Subject: Shock as TNI Assets Estimated at Only US$108.2 Million

The Jakarta Post Thursday, July 20, 2006

Legislators shocked by estimate of TNI assets

M. Taufiqurrahman, The Jakarta Post, Jakarta

In a disclosure that quickly sparked doubt from lawmakers, a government team said Wednesday that the assets of military-owned businesses were worth a total of only Rp 1 trillion (US$108.2 million), far less than widely believed.

A supervisory team for the conversion of military-controlled businesses said the book value of 1,520 foundations and co-operatives operated by the Indonesian Military (TNI) was Rp 1 trillion.

"It could be less or more than that figure," team chairman Said Didu said at a hearing with the House of Representatives' Commission I on foreign affairs and defense.

Didu said the figure was a rough estimate that his team received from TNI.

"The TNI leadership came out with the estimate after it assembled more than 70 percent of the high-ranking officers knowledgeable about the businesses," he said, adding that the meeting to determine the value of the assets was initiated by former TNI commander Gen. Endriartono Sutarto.

The revelation of the alleged value of the businesses took most Commission I members by surprise.

"We have learned that during the New Order regime of former president Soeharto, a number of generals held concessions for mining, forestry and other lucrative sectors inherited by the TNI businesses, so the assets cannot be worth only Rp 1 trillion," said lawmaker Permadi of the Indonesian Democratic Party of Struggle (PDI-P).

House member Soeripto of the Prosperous Justice Party (PKS) expressed similar shock.

"As someone who has known a little bit about forestry, I learned that one way or another military members managed to get shares in all 550 logging concessions. How can there be only two concession-holders with connections to the military?" said Soeripto, a former secretary-general of the Forestry Ministry.

Didu said the government would soon set up a new agency to manage the assets of TNI-owned businesses until they were handed over to the government.

A 2004 law mandated that all military businesses must be taken over by the government within five years.

TNI headquarters, the Defense Ministry, the Justice and Human Rights Ministry, the Finance Ministry and the State Ministry for State Enterprises set up the supervisory team led by Didu to manage the handover of the assets.

Didu said the new agency would resemble the now-defunct Indonesian Bank Restructuring Agency (IBRA), which was tasked with revamping the country's banking industry after the economic crisis of the late 1990s.

The decision to establish the new agency was made after the supervisory team determined that the existing team could not accomplish its mission within the given time.

"Due diligence on a company that performs well will take us one year. Here we have more than 1,500 companies with assets scattered from Sabang to Merauke, and not all of them are in good shape," Didu said.

Lawmaker Ade Daud Nasution of the Reform Star Party warned that the establishment of a new asset management agency would open the way for corruption.

"Such an agency will be prone to corruption; look what happened to a former IBRA chairman, who's having a run-in with the law now," Ade said.

---------------------- Joyo Indonesia News Service

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