Indonesia fails to end military businesses

Tuesday, January 12, 2010
JAKARTA 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 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.