Al Araf, Jakarta – The democratic transition in Indonesia is undoubtedly a complex and fragile process. It does not place the so-called reformists as a group that can easily take and affect the authority to create political change.
This happened because despite the fall of Soeharto there are still many powerful old groups that have hijacked and influenced the political transition process. The process is tainted by political negotiations between the old and new groups, blurring the line that divides them.
In this situation, the Indonesian Military's (TNI) reform agenda has been decided by power struggle between the reformist and status quo groups. One of the sticking issues in the negotiation is on acquisition of TNI businesses. Although it is part of the TNI's reform agenda, the process has remained slow if not stagnant until today, despite the fact that the 2004 TNI Law mandated the transfer of military assets by 2009.
As a part of the military reform agenda, the termination of TNI role in business is expected to help create a professional military institution that focuses on state defense. Samuel P. Huntington said that military professionalism is based on three things: expertise, or knowledge and capability; social responsibility and corporation, which includes awareness and loyalty to the group or institution and dignity for the standard competence.
The government has formed several teams to take over military businesss since the enactment of the TNI law, all of which have failed to accomplish their tasks.
The first team, the TNI Business Transfer Supervisory Team (TSTB) was established in 2005, involving the Defense Ministry, Finance Ministry, Law and Human Rights Ministry and State-Owned Enterprises Ministry, to verify all TNI businesses.
Originally, the enterprises belonging to the TNI were to be handed over by the government and transformed into public companies, limited liability companies or holding companies.
From the beginning, the government's commitment to acquiring TNI business has sparked doubts as the President only passed a regulation as a legal umbrella for acquisition of military assets only in 2008. Under the presidential regulation, the National TNI Business Activity Acquisition Team was formed.
The belated issuance of the presidential regulation came under fire from civil society groups, who suspected the delay would only avoid takeover of TNI business. There were also concerns about the metamorphosis of the TNI business' into different corporations or the sales of the assets to a third party before the presidential regulation took effect.
Outside of this concern is the bizarre data on the number of businesses controlled by the TNI. In September 2005, the TNI inventoried 2,616 businesses, comprising 25 foundations, 916 business units and 1,071 cooperatives. In March 2006, the number fell to 1,502 units without clear documentation from the Defense Ministry.
In July 2006, the TSTB said the military's assets were worth Rp 1.5 trillion (US$136 million according to the 2006 exchange rate). The figure was much lower than the research conducted by the Ridep Institute in 2004, which valued the military business at Rp 5 trillion.
In 2008 the National TNI Business Activity Acquisition Team said the TNI owed 23 foundations that controlled 53 limited companies, operated 1,098 cooperatives that controlled two limited companies and used state assets that were managed by a third party. This team also found 1,618 plots of land covering an area of 16,544.54 hectares; 3,470 plots of land and buildings covering 8,435.81 hectares and 6,699 buildings covering 37.57 hectares.
The TNI's foundations as of 2007 controlled Rp 1.8 trillion in assets and its cooperatives controlled assets worth Rp 1.3 trillion. In total the TNI's assets were valued at Rp 3.2 trillion, with administrative obligations worth Rp 980 billion.
The team, however, did not disclose details of the companies and kinds of business owned by TNI. The team recommended that the government take over all the TNI businesses and assets, reposition all TNI foundations, cooperatives and state property, except for its primary cooperatives. State property would be returned to the Finance Ministry and state property that was managed by third parties would be restructured so as to contribute to state revenue as non-tax revenues.
Another recommendation was to reposition the military business, joint foundation and cooperatives into quasi-businessed under the Defense Ministry. The next step was a legal and financial audit of the foundations and cooperatives. In the meantime, the TNI primary cooperatives would be transformed into working units under the Defense Ministry and dedicated to soldiers' welfare.
It is important for the Defense Ministry to explain to the public and provide details about the delayed process of TNI business transfer, including which businesses have been taken over and which assets have not. Such transparency will prevent fishy business in the process.
Furthermore, the House of Representatives needs to supervise the process. The arrangement and acquisition process of TNI business has to wind up this year, otherwise it will delay completion of the TNI reform agenda.
It is also important that profits from TNI businesses go to the state coffers and are spent on improvement of soldiers' welfare equally and fairly. Consequently, better welfare will enhance the TNI's performance.
[The writer is program director of the Imparsial human rights group.]