Rendi A. Witular, Jakarta – The Indonesian military (TNI) will not seek financial compensation in return for the relinquishment of its businesses to the state, but has asked the government to improve the welfare of soldiers.

TNI Commander Gen. Endriartono Sutarto said on Thursday that the military's top brass had agreed not to seek compensation from the government since the decision to withdraw from business was part of the TNI's compliance to the prevailing military laws.

"We will not ask for any financial returns since it is our obligation and commitment not to be involved in any business activities. But the government should seek other ways to improve the welfare of the troops," said Endriartono at the State Palace.

Law No. 34/2004 on the TNI (not No. 32/2004 as mentioned before) stipulates that the government must take over all business activities of the military within the next five years as part of sweeping reforms. The law bans soldiers from involvement in any businesses to ensure the military focuses on defense, not commerce, and its professionalism is boosted.

The military has been involved in businesses since the country gained independence in 1945 – with the government failing to meet the military's financial needs – but it actually flourished at the beginning of the New Order era in the early 1970s. Almost 70 percent of the TNI's annual budget comes from its business activities. Business assets owned by the military are estimated to be worth up to 10 trillion (US$1.06 billion).

Endriartono said, once the government took over the businesses, the military would not intervene in any future policies issued by any ministry, or ministries, which were tasked to manage, oversee or supervise the companies after the takeovers.

"We won't have any authority once the business entities are taken over by the government. But I expect businesses that are running at a loss will be shut down, while profitable ones should be managed for the welfare of the soldiers," he said.

The TNI announced earlier that it would divest its vast business interests within the next two years to the government since the enactment of the TNI law last year.

Meanwhile, Minister of Defense Juwono Sudarsono said that as a consequence of taking over the businesses, the government would significantly increase military spending. "We have to pay attention to their welfare," he said.

At present, a task force headed by Juwono is still assessing the business entities run by the Army, the Navy, the Air Force and TNI headquarters. The entities are in the form of companies, foundations and cooperatives.

He said the assessment would be completed in October before a special team consisting of officials from various ministries would come to a decision on the mechanism for the takeovers.

"In October we will decide what to do with the businesses. We will examine them and draw up a plan. The Ministry of Justice and Human Rights will deal with the legal aspects while the Office of the State Minister of State Enterprises will take care of the business side," said Juwono.