Robert Go, Jakarta – Indonesia's military will not get out of business just yet but could set up holding companies to consolidate and clean up the hundreds of enterprises under its control, according to top generals and sources.
Although they are under pressure to give up commercial activities altogether, the Indonesian Armed Forces (TNI) argue that the income from its companies is needed to supplement the meagre budget allocation for defence.
Lt-General Agus Widjojo, deputy speaker of the legislative body People's Consultative Assembly (MPR) who represents the military and police faction, said: "It is only fair, and it is universally practiced, that the military looks out for the welfare of its soldiers.
"The question is not whether the military can or cannot run businesses but rather how it runs them. Does it do so with accountability and transparency?"
Other senior officers at the TNI headquarters near Jakarta declined to comment officially but said that the thinking among the top brass was indeed for a revamp of the entire system.
One of the officers said: "The long-term view is perhaps to reduce our dependence on the business activities, but for now it should be enough that we clean them up and hand them over to professional managers and make them more transparent."
The TNI earlier engaged consulting firms and auditors to begin restructuring and to see what could be done to streamline its holdings. Among key recommendations is the idea of sorting businesses based on industry sectors and types of operations and grouping them under a small number of umbrella companies.
Money from the government amounts to between 25 and 30 per cent of what the TNI needs to operate at full efficiency and to ensure its 500,000 soldiers are taken care of. Military sources insist that the money raised from private dealings is not used to fund operations or to buy new weaponry but to provide housing, medical care, scholarships and other such items for soldiers.
The organisation's involvement in business dates back to the 1950s when military officials started private companies and used their connections to help their businesses survive. Now they have business interests in forestry, plantations, oil, insurance, hotels and restaurants and taxi companies.
There is sketchy information about how much money the military makes in this fashion. But experts have estimated that billions of dollars have been accumulated and distributed by the various yayasans or foundations, and cooperatives under the control of TNI officers since the mid 1960s, when former president Suharto rose to power.
Critics also allege that much of the money ended up financing the jet-set lifestyles of high-ranking officers.
Centre for Information and Development Studies director Umar Juoro said: "These companies are very messy. It is unclear how much money they make or lose and officers or former officers get to run them without having to worry about whether they're being well run or not.
"It seems there is a drive to at least make these companies more accountable and that's all to the good. But it remains unclear when this will happen."