Indonesia: The Dangerous Business Empire Of The Military


In a report released yesterday, Human Rights Watch (HRW) says the Indonesian government has failed to dismantle the military owned or controlled businesses. The New-York based human rights organization says that these businesses are implicated in human rights abuses, crime and corruption, and could also easily undermine the civilian government.

The HRW’s report provides a detailed analysis of the failure from the Indonesian government to regulate military involvement in businesses despite a Presidential decree issued in October 2009. Back in 2004, an Indonesian law imposed a 5 year deadline for the Indonesian government to take over all business activities that are owned and operated by the military.

The military business ventures are a platform for extortion, violence, property seizures and many crimes against civilians. The businesses also provide the military with an independent source of income completely outside their approved budget. In 2007, the Indonesian military had 23 foundations and over 1,000 cooperatives, including ownership of 55 companies, as well as leases on thousands of government properties and buildings. From its various business operations, the military controlled $350 million in assets and earned a profit of $28.5 million in 2007.

Despite the 2004 law mandating the government to shut down all military businesses, the Human Rights Watch report clearly shows that the Indonesian government has no intention to end military ownership of the armed forces businesses.

“The Indonesian government’s planned reforms are totally inadequate. The law says the government needs to get the military out of these businesses, but instead they will be allowed to remain in military hands. Promising to monitor them more closely is not good enough. Indonesia’s parliament gave the government 5 years to take over all military businesses. It is outrageous that, despite the parliamentary directive, the government has no plan to take over ownership or management of a single military business. The goal of military business reform should be increasing civilian control and military accountability. That won’t happen unless the government revises its plan,” said  Lisa Misol  from Human Rights Watch. Lisa Misol is the author of the report.

To read the report from Human Rights Watch click here.


2 Responses to Indonesia: The Dangerous Business Empire Of The Military

  1. Stephen Dufrechou January 12, 2010 at 3:51 pm

    From the HRW report:

    “Indonesia’s armed forces have a longstanding practice of raising independent income outside the approved budget process.[1] The military’s role in Indonesia’s economy takes several forms: military-owned businesses organized under TNI foundations and cooperatives; collaboration with the private sector, including protection payments and leasing of public land for profit; criminal enterprises, such as involvement in illegal logging; and various forms of corruption, including inflating the cost of military purchases.

    “The military has long argued that they need to operate independent businesses in order to supplement the funds allocated by the government, but the reality is that these businesses do little to cover unbudgeted expenses. According to government data, the military’s foundations and cooperatives had gross assets of Rp3.2 trillion (US$350 million) and net assets of Rp2.2 trillion ($235.4 million) as of the end of 2007 and their business activities brought a profit of Rp268 billion ($28.5 million) that year. (No estimates are available for protection payments, land and building leases, criminal enterprises, and corrupt practices.) By contrast, the official budget allocation to the TNI (which reflects only part of government spending on the armed forces), was Rp29.5 trillion ($3.2 billion) in 2007 and by 2009 had grown to Rp33.6 trillion ($3.6 billion).” [sic]…

    I am admittedly not well-versed in contemporary Indonesian “power-politics”, but the very nature of these military businesses–and the profits they reap–suggest that there may be no chance to put checks on their exercise of power, in any way…. That includes the government’s own ability to intervene and, thus, live up to its promise to take over the businesses in question…

    Of course, this all reads like a horrific recipe for an eventual social implosion, into mass political-violence.

  2. Gilbert Mercier
    Gilbert Mercier January 12, 2010 at 4:01 pm

    I think what “it reads”, Stephen is a likely military coup if the Indonesian government makes an attempt to crack down on the serious abuses put into light by the HRW report.

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