When hearing the name Bosowa Group, most local businessmen would often described it as a growing business empire linked to Vice President Jusuf Kalla and businessman Aksa Mahmud -- now deputy speaker of the People's Consultative Assembly (MPR).

Established in 1973 by Aksa, Kalla's brother in law and closest confidant, the group has now become a diversified conglomerate with businesses ranging from automobiles distributor to turnpike operator. It was one of the main financial backers of Kalla and President Susilo Bambang Yudhoyono during the 2004 presidential campaign.

Bosowa, an acronym of South Sulawesi's cities of Bone, Sopeng, and Wajo, is now the second largest conglomerate after the Hadji Kalla Group in the eastern part of Indonesia, with an operating revenue of Rp 1.2 trillion (US$129 million) last year.

The group, which started as a small trading company engaged in distributing Mitsubishi cars and trucks for the eastern-part of the country, now employs around 13,000 workers, with most of them originated from areas in central and east Indonesia.

As part of efforts to raise more funds for expansion and boost accountability, the group is planning to sell some of its shares in its turnpike and cement companies to the public this year, and list the shares on the Jakarta Stock Exchange.

Several new investment plans in the cement sector in Java as well as power plant projects in eastern part of Indonesia are already on the pipeline.

The group is even exploring possibility to take over certain mid-size banks.

The aggressive expansion plans are mostly initiated by younger generation in the group's management, spearheaded by Aksa's eldest son Erwin Aksa, 30, who runs the group's daily operation since Aksa was elected as the MPR's deputy speaker in 2004.

Following are excerpts from an interview with Erwin over the group's expansion plans:

Question: In which business sectors are you planning to expand?

Answer: Our main business focus will be on infrastructure and cement sector. As the only private local cement player (PT Semen Bosowa Maros), aside from state enterprises and foreign companies, we are proud to be engaged in this business at a time when the country will need huge supply of cement. Our other focus will be on maintaining our trading businesses, which are not that significant and are difficult to be expanded further. Until this day, we remain as the main distributor for Mitsubishi automobiles.

The group's largest revenue is still from the cement business, which accounts for 50 percent. The remaining comes from infrastructure and trading businesses.

In the infrastructure sector, we are now operating the Serpong-BSD (Bumi Serpong Damai) turnpike section (in the southern outskirt of Jakarta), and several other turnpikes in Makassar. We are now in the process of constructing a 10-kilometer turnpike in Makassar that will link the airport with the seaport there. We are also involved as a minority shareholder in the Depok-Antasari turnpike section (in Jakarta), which will only start construction in 2009 because of difficulties in clearing the land for the project. Our share in the project is not much, just around 6 percent.

Any plan to bid for other turnpike projects?

Well, we have a lot of plans for that. But the problem is that turnpike investors are still facing difficulties during land clearance. This country will never be able to expand its road capacity as long as the government does not provide incentives for helping us to secure the land.

My suggestion is that the government should take over the land clearance problem by establishing a revolving funds or through state or regional budgets to acquire the land. Investors have less capability for that since it will be difficult for them to seek bank loans to be used for purchasing lands, especially those located in Java which are already very expensive.

Aside from the financial problem, investors are also faced with unnecessary difficulties during the land clearance. Numerous non-governmental organizations and other groups in the public often disturb the construction process of massive projects.

There is already a regulation stipulating that the price of land to be acquired for infrastructure projects should be based on the value of the tax object (or known for its local acronym of NJOP) plus several percent margin. But in practice, the central and local governments are often not consistent in applying the regulation (allowing speculators to drastically inflate the price of land).

In Makassar, land clearance is easier than in Java.

What about power project?

We have such a project in Jeneponto (South Sulawesi) with a capacity of 2 x 100 megawatts. But again the are also problems that must be resolved by the government. Aside from licensing problem, power plant investors are facing difficulties to seek loans from local banks. Foreign banks are actually willing to finance such project but they request a government guarantee for the project due to lack of confidence.

At present, the progress of our project remains slow. We are still processing several licenses which could take a long time, possibly taking two years if we don't use any special channel.

Special channel means that we should seek assistance from the authority who are close to us.

The (bureaucratic) problem includes the (required) study (of the project) by the Ministry of Energy and Mineral Resources and state power utility company PLN which could take between two and three years. We must also lobby the government that there is (imminent) power crisis in eastern part of Indonesia, because the government is still prioritizing Java.

Power crisis in South Sulawesi will not be considered fatal by the government compared if it happens in Java. The government should no longer think of Java alone. Areas in eastern Indonesia also need attention. The government has pledged that it will set up several power plants in the areas, but words remain just words.

We are also seeking to focus on building other power plants in these areas. The government directly appoint a company to build a power plant without having to open tender process.

There is a regulation stipulating that in a power-crisis areas, the government could exempt any tender process in order to speed up construction process of the power plants.

We understand that Bosowa is planning to build new cement plant in Java. So how is the progress?

The highest cement demand remains in Java. We could not yet expect high consumption from areas in East Indonesia.

Due to such condition, Bosowa is currently seeking sites for building cement plants in Java, especially in Banten, West Java and Central Java. We are eyeing locations which have been left by previous cement investors.

We are now trying to reexplore these locations to set up our new plants, which will have Bosowa flag on it. Building a cement plant is no longer difficult like in previous years. After the introduction of regional autonomy, we only need to seek approval from regional administration.

Investment for the new plant is estimated to reach around US$150 million for an annual installed capacity of two million tons. If there are no obstacles, we expect to start the construction in 2007.

What about plan to take over certain banks?

We are just looking around. The bank is needed as a financing mediator since we see local banks are still difficult to channel loans. But really, we are just exploring. We have not yet invested in any. For sure, we are looking for small- and mid-size banks.

Any plan for going public

We are planning to sell some of our shares in several of our units through an initial public offering (IPO) scheme this year. Our two turnpike companies will be merged and will be probably named PT Bosowa Toll. Proceeds from the IPO will be used to expand our turnpike business in Makassar. Semen Bosowa is scheduled to go public this year as well. We may unleash between 20 percent and 30 percent of our shares.

Are there any burden in running the business due to the group's close link with Vice President Kalla?

The greatest burden is that when people often relate us with the vice president. People are currently tend to avoid doing business with those close to power as they are afraid of being accused for collusion.

Due to such condition, many businessmen who are willing to deal with people close to power often set up a special purpose vehicle (SPV) company to conceal their identity.

For Bosowa, we don't do such trick. We want to expand the group's name and seek a good image by not engaging in dubious business activities.

The group also tend to avoid state-owned banks when trying to seek financing. Instead, we are planning to seek overseas funds. That is why we are planning to make several of our companies listed as a public company in order to gain trust by boosting accountability and transparency.

We also avoid taking procurement for state enterprises and state projects. We focus more on making new investments.

We have once offered to build a railway track that will link the coal plant owned by state-owned mining company PT Bukit Asam with the Tanjung Enim port. But due to the lengthy bureaucratic procedure, we decided to halt the offer. It makes us stressful.

You just can't imagine the bureaucratic difficulties faced by companies which have no slight links at all with the government.

We can accept such bureaucracy if we can see the end of the tunnel. But in this case, we don't see any slight light coming out from the tunnel.

Are there instructions to avoid dealing with state companies or state projects coming from your Uncle Kalla

Not really. We are just seeking opportunities. In this country, 70 percent of the economic activities are controlled by state enterprises. It means that most of the giant companies in Indonesia are nurtured by state companies.

Is it true that Bosowa is currently helping the daily operational budget of the vice president?

Not in daily operational, that is not true. We are just financing the presidential campaign (in 2004). If asked for financial assistance for the 2009 presidential campaign, we will surely contribute again.