[Kabar-indonesia] FT: TNI to Divest Only Six of Its 1, 500 Businesses [+Freeport]

[JoyoNews at aol.com]

[Note: also see the previously sent 11 part HRW Report: 
Indonesian Military's Economic Activities]

also: Indonesia Govt: Still Probing Freeport Military Payments

Financial Times (UK)
June 21, 2006

Indonesian military to divest only six of its 1,500 businesses

By Shawn Donnan in Jakarta 

Indonesia is scaling back plans to force its military to unload its business 
interests in a blow to reform efforts just seven months after the US restored 
full military ties with Jakarta.

Indonesia's parliament in 2004 passed a bill requiring the powerful military, 
known as the TNI, to unload all the businesses it controlled within five 
years. Advocates of reform have long accused the TNI's network of legal and 
illegal businesses of contributing to corruption, illegal logging and other crimes 
and of complicating life for foreign companies looking to invest in south-east 
Asia's biggest economy.

But in an interview with the Financial Times, Juwono Sudarsono, Indonesia's 
defence minister, said Jakarta now expected to be able to force the military to 
divest just "six or seven" profitable businesses of the 1,500 it controls.

The main reason for that, he said, was the "meagre resources" of Indonesia's 
defence budget with the civilian government providing just 48 per cent - or 
$2.8bn - of the "minimum budget required" by the military.

"It has to do ultimately with economics and affordability," said Mr 
Sudarsono, a former academic and ambassador to the UK.

"You cannot expect us to reach your [western] standards of reform, your 
standards of accountability, and your standards of propriety because the 
socio-economic underpinnings are just not there," he said. "It's just the reality of the 
situation."

The comments came ahead of the release by Human Rights Watch today of a 
report expected to be critical of Indonesia's efforts to reform military businesses.

Mr Sudarsono insisted that despite concerns over "scope and speed", Indonesia 
remained committed to military reform.

"There will be a series of glitches in the reform process because of the 
inherent vested interests at all levels," he said. "But I'm very confident that 
the larger trajectory is towards more accountability, more efficiency, and 
greater transparency."

Mr Sudarsono said many of the military's businesses had suffered in recent 
years from "market forces" and the Asian financial crisis. Of the 1,500 or so 
controlled by the military, largely via a network of foundations and 
co-operatives, just six were profitable, he said. Only those would be handed to the 
civilian ministry of state-owned enterprises.

The remaining businesses would be administered according to laws regulating 
foundations and non-profit co-operatives, Mr Sudarsono said, with their 
revenuesto be used to help "low-ranking soldiers and their families".

Since the 1998 fall of strongman Suharto, Indonesia's military has gradually 
withdrawn from politics, although many former generals - including President 
Susilo Bambang Yudhoyono - have chosen to run for office.

But it remains arguably Indonesia's best-functioning institution and Mr 
Sudarsono called it a bulwark against the rise of radical Islam in the world's 
largest Muslim country.

"In that sense we are somewhat like the Turkish army," he said. "The very 
notion of Indonesian-ness is a blend, a sublime blend, between secularism and 
Islamism and today the defence forces are the only institution that upholds this 
principle."

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Indonesia Govt: Still Probing Freeport Military Payments

JAKARTA, June 21 (Dow Jones)--U.S. mining giant Freeport-McMoRan
Copper & Gold Inc.'s (FCX) security payments to Indonesia military
forces in Papua Province indicate possible corruption, an official at
the Indonesian ministry of defense said Wednesday.

"There are indications of corruption at Freeport, but the
investigation hasn't been completed yet," Major General Dadi Sutanto,
the director general of the ministry's strategic defense department,
told reporters at a press briefing. 

Freeport officials were not immediately available for comment.

The government has been investigating Freeport after a December New
York Times report said the company made payments of nearly $20 million
to military and police officials posted around its massive Grasberg
gold mine in Papua from 1998 to 2004 for securirty reasons.

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Joyo Indonesia News Service
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