Jakarta – A government task force has undervalued the net worth of the Indonesian Military's (TNI) business units with just a year to go before a deadline for the state to claim all TNI business assets, a rights group has said.
The task force for the takeover of TNI Business Holdings has valued the military firm at Rp 2.1 trillion (approximately US$190 million). However, NGO the Indonesian Human Rights Monitor (Imparsial) has said the figure is too low.
"The figure was too small considering the TNI business has been in operation since the New Order era. We also noticed a disclaimer in the report stating that neither a financial nor a legal audit had been conducted on the TNI business," Imparsial director Rusdi Marpaung said Thursday.
He said he would not blame the error on the task force because it was not mandated to perform an audit but only to design a mechanism to perform the take over. The task force, he said, was only authorized to call on TNI to disclose the assets.
The Supreme Audit Agency had previously found that the TNI's and Defense Ministry's financial reports had not included large amounts of non-tax income – estimated in the billions of rupiahs – generated mostly through productive assets, including rented land and property.
"We would see a huge number of assets if the investigation into the military business were deepened," Rusdi said.
"In 2004, Imparsial discovered that the chief commander of the Navy was attempting to sell a number of companies owned by the Indonesian Navy, so there is a possibility that a lot of companies have been sold by the military, and we don't even know where the money has gone."
Law No. 34/2004 on the Indonesian Military bans TNI soldiers from taking part in business activities and demands the state take over all TNI-owned business assets by October 2009.
TNI owns construction, trade, mining and plantations companies, as well as foundations that control schools, universities, hospitals, mosques and run several cooperatives in various sectors.
Over a period of eight months, the task force found that the military owned 23 foundations, 55 firms and 1,098 cooperatives, all of which must be transferred to the state under the 2004 law.
The task force found that assets owned by TNI cooperatives, including its subsidiaries, amounted to Rp 1.3 trillion and valued the foundations' total assets at Rp 1.8 trillion.
Because the cooperatives and foundations have liabilities totaling Rp 1 trillion, the net value of TNI's businesses is Rp 2.1 trillion, the task force found.
In its report, the team proposed that cooperatives, foundations and firms be dissolved or merged with existing units under the supervision of the Defense Ministry.
"The issue about the businesses being useful to meet soldiers' needs should not impede us from fulfilling the mandate of the law on TNI. The people want TNI to get out of politics and business and thus TNI must obey the law," Rusdi said.
Imparsial reminded the government the clock was ticking in its race to take over TNI's businesses.
The NGO said the task force's recommendations should be followed up by a shake-up of TNI's financial management and a revaluation of TNI's budget. (pmf)