TNI to divest businesses in two years: Endriartono

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."