TNI to divest businesses in two years: Endriartono

Tiarma Siboro, The Jakarta Post, Jakarta

In a bid to boost professionalism, the Indonesian Military (TNI) has decided divest its vast business interests within the next two years, TNI Commander Gen. Endriartono said.

The announcement to completely withdraw from the business sector faster than initially planned was made following a meeting on Tuesday at TNI headquarters with top military brass including the three military chiefs of staff.

Speaking to reporters, Endriartono said that loss-making businesses would be shut down, while profitable ones would be either acquired by the government or sold to the private sector.

He did not provide details on how the divestment process would be carried out.

Under Law No. 34/2004 on the military, commercial ventures acquired by the TNI during the former dictatorship of President Soeharto must be surrendered within five years.

Critics have argued that the military's involvement in business activities has increased corruption and undermined military professionalism.

Endriartono acknowledged that the involvement of the military in the business sector had provided ways for certain TNI personnel to engage in what he termed "negative behavior", instead of using the businesses to improve soldiers' welfare.

Law No. 32/2004 on the TNI stipulates that the government must take over all business activities of the military within five years as part of sweeping reforms within this once all-powerful institution. The new law strictly forbids soldiers from involvement in any business activity in order to ensure professionalism in the military and to ensure that all military personnel focus on their primary role, national defense.

Minister of Defense Juwono Sudarsono, along with several related ministers, including State Minister of State Enterprises, previously said that the government would take over military business enterprises that have assets worth more than Rp 5 billion (US$526,000), while smaller ones would continue to be owned by the TNI.

As a consequence of the stripping of TNI's business interests, the government plans to increase military spending, which is currently the lowest in the region, as the state could only currently cover around 30 percent of the defense budget.

The TNI has been involved in numerous businesses since the late 1950s because the government was unable to meet the military's budgetary needs.

Almost 70 percent of the TNI's annual budget comes from its business activities, and Endriartono warned the state to start designing concepts "on how it will deal with military (financial) needs."