T

he prolonged transfer of Indonesian Military (TNI) businesses to the government is proof of the TNI’s lack of transparency and poor willingness to reform, an NGO said on Friday.

The 2004 TNI Law mandates the force to complete the handover of the businesses — worth a total Rp 3.2 trillion (US$364.8 million) — to the government by 2009.

“The deadline passed almost two years ago, but the TNI has not announced the handover progress,” Al Araf, the program director of Imparsial, said at a press conference.

The government also seemed reluctant to enforce the law by pushing the TNI to fulfill its obligations, he said.

President Susilo Bambang Yudhoyono, a retired army general, was afraid of losing political support from the armed forces, he said.

“The TNI is still a significant power in Indonesian politics. The President might not want to exacerbate the political situation given the current tensions among members of the ruling coalition,” Al Araf said.

The decision to end military businesses was made in October 2004 when the House of Representatives passed the TNI law.

Critics claim military businesses were a vehicle for members of the military to amass personal wealth.

Human rights groups and military analysts have long voiced concerns over the military’s business activities, which they say were at the root of many of human rights abuse and corruption cases.

In early 2009, then defense minister Juwono Sudarsono pledged the processes would be completed by the deadline set by the law, which was October 2009.

However, the government failed to do this, forcing the minister to form a national team on military business takeovers comprising officials from the TNI and the Defense Ministry as well as representatives from the Finance Ministry, Cooperatives and Small and Medium Enterprises Ministry, State-Owned Enterprises Ministry and Law and Human Rights Ministry.

Businessman Silmy Karim, who was appointed to head the team, claimed the transfer process was complete. He insisted the government had carried out the mandates stipulated by regulations.

Salim said Imparsial may have overlooked some regulations ruling that cooperatives and foundations were excluded from the process.

“Everything was done by the end of 2009. We cannot take over cooperatives because they are no longer included in the TNI organizational structure as regulated by a 2010 presidential regulation,” he told The Jakarta Post.

Foundations were also no longer subject to the TNI law because they were not businesses, Silmy argued.

Most military businesses, set up in the New Order era, are cooperatives or foundations. The team said there were 1,321 cooperatives, 53 firms and 23 foundations run by the TNI as well as 1,175 other subsidiaries leasing state property for commercial purposes.

Official data shows these businesses generate an average annual profit of a paltry Rp 268 billion.

This figure, however, has decreased steadily, triggering suspicions the TNI may have manipulated the legal status of some business units to exempt them from being targeted by the law.

Al Araf cited a 2006 statement by the TNI claiming that all of the business were worth only Rp 1.5 trillion, far below the initial estimate of
Rp 3.2 trillion.

“In fact, an independent study in 2004 valued the assets of all TNI businesses at Rp 5 trillion,” he said.

Al Araf said Silmy’s claims must be backed up by a transparent disclosure of the whole transfer process, including details of all of the business units handed over.

“The TNI must disclose the value of each business unit and their assets,” he said.