Subject: Indonesia fails to end military businesses: Human Rights Watch

also Jakarta criticised over army’s assets; Continuing Indonesian military business 'dangerous': Human Rights Watch

Indonesia fails to end military businesses: Human Rights Watch

* Rights group criticises Indonesia's slow military reform

* Group says Yudhoyono's government lacks intent

* President's spokesman: process to take time

JAKARTA, Jan 12 (Reuters) - The Indonesian government shows no inclination to end the military's involvement in business or make the powerful armed forces fully accountable to civilian authorities, Human Rights Watch (HRW) said on Tuesday.

The New York-based group said in a report that reform of Indonesia's powerful military was a weak spot in President Susilo Bambang Yudhoyono's efforts to improve governance and end corruption in the world's third-largest democracy.

Foreign investors have been looking for decisive action against corruption from Yudhoyono after he won a second term last year. But the former general has moved cautiously following a power struggle between the respected Corruption Eradication Commission and the police and attorney-general's office.

In October 2004, Indonesia's parliament had issued a five-year deadline for the military to withdraw from its businesses, but Yudhoyono issued a decree five days before the expiry, postponing the date for an unspecified period.

Human Rights Watch said Yudhoyono's government "does not intend to end the military ownership of the armed forces' businesses and the reform plans do not ensure accountability for military misbehaviour in connection with business activity."

The report said the military's business operations include enterprises under military foundations and cooperatives, collaborations with the private sector and criminal activities such as illegal logging.

At the end of 2007, the military maintained 23 foundations and over 1,000 cooperatives, including ownership in 55 companies as well as leases on thousands of government properties and buildings.

Official data valued the total gross assets at 3.2 trillion rupiah ($350 million) at the end of 2007 and profit from the business activities at 268 million rupiah during that year.

A presidential spokesman dismissed the suggestion that the government was ignoring the military's business activities and said the reform process was taking place gradually.

"Maybe it takes time, but the government is concerned about looking into how the military can be turned into a professional force," said spokesman Julian Pasha.

The 400,000-strong military played a dominant role in Indonesian politics and businesses during the three-decade rule of autocratic president Suharto, and was accused of widespread rights abuses.

Suharto was toppled in May 1998 and died a decade later. Successive governments since then have attempted to dismantle the military's business empire, with no significant success.

The longstanding self-funding practices of the military, which officers insist was needed to cover the small budget, have undermined civilian control over the armed forces, fuelled rights violations and contributed to crime and graft.

The HRW said reasons for the delay in ending the military's business activities include a slow process and vague regulations. The slow process has also allowed the military to liquidate some of its assets, it said.

"There were also persistent rumours that the military drained companies of value, transferring assets to private allies on anticipation of an eventual handover," the report said.

Yudhoyono's decree in October has set in motion the long-awaited liquidation of military businesses, HRW said.

However, it called on the government to revise its ambiguous reform plans and open access for public monitoring, HRW said.

--

Radio Australia

Thursday, January 14, 2010

Continuing Indonesian military business 'dangerous': Human Rights Watch

The Indonesian Government is being criticised by Human Rights Watch for slow progress in dismantling what it calls the Indonesian military's "dangerous business empire". In a new report the New York- based human rights organisation says many elements of armed forces enterprises are implicated in rights abuses. It says the army still has control of more than 50 businesses, despite a law passed in 2004 requiring it to exit private enterprise by 2009. The Army and Government say such reform is an ongoing process.

Presenter: Stephanie March

Speakers: Lisa Misol, Human Rights Watch; Silmy Karim, spokesman, Indonesia's National Team for the Transfer of Military Business

MARCH: Under the Suharto dictatorship, Indonesia's military was a powerful political and commercial entity. In the decade since Suharto's resignation, Indonesia's transformation into a democracy has seen the army's political influence diminish. But Human Rights Watch analyst Lisa Misol says it's business 'empire' is still going strong.

MISOL: Today that we know of the military is invested in at least 55 different companies and as well as a host of other activities. The companies in which they have investments span quite a range but they include transportation services, real estate businesses, timber interests. They are also involved in a lot of protection services for companies for which they are paid, and there is a host of criminal enterprise that have military involvement that they also earn money from.

MARCH: Official figures say these business interests have gross assets of $350 million and turn a profit of around $25 million each year. Critics of military business say having a revenue stream exist outside of parliament diminishes the military's accountability. But Silmy Karim, the spokesman for the Government's National Team for the Transfer of Military Business, says there's already been significant change.

KARIM: The Human Rights Watch has to see that there is many progress in the process of military reform compare 15 years ago when the Suharto era. The size of the business compared to 15 years ago is much different now it's very small - only 3.2 trillion rupiah, it's around $350 million.

MARCH: Lisa Misol says commercial activities compromise the army's independence.

MISOL: Our concern is with the human rights consequences of the military's involvement in any money making activity and it really poses conflict of interest for the military in terms of their proper defence role if they actually are seeking profit then what we have seen are human rights abuses, extortion, seizure of land and abuse of workers.

MARCH: Parliament passed a law in 2004 requiring the military be stripped of its commercial interests by 2009. There has been much debate about what to do with the military businesses - whether to allow the Government to take them over, or liquidate them all together. Shortly before the 2009 deadline, President Susilo Bambang Yudhoyono passed a decree setting out new guidelines for army business reform. Human Rights Watch says under the new measures the military is not required to give up it's businesses, only restructure them.

MISOL: We have had contact with the government and they have made very clear to us that they are not taking ownership over any of the businesses and they are not operating any of the business and they are not asserting management control over any of the businesses. So the only thing they have credibly said they are doing is that they will supervise them and have some oversight and monitor the businesses

MARCH: But Silmy Karim says the military's become more transparent about its business enterprise.

KARIM: They open, they supporting us to see all over Indonesia what they do activities and business, so we don't see much problem with that and we see that this we have to appreciate what the military does when we were gathering information.

--

Financial Times [UK] January 12, 2010

Jakarta criticised over army’s assets

By Katherine Demopoulos in Jakarta

Indonesia was criticised on Tuesday for backtracking on a commitment to divest from its military a nationwide network of business assets worth at least $250m.

A report by Human Rights Watch said regulations on the divestment of the army’s businesses were unclear and a taskforce looking at the matter had little independence. As a consequence, the report concluded, the army’s business interests were likely to remain in military hands.

The army’s failure to get rid of its business assets is seen as symptomatic both of the slow pace of reform within Indonesia’s military itself and of the country more generally.

Professor Tim Lindsey, director of the Asian Law Centre at the University of Melbourne, said public sector reform was a big issue in Indonesia, which needed “aggressive” reformers.

Usman Hamid, head of the non-governmental Commission for Missing Persons and Victims of Violence, added that the reluctance to rein in military business reflected the army’s “cycle of impunity”.

In October 2004, Megawati Sukarnoputri, the then president, signed into law the requirement that within five years the government would take over the army’s businesses.

As that deadline expired last year, further regulations were issued by Susilo Bambang Yudhoyono, current president, and the defence ministry, but their lack of clarity means the interpretation contradicts the spirit of the 2004 law.

Most importantly these new measures do not require the military to give up its businesses, but merely provide for a partial restructuring of the entities ­ military co-operatives and foundations ­ through which it holds many of its investments,” the report said.

Lisa Misol, its author, said that all stakeholders in 2004 supported reform ­ including the military, if its budget was to be increased.

However, she added: “What you lacked was the political will to actually see it through. The government dragged its heels for five years. The momentum has never recovered since then.”

The military has an estimated $350m (€240m, £215m) in assets, $100m in debt and annual profits of $28.5m. According to the report, the assets are held through 23 foundations and about 1,000 co-operatives, and cover land rental, plywood plants and transport interests. The army also has other informal businesses, which the regulations do not address.

Silmi Karim of the military business taskforce confirmed the businesses would not be divested, but would be subject to tighter control.

Foundations are to be prohibited from investing more than 25 per cent of their assets and the “small number” that exceed this must sell up, he added.


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