Kadin suggests alternative financing schemes to TNI<\/p>\n
Zakki P. Hakim
\nThe Jakarta Post\/Jakarta<\/p>\n
The much-hyped Ambalat dispute has encouraged the Indonesian
\nMilitary (TNI) to renew its demands for more up-to-date weaponry,
\nwith the constraints on the military budget forcing it to look
\nfor new funding sources.<\/p>\n
In response, Indonesian Chamber of Commerce and Industry
\n(Kadin) chairman Mohammad S. Hidayat said on Tuesday that his
\nassociation had offered alternative financing schemes to help the
\nTNI update its weaponry.<\/p>\n
"We are concerned about the living standards of our soldiers
\nand the state of our defense capability," he said after a rare
\nclosed-door meeting between top Kadin officials and TNI chief
\nGen. Endriartono Sutarto, accompanied by military spokesman Maj.
\nGen. Sjafrie Sjamsoeddin.<\/p>\n
Hidayat said there were a number of "business-to-business"
\nfinancing alternatives that the TNI could avail of instead of
\nrelying excessively on the state budget.<\/p>\n
"Kadin can play a role in identifying such financing schemes,"
\nhe said after the two-hour meeting at the chamber's offices in
\nKuningan, South Jakarta.<\/p>\n
The alternatives included countertrade, export credit and
\ncommodity financing deals, Hidayat said without elaborating.<\/p>\n
The Kadin offer comes against a backdrop of increasing public demands
\nfor the TNI to surrender its businesses to the state in a bid to
\nimprove its professionalism.<\/p>\n
This year's state budget allocated some Rp 21 trillion to the
\nmilitary, which, according to defense minister Juwono Sudarsono,
\nwill only cover around 50 percent of the its basic expenses.<\/p>\n
To cope with its budgetary problems, the TNI has long relied
\non profits from its businesses. However, many believe corruption
\nis widespread in senior ranks as the military has never publicly
\nreleased audit findings on its companies.<\/p>\n
Hidayat urged the government to learn from the past mistakes
\nas regards alternative financing schemes for the military,
\nparticularly from the Sukhoi countertrade deal.<\/p>\n
The Sukhoi purchase made headlines in 2002, when the
\ngovernment was accused of breaching existing purchasing
\nprocedures by excluding the Ministry of Defense from the entire
\nprocess.<\/p>\n
The government bought four Sukhoi fighter jets worth US$265
\nmillion from Russia based on a countertrade deal involving 11
\ncommodities.<\/p>\n
The dispute over the Ambalat offshore oil block erupted last
\nmonth after Malaysian state-owned oil firm Petronas awarded
\nproduction sharing contracts to Shell in areas that are also
\nclaimed by Indonesia.<\/p>\n
The dispute prompted Jakarta and Kuala Lumpur to deploy
\nwarships, we each side accusing the other of infringing its
\nsovereignty. However, the two neighboring countries have since
\nagreed to settle the dispute peacefully.<\/p>\n
Nevertheless, the brief spat has put the need for the TNI to
\nupgrade its weaponry, including its warships and aircraft, under
\nthe spotlight.<\/p>\n
Endriartono said the territorial dispute had persuaded the TNI
\nto request an increase in the defense budget when the government
\nproposed revisions to the state budget next month.<\/p>\n
"Most of the additional money would be used to upgrade Navy
\nand Air Force equipment," he said.<\/p>\n
Asked if the dispute had affected foreign investment and
\ntrade, Hidayat said that there had been no major impacts thus
\nfar.<\/p>\n
He said that despite the dispute, Malaysian Minister of
\nInternational Trade and Industry Rafidah Aziz along with more
\nthan 100 businesspeople would visit Indonesia next week to meet
\nMinister of Trade Mari E. Pangestu and local private sector firms
\nto explore business opportunities between the two nations.<\/p>\n
"But if the conflict is prolonged, it will eventually have
\nadverse consequences," Hidayat said.<\/p>",
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