T

he running of businesses owned by the Indonesian Military (TNI) will be transferred to a management agency under the Defense Ministry, once a presidential regulation is enacted.

"The presidential regulation will be enacted later this month or early October. Once the regulation is enacted, the transfer will be officially carried out," spokesman of the national team overseeing the transfer of TNI businesses, Silmy Karim, told The Jakarta Post on Tuesday.

"The next step is to establish a management agency to run the businesses."

Silmy said the agency would sit under the Defense Ministry through a ministerial decree.

The team, established by a 2008 presidential decree, last year identified 1,261 TNI-established non-profit societies and cooperatives valued at Rp 1.3 trillion (US$129.22 million).

"The agency will include representatives from various institutions such as the Defense Ministry, the TNI headquarters, the Justice and Human Rights Ministry and the State Ministry for State Enterprises," Silmy said.

"The agency will also include outsiders just like me," he added.

Silmy, a businessman and vice chairman of the Indonesian Young Entrepreneurs Association (HIPMI), was speaking at the sidelines of a public discussion on economic resilience and defense, which was held by University of Indonesia's School of Economics, in Depok, West Java.

The deadline for the enactment of the presidential regulation is Oct. 16, as stipulated by the 2004 law on the Indonesian Military.

Silmy said the team had to carefully study laws on cooperatives and non-profit societies when deciding which business units would be taken over under the 2004 TNI Law.

"It turned out that most of the *TNI* businesses are cooperatives and non-profit societies," he said.

"A cooperative, for example, is owned by its members and not the TNI directly."

Silmy said that in the past, the military used to own businesses but those had now all been converted into state-owned enterprises.

He pointed to the state weaponry manufacturer PT Pindad, which came under the Army, the state aircraft maker PT Dirgantara Indonesia that was under the Air Force, and the state shipbuilder that was under the Navy.

TNI chief spokesman, Rear Marshal Sagom Tamboen, told the Post on Thursday that he could not comment on the issue until the presidential regulation had been enacted.

"All I have heard is that the regulation will accommodate some requests made by the TNI such as not dissolving the cooperatives and maintaining the non-profit societies," he said over the phone.

"We will manage the cooperatives and non-profit societies according to existing laws.

"Besides, it is the rights of every citizen to establish cooperatives and non-profit societies."

Sagom said the TNI would obey the presidential regulation whatever it dictated.

Maj. Gen. Syarifudin Tippe, director general for defense strategies at the Defense Ministry, Defense Ministry expert on economics affairs Pos Hutabarat, senior economist Dorodjatun Kuntjoro Jakti, and Ignatius Heruwasto of the Management Institution of the economics faculty, also spoke at Tuesday's discussion.

In his opening address, Syarifudin said there was a linear correlation between the economy and the defense sector.

"A strong economy guarantees a strong defense. A strong defense allowing a country to protect its sovereignty is needed for economic development," said Syarifudin, who is also the rector of the newly established Indonesian Defense University.

"Therefore, economic and defense policies should be carried out simultaneously."

Dorodjatun stressed the importance of keeping an eye on macroeconomics indicators as an early warning system to anticipate future crises.

"The indicators include debt service ratio, foreign exchange reserves, inflation and growth rates.

"Indonesia, for example, needs to grow at 7 percent a year to curb its unemployment rate."

Pos echoed Dorodjatun's concerns by saying it was important to manage a number of economic indicators to foster a more resilient economy.