Tony Sitathan, Jakarta – Adhong is a former junior officer from the Indonesian Army. He recalls the Suharto era when he was deployed in Irian Jaya (now West Papua) and Nusa Tenggara, where sectarian clashes and rivalries between religious groups was nothing unusual. "Those were difficult times and we were considered the first crack troops that [were] relied upon by the government to suppress any form of social disorder," he recalled. After his early retirement from active service, he is now gainfully employed as a security "advisor" to a nightclub in the heart of Chinatown in East Jakarta.

However, his ties to the military, he revealed, have not been permanently severed. He relies on former and active marines and Kopassus (special forces soldiers) to provide the muscle needed to maintain law and order in the nightclub. Also, since the nightclub acts as a massage parlor that offers sexual services, security on the premises has to be tightly controlled. He recalled a recent incident where he had to prevent the neighborhood police from muscling in on army turf.

G Hutagalong, a former security advisor to popular nightclubs such as Tanamur, which is well known in Jakarta as a hotspot for tourists, reveals an intricate web of alliances and shakedowns that permeate the nightlife in Indonesia. "Each nightclub or discotheque or even massage parlor has an elaborate payment system in place for the collection of monies or monthly dues ... paid to either the police or the armed forces in return for protection from organized crime syndicates or unknown external threats. It's a system that has proved effective in Indonesia and something almost necessary in maintaining the peace and order of that area," he said.

It seems a high price to pay for security that should be guaranteed by the police who have been sworn to uphold the law. It has been estimated that larger nightclubs and discos such as 101 Nights and Tanamur have to pay almost 30 percent of their gross revenues per month for such shakedowns.

In Indonesia, where the average salary for mid-ranking soldiers ranges from Rp550,000-Rp900,000 (US$60-$100), while high-ranking officers earn about Rp2 million to 6 million ($225-$675), the pay is hardly sufficient to cope with inflation rates of 8 percent or more. Illegal activities, then, account for a large percentage of soldiers' allowances.

A D Asep, a former colonel in the strategic reserve command based in South Sulawesi, says the army has been involved in underground racketeering and other black-market activities such as distributing narcotics, working with mafia-type warlords and smuggling electronics goods, providing young girls for prostitution as well as a host of other activities. "I would estimate that at least one-third of accounted army funds are derived from such activities, although there are also legitimate business fronts that are led by capable businessmen who act on behalf of the armed forces," he said. Not all their business activities are established in the gray areas.

There are also several business fronts run by private businessmen such as Tommy Winata, the owner of the Artha Graha Group. The group has diversified interests in property development, logging and plywood plants, real-estate development, information technology, banking and finance, aside from general trading. There are more than 40 registered businesses and several dozen other affiliated companies under the Artha Graha umbrella.

The Artha Graha Group and, more notably, the Artha Graha Bank made media headlines recently with the uncalled-for detention of two high-flying Indian executives from Polaris Software Lab Ltd (see India ruffled over Indonesia's heavy hand, December 19, 2002). It was over a commercial dispute that can be considered a breach of contract between the bank the software company. Its heavy-handed use of force in detaining and later placing the executives under lock and key proved to the public and the international community just how powerful a stranglehold this business entity has on the military and the police in Jakarta.

Also when Tempo, the weekly business journal, wrote in one of its editions that the Artha Graha Group stood to gain from the fire that burned down a garment wholesale center, after it revealed a plan to rebuild the center for about Rp52 billion, force was used against the journalist who wrote the story and the magazine's headquarters. "As many as 200 people stormed the Tempo office and hurt several journalists as well as ransacking the office, despite the police watching on the sidelines," complained Teguh Indrawan, a reporter for a rival business magazine. "This goes to show the callousness of the authorities that should have immediately arrested such perpetrators for crime instead of defending them," Teguh asserted.

Such flagrant abuse of the law has far-reaching repercussions, especially since the army has always depended on the goodwill and support of its people for its very existence. With the General Assembly still deliberating on increasing state funding for the armed forces and cutting back its business involvements, President Megawati Sukarnoputri has sent strong signals to the army to rely less on its function as a commercial business facilitator and more on its role of safeguarding national interests.

Although it's a hotly debated issue, since the military budget officially accounts for less than 40 percent of its required budget, the Indonesian government has to find ways to balance the books before setting a motion to cut the army's role in business. Indonesia's military budget is a little more than $1.4 billion, as compared with Singapore, which has earmarked more than $4.6 billion, Thailand has kept aside $2.3 billion, and even Malaysia has reserved about $1.8 billion to shore up its defense capabilities.

With Indonesia's population standing at 230 million while Singapore's is about 4.2 million, it is a defense-budget mismatch by any standards. So in order to make up for the budget deficit, the Indonesian army has prided itself on running its own businesses and being self-sufficient ever since the days of president Suharto. He is credited with founding self-funding army-linked companies back in 1955, when he began to work closely with the likes of Bob Hasan and Sudomo Salim, better known as Liem Sioe Liong, in the import of agricultural commodities, which later extended to controlling mining areas, logging interests, property development, even banking and finance.

"The army in the Suharto period had its hands in many different economic pies, and now with his departure, there are still sizable businesses that are being channeled under the military," said Edward Suryanto, a well-known human-rights activist and lawyer in Jakarta. "There are close to 300 funded yayasans [charities] set up under the armed forces to date as well as several other businesses that have international branches."

Dr Harold Crouch has spent several years in Jakarta as the head of an international crisis group, and he describes an Indonesian military still active in making its own rules. "The army gets only one-third of its budget from the Indonesian state. The other two-thirds of the budget is raised by the military itself – from business enterprises and from corruption, and the largest source of military finance is actually from extortion and illegal activities. Wherever there is illegal mining, illegal logging, illegal fishing, cattle rustling and even smuggling, you'll be bound to find military elements," he said.

It is ironic to find that the rank and file of the army are still discontented despite the army's business overtures. The money that it rakes in never seems to reach those in the lower echelons of the military, but only the top brass. "The majority of those in the army are moonlighting to earn a living," said Adhong. "With living costs in Jakarta escalating by the day, its no wonder that several of my former colleagues have to work as security members or resort to even driving taxis on their off-duty days." It seems being taken for a ride is a way of life for those charged with defending their nation.