Military may retain many businesses

Military may retain many businesses

Tiarma Siboro, The Jakarta Post, Jakarta

The Indonesian Military (TNI) will likely retain many of its
businesses, despite a law mandating that the government take over
all the military's enterprises to improve its professionalism.

A meeting of senior officials from four relevant ministries
concluded on Wednesday that the government would only take over
TNI companies "that enjoyed state facilities".

"Most of these business units are run by cooperatives or
foundations owned by all the military units, and we will allow
them to maintain them because the government has never shared
assets or facilities with them," said Muhammad Said Didu,
secretary at the Office of the State Minister of State
Enterprises.

Many or most of the businesses were established in cooperation
with private companies, while others are managed by the TNI's 219
cooperatives and foundations.

The meeting was attended by Minister of Justice and Human
Rights Hamid Awaluddin and senior officials from the Ministry of
Finance, the Office of the State Minister of State Enterprises
and the Ministry of Defense.

Held at the defense ministry, it discussed the verification
process for TNI's business units.

Didu said the government could understand that many of the
TNI's companies were under the management of the military's
cooperatives and foundations, and were aimed at improving its
soldier's welfare, instead of looking for profit.

Partly for that reason, the government would allow the
military to continue running these companies, he added.

However, Didu said the meeting on Wednesday suggested that the
government revitalize the management of the companies it would
take over from the TNI by making them state enterprises, rather
than limited companies (PT) or holding companies.

He argued that, as state enterprises, the companies
would be eligible for the Office of the State Minister of State
Enterprises' assistance programs without the companies'
confidential information being "leaked to private
parties".

"As you know, these companies' core business is in the defense
and security fields," he said.

In the move to create a professional TNI, Law No. 34/2004 on
military reform was passed last year, requiring the government to
take over all business units run by the TNI within five years.

Minister of Defense Juwono Sudarsono ordered last month all
military units from all forces to lodge reports on their
companies.

He said the President would issue a regulation to rule on the
handover of the TNI's companies by November.

Didu said that his office would need no less than three months
to verify which TNI companies were profitable and which were not.

The latest data shows the military has no less than 219
cooperatives and foundations, with each running about two to
three business units.

Despite the number of business units, the TNI's top brass have
repeatedly cited the "low" defense budget as an excuse for the
military's "lack of professionalism".

TNI chief Gen. Endriartono Sutarto has asked the government to
consider the soldiers' welfare, including the procurement of
housing facilities, as a top priority once the servicemen are
banned from involvement in business activities.

For the 2005 fiscal year, the government has allocated Rp 21
trillion (US$2.3 billion) for defense expenditure, accounting for
only 6 percent of the state budget.