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Military's role in economy will be hard to reduce

Asia Pulse - February 17, 2000

Jakarta – It will much longer to reduce the Indonesian military's influence on the economy than on politics or government, an observer said.

"Stopping the military's role in the legislative body or the cabinet is now feasible. But stopping [it] in the economic field will take a longer time," Ikrar Nusa Bhakti, a researcher from the Indonesian Institute of Sciences (LIPI), said Wednesday.

Speaking in a discussion organized by the Study-Action Forum for Indonesian Democracy, Ikrar questioned the military's businesses through various foundations and cooperatives. "Most of the businesses are no longer directed to step up the welfare of the military personnel, but dedicated to the affluence of some generals," he noted.

According to him, the Indonesian military's involvement in business began during the reign of Soekarno and came to dominance during the three decades of Soeharto's rule.

During the process of nationalization of big businesses left behind by the Dutch colonial rule in 1956-57, Ikrar said, there had been fierce competition for assets control between the military and the then Indonesian Communist Party (PKI).

President Soekarno finally allowed military, particularly the Army, to manage a few business establishments. It was during this time that the military started to invite Chinese businessmen to cooperate in managing the businesses.

Following the ascent of Soeharto to power, the military got a greater opportunity in business. Chinese businessmen then sought cooperation individually, and some generals became backers to various business undertakings. "The generals' involvement in business is still going on," he said.

According to Ikrar, the state would need the right plan if it were to eliminate the military's role in business. "The civilian circle should be willing to negotiate with the military about appropriate compensation if the latter is to relinquish its control over all business assets," Ikrar said.