Abdul Khalik, Jakarta – A national task force has recommended the Indonesian Military (TNI) hand over control of cooperatives and companies it runs, worth Rp 3.1 trillion (US$281 million), to the state.
During eight months of identification and verification, the team registered 23 foundations, 55 firms and 1,098 cooperatives owned by the military, which it said should be transferred to the state to fulfill the mandate of the 2004 law on the TNI.
The recommendation was submitted to Defense Minister Juwono Sudarsono as the chairman of the team's steering committee.
The committee also includes Finance Minister Sri Mulyani Indrawati, State Minister for State Enterprises Sofyan Djalil, Cabinet Secretary Sudi Silalahi and TNI chief Gen. Djoko Santoso. They report to President Susilo Bambang Yudhoyono, who must complete the transfer of all military businesses by Oct. 16 next year, as stipulated in the law.
Team chairman Erry Riyana Hardjapamekas said the team found that assets owned by TNI cooperatives, including its subsidiaries, were valued at Rp 1.3 trillion; while assets owned by the foundations were valued at Rp 1.8 trillion.
"But the cooperatives and foundations have liabilities totaling Rp 1 trillion, making TNI's net business worth only Rp 2.1 trillion," Erry said at a press conference.
The team called for the TNI's primary cooperatives, operating at district and regency levels, to be maintained because they fulfilled troops' needs for basic commodities and savings and loans.
"Because the state is not yet able to meet soldiers' basic needs according to the law, primary cooperatives should be maintained until the state can satisfy these needs," the recommendation read.
The team, however, proposed central cooperatives, foundations and firms be dissolved or merged with existing units under the Defense Ministry's supervision.
The Army's central cooperatives are called Inkopad and Puskopad, the Navy's Inkopal and Puskopal and the Air Force's Inkopau and Puskopau.
Puskopad, Puskopal and Puskopau operate at provincial level under the auspices of regional military commands, while Inkopad, Inkopal and Inkopau are based in the capital under the control of TNI headquarters.
Apart from profit-seeking companies in construction, trade, mining and plantation, the foundations also control schools, universities, hospitals and mosques.
"While we recommend the transfer of all businesses to the state will not violate any law or cause third parties losses, we must ensure the operations of schools and hospitals be preserved during the handover to the defense, education or health ministries," Erry said.
The TNI's cooperatives employ 3,523 active soldiers and 4,970 civilian officials, the team found.
It also revealed the use of state assets by the TNI with no accountability, and its refusal to report non-tax income to the state. "We recommend that all assets be returned to the state, and that the TNI pay the state from the proceeds," Erry said.
The team's conclusion confirmed an audit by the Supreme Audit Agency (BPK) that found financial reports from the Defense Ministry and the TNI failed to include huge amounts of non-tax income, estimated at billions of rupiah, generated mostly through productive assets such as rented land and buildings.