20 Jun 06. Indonesian military to divest only six of its 1,500 businesses. Indonesia is scaling back plans to force its military to unload its business interests in a blow to reform efforts just seven months after the US restored full military ties with Jakarta. Indonesia’s parliament in 2004 passed a bill requiring the powerful military, known as the TNI, to unload all the businesses it controlled within five years. Advocates of reform have long accused the TNI’s network of legal and illegal businesses of contributing to corruption, illegal logging and other crimes and of complicating life for foreign companies looking to invest in south-east Asia’s biggest economy. But in an interview with the Financial Times, Juwono Sudarsono, Indonesia’s defence minister, said Jakarta now expected to be able to force the military to divest just “six or seven” profitable businesses of the 1,500 it controls. The main reason for that, he said, was the “meagre resources” of Indonesia’s defence budget with the civilian government providing just 48 per cent – or $2.8bn – of the “minimum budget required” by the military. “It has to do ultimately with economics and affordability,” said Mr Sudarsono, a former academic and ambassador to the UK.
“You cannot expect us to reach your [western] standards of reform, your standards of accountability, and your standards of propriety because the socio-economic underpinnings are just not there,” he said. “It’s just the reality of the situation.” The comments came ahead of the release by Human Rights Watch today of a report expected to be critical of Indonesia’s efforts to reform military businesses. Mr Sudarsono insisted that despite concerns over “scope and speed”, Indonesia remained committed to military reform. “There will be a series of glitches in the reform process because of the inherent vested interests at all levels,” he said. “But I’m very confident that the larger trajectory is towards more accountability, more efficiency, and greater transparency.” Mr Sudarsono said many of the military’s businesses had suffered in recent years from “market forces” and the Asian financial crisis. Of the 1,500 or so controlled by the military, largely via a network of foundations and co-operatives, just six were profitable, he said. Only those would be handed to the civilian ministry of state-owned enterprises. The remaining businesses would be administered according to laws regulating foundations and non-profit co-operatives, Mr Sudarsono said, with their revenuesto be used to help “low-ranking soldiers and their families”. Since the 1998 fall of strongman Suharto, Indonesia’s military has gradually withdrawn from politics, although many former generals – including President Susilo Bambang Yudhoyono – have chosen to run for office. But it remains arguably Indonesia’s best-functioning institution and Mr Sudarsono called it a bulwark against the rise of radical Islam in the world’s largest Muslim country. “In that sense we are somewhat like the Turkish army,” he said. “The very notion of Indonesian-ness is a blend, a sublime blend, between secularism and Islamism and today the defence forces are the only institution that upholds this principle.” (Source: FT)
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