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Indonesian military to divest business in two years

Updated On: Apr 15, 2005

Jakarta – The Indonesian military (TNI) will end its deep involvement in business – long blamed for a variety of institutional ills, such as corruption and lack of professionalism –  within two years as part of its ongoing reforms, said military commander, General Endriartono. 

    The deadline, which has been set earlier than initially planned, was made following a meeting of the top military brass at TNI headquarters on April 12.
    Gen Endriartono told reporters that loss-making businesses would be shut down, while profitable ones would be either acquired by the government or sold to the private sector. 
    "Whether (their assets) amount to one trillion rupiah or five million, they will no longer exist in two years," he said. 
    Under Law No. 34/2004 on the military, commercial ventures acquired by the once all-powerful TNI during the former dictatorship of President Suharto must be surrendered within five years. 
    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 defence. 
    The TNI has been involved in numerous businesses since the late 1950s because the government could not meet the military’s budget needs. The military only received about 30 per cent of its budget from the government, the rest was funded through business ventures.
    These businesses support military operations and increase the welfare of military personnel and their families. The military’s business assets are estimated to be worth up to 10 trillion rupiah.
    Critics have argued that the military's involvement in business activities has increased corruption and undermined military professionalism.  
    Gen 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".
    President Susilo Bambang Yudhoyono, a former general, has pledged to pursue reform of the military and place it under full civilian control. His government has also pledged to increase military spending, currently the lowest in Southeast Asia.

* TNI to divest business in two years: Endiartono (The Jakarta Post, April 13)