I never thought I’d become an entrepreneur,” he replies. “But as the years went by, it sort of came naturally. I started to realise that I might have built the necessary network and leadership qualities to start my own business.

“It was a big decision because being a professional and being an entrepreneur are two completely different things. You are facing a completely different set of risks. But in the end, I thought I had been a professional for about 16 years by then. So it was case of now or never. I took the plunge and I launched Syailendra Capital. I had always wanted to be a fund manager. I think this is one of the best jobs in the world.

“Everything was tough at the beginning, given that the founders of Syailendra were capital market professionals who had no affiliations with big business groups or institutions. So it was tough to attract good talents to join the company. But gradually, I managed to convince people that we had the right vision, the right business model and perhaps most importantly the ability to survive and compete with the big boys.”

How does Parengkuan describe his own leadership style? “I’m a big believer in creating a good, conducive working environment to get the most out of your employees,” he says. “We try to develop a culture here where everyone has a big sense of belonging towards the company. Every job is stressful, but we want our employees to at least feel that it’s fun to come to the office.

“Fortunately, I feel that being a leader came naturally to me. I don’t get upset when people keep coming to me with problems. I think it’s a good sign, because it shows they trust you can help them solve their problems. But that may not be enough. To be a good leader, you must earn their respect, and that typically comes from your ability to make decisions that are much more often right than wrong, and to take full responsibility when those decisions go wrong. Admitting mistakes, I think, is one of the most important leadership qualities most people don’t have.”

Parengkuan says he learned a lot about leadership in his younger days from Lippo Group founder Mochtar Riady. He considers him to be one of his mentors in business. “I spent 10 of my 16 years as a professional with the Lippo Group,” says Parengkuan. “One day at the height of the Asian financial crisis in 1998, Pak Mochtar walked into my room and said: ‘Jos, remember this. The Chinese word for crisis in English means “danger but also opportunity”. Great opportunities often come in desperate times like this.’

“And that was perhaps his most valuable lesson ever for me. While it’s quite easy to understand the numerous opportunities that arise during turbulent times, what Pak Mochtar taught me was the need to stay positive, rational and focused in difficult times. Thinking positive really helps us solve a lot of problems.”

The most difficult business decision Parengkuan has ever had to make came early on in his entrepreneurial career. “I remember that after a few months it was quite a successful start for the company. We had about 200 billion rupiah assets under management (AUM) already. And then one day, a large pension fund client wanted to place a large amount of funds with us, which would have effectively doubled our AUM.

“But they said that they wanted us to guarantee the return. That is something that is not allowed by the law. As a fund manager, we can’t make promises on returns. It was a very tempting proposition and the market was also very supportive at the time.

“But I said to them: ‘With all due respect, I’m going to have to turn down your offer. It’s not because I’m afraid that I can’t fulfill your promises or I’m scared of the regulator. It’s because I have been investing in the stock market for the last 20 years and I know exactly what could happen when things go wrong in the market. I can tell you this, when the market goes wrong, there is absolutely no way I can fulfill my promise to you. I will not be able to honour my commitment to you.’

“But, they said to me: ‘You’re an expert in stock investing. For sure, before the market crashes you would be able to predict that.” I said: ‘No, that’s not true. You have to be very lucky to be able to escape a market crash. In reality, most people cannot escape.’

“What differentiates a good fund manager and an average fund manager is their ability to recover after a crash, not their ability to predict one. And also, one of our principles in doing business is that we want to earn money, but we want to earn it in a proper way. It’s all about business ethics, and that is one of the values at Syailendra that we have always maintained throughout the years. Because I believe that you may have to sacrifice some short-term benefits, but in the long run, people will recognise your integrity. And I think integrity in this business is everything. If you lose your integrity, you’re finished.”

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