Indonesia's powerful military has volunteered to close up shop on its huge business empire – three years earlier than the law requires. The armed forces commander, General Endriatono Sutarto, made the decision with the apparent agreement of the heads of the army, navy and air force. The surprise announcement puts renewed pressure on the government in Jakarta to come up with the money to fully fund the military.
Presenter/Interviewer: Karon Snowdon, Finance Correspondent
Speakers: Bob Lowry, former Australian defence force attache; Professor Dewi Fortuna Anwar, Humanities Deputy Chair at the Indonesian Institute of Sciences.
Snowdon: Bringing down the shutters on the multi-billion dollar business empire of Indonesia's military is easier said than done. Its tentacles reach into big and small businesses, legal and illegal, from hotels and construction to logging and arms sales.
It all started as a means to fund its operations because the government, since the Suharto years, has paid only one third of the military's budget. But it's developed into get-rich schemes of the powerful and has bred some of the worst and most dangerous corruption in Indonesia.
Professor Dewi Fortuna Anwar, Humanities Deputy Chair at the Indonesian Institute of Sciences, says the news from military headquarters is to be welcomed.
Anwar: Usually strong resistance from within the military itself and now the statement being made by the military commander, I think that's a good sign.
Snowdon: As one of the new President's often quoted commitments to rooting out official corruption this is the most important first step, according to an expert on the matter, Bob Lowry, a former Australian defence force attache.
Lowry: Well if it carries across the whole of the public services and the police force it will be quite significant because the President has already declared war on corruption, and this should be seen as part of that general process of professionalising not only the military, but the public service overall and the police force as well.
Snowdon: We wish them luck actually...
Lowry: Yeah that's right exactly, it's a difficult process and you have to start with the military and the police, because if you don't start with the military and the police the chances of you carrying it through to the rest of the public service is pretty slim.
Snowdon: It wasn't possible to contact the military for a comment, but it revealed last week one of its officers is being held on suspicion of being involved in the most recent controversy involving the military.
The world's largest illegal logging racket was last month uncovered by the London-based Environmental Investigation Agency, in cooperation with Indonesian authorities.
The smuggling of 300-thousand cubic metres of one species every month from Papua to China contributes to Indonesia's loss of forests the size of Switzerland every year.
Whether this contributed to General Endriartono's press conference announcement is open to conjecture.
Rather the two year deadline to sell out the military's businesses probably has more to do with getting the parliament to work faster at ensuring the military's budget is increased. Bob Lowry again.
Lowry: There are probably two things, first of all there is a push both from probably from the President and from overseas governments for them to professionalise more quickly, but there is also the question of the government's budget process and the military's been trying various ways to get the government to increase, especially the parliament to agree to increase its budget.
Snowdon: So is this General Endriartono pushing back?
Lowry: No it's probably something he wants to do and he's indicated on various occasions that he wants to professionalise the military, but he can't do it without increased government funding.
Snowdon: So are we to assume that General Endriartono is a committed reformer from this action?
Lowry: He's certainly given indications of that in the past, but he's always said that to reform requires that the government increase the formal defence budget.
Snowdon: And how's the Indonesian government going to do that, it's going to cost an awful lot isn't it?
Lowry: Well a lot of the money made from business doesn't actually flow to operations, military operations, it flows to fleshing out the pockets of senior military officers. So it's not necessarily so that the government has to replace the total off-budget income that the military's receiving.
Snowdon: The new law enacted last year set what is probably a more realistic five year timetable for the changes supported by the Defence Minister.
Dewi Fortuna Anwar sees the two year deadline as a good will gesture on the part of the military leadership. Whatever the timeframe proves to be, many officers are going to be unhappy at the prospect of losing substantial ill-gotten gains.
Anwar: Most people don't think that Indonesia as a nation is committed to move forward from a more consolidated democracy to the development of a more professional military. So I don't think that people who have enjoyed privileges will be happy, but certainly in order to make it work the government should not only take the businesses away from the military, but that they should be given compensation, they should be given enough salary to live on and they should be given enough hardware to be a professional military.