Subject: TNI May Retain Many Businesses Despite Law

The Jakarta Post Thursday, October 20, 2005

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.

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