Jakarta – The government stepped into a controversial quagmire Monday when it announced that only six businesses met the criteria for classification as a military business from among the 1,500 that had previously been identified as Indonesian Military (TNI) businesses.
Defense Minister Juwono Sudarsono said in Jakarta the six business units that filled the criteria had more than US$50,000 in assets and could be categorized as companies.
"We consider TNI business in terms of corporate size. The State Ministry for State Enterprises office determines their classification," he said.
Juwono added that the defense, finance and justice and human rights ministries and the State Ministry for State Enterprises would meet in the next three days to complete the draft of the presidential decree on military businesses.
The Defense Ministry and TNI will still be allowed to maintain some cooperatives and foundations, as long as they are not profit-making entities, Juwono said.
"Since 1952, the country has never allocated a large enough security and defense budget. (Indonesia) probably has the lowest defense budget among ASEAN countries," he said.
Experts insist, however, that military business should be defined as any financial act carried out by TNI or a soldier for capital gain.
Edy Prasetyono from the Center for Strategic and International Studies (CSIS) detailed for The Jakarta Post the four categories of military business.
The first comes in the form of shares in commercial or private companies; second, foundations that are active in the business sector; third, cooperatives that, under the cooperatives law, are allowed to conduct economic activities and fourth, asset commercializations, such as the renting of buildings and land.
"The TNI should be prohibited from engaging in business activities because that is unprofessional and would make the TNI independent of the state, thus becoming a separate power. Its loyalty would be based on economic reasons, thus exacting high economic and social costs," Edy said.
Agus Widjojo also from CSIS said that in principle, the military and business were contradictory "because a soldier is committed to serving while business is meant for seeking profit".
The TNI has been involved in business since the late 1940s, but the practice expanded at the beginning of the New Order era in the early 1970s under former dictator Soeharto.
Almost 70 percent of TNI's annual budget is derived from its diversified business activities. This year's defense budget is set at Rp 32 trillion (US$3.63 billion) or 4.5 percent of the state budget. Under a law on military reform, the government must absorb all TNI businesses within the next five years.