Wed, 14 Jun 2000

Juwono defends business projects of TNI officers

JAKARTA (JP): Minister of Defense Juwono Sudarsono defended the business activities of Indonesian Military (TNI) officers as a way to help improve its soldier's welfare, saying that it was needed given the government's inability to provide a sufficient budget.

Juwono said there should be no problem with such activities as long as these businesses are publicly accountable, bring welfare to all soldiers and are established in the form of a limited- liability company (PT).

"If the businesses are in the form of a PT, it's okay. But the problem is there are many foundations or cooperative units with unclear legal status that are not accountable," he said.

With the TNI's presence in the House of Representatives and domestic security slowly being phased out, there are growing calls that it also refrain from direct intervention and involvement in the business sector.

The TNI, like civil servants, are generally prohibited by law to undertake commercial activities outside their formal occupation.

Many have criticized military businesses, saying they violate the military's defense function.

Article 2 of Government Regulation No. 6/1974 clearly states that all military officers with a rank of lieutenant or higher, and their spouses, are prohibited to own or be connected with any businesses.

The regulation even prohibits military officers and their spouses from conducting trade in any form. However, the regulation opens the possibility for officers to be involved in businesses if the President gives official permission.

Juwono warned on Tuesday that the TNI's operational readiness was on a sharp decline while on the other hand they have to deal with various cases of unrest across the country.

For the time being the additional nonbudgetary funds are needed to improve soldiers welfare because the state budget only covers 25 percent of minimum operational costs, he remarked.

The 2000 State Budget allocates Rp 10.9 trillion (US$1.3 billion) to the ministry. This allocation accounts for 5.59 percent of the total state budget which covers a nine-month period.

"We hope to cut down the nonbudgetary funds in the future but right now, due to the economic crisis we have to survive from these businesses," Juwono said.

According to Juwono, military enterprises date back to the 1950s as a means for a commander to improve his soldiers' welfare. It was started when former president Soeharto, who was a middle ranking officer at the time, held a meeting with Chinese- Indonesian tycoon Liem Sioe Liong in Surakarta.

So far, besides cooperatives, the Army's Special Force (Kopassus) and the Strategic Reserve Command (Kostrad) have their own air and land transportation business.

Juwono said to improve the system of these businesses and because of demands from the International Monetary Fund (IMF), as stated in its Letter of Intent, the ministry is auditing companies and foundations owned by TNI.

"The Ministry of Defense's Secretary General and Inspector General are in charge of the audit. They are cooperating with TNI Headquarters to find out the numbers of foundations, cooperative units or companies owned by TNI," he told journalists here on Tuesday.

However he emphasized that the audit is not aimed at restricting these businesses but merely to gather details of their assets.

"Right now we're also focusing on how to find a formula to use the allotted budget to buy military equipment that is at least competitive with neighboring countries," he said. (09/dja)