No subject

that TNI version of the bill. A perusal of its contents showed that Cilangkap 
was striving to widen its room for political action. However, this was the very 
opposite of what the observers wanted to see. TNI HQ was strongly opposed to a 
suggestion that the TNI be brought under the supervision of the House of 
Supervision and Supreme Audit Agency (BPK). “They claimed that internal 
supervision mechanisms were already in place, so why was legislative provision 
for this needed?” recounted Riefki Muna. 

Time went on. The explosion in Bali on October 12 last year was felt by TNI to 
justify their position. It was after this that TNI started vociferously arguing 
in favor of the controversial Article 19. Munir suspects that the inclusion of 
this article was the handiwork of Army Chief of Staff General Ryamizard 
Ryacudu. What is more, according to Kusnanto, the article first saw the light 
of day in an October draft of the bill. “I think it was Ryamizard who first 
said that the Bali bombings were a consequence of weaknesses in the TNI’s 
territorial cells,” recalled Kusnanto. 

After this, the proceedings of the working group came to be dominated by the 
military. In order to reduce the level of debate, TNI HQ first started changing 
its representatives and then reduced the number of its representatives on the 
48-strong committee by half. After further reductions, there were eventually 
only five TNI members left. 

It was now time for a final decision to be made. At the start of last February, 
a TNI representative categorically stated that Article 19 would not be changed 
without the approval of the TNI commander. “Given this, the reaction to this 
new bill will be the same as to the Civil Emergency Law. I myself will take to 
the barricades if this article is railroaded through,” asserted one of the 
observers. The Civil Emergency Law allows for the security forces to take 
resolute action against demonstrations, and was strongly opposed by protestors 
in 2000. 

The working group finally completed its work. The military version of the bill 
was considered non-negotiable by the boys in green. The Department of Defense 
was in a quandary. Right from the outset, the department had wanted the new 
bill to stress that the military was subject to civilian control. “It’s pretty 
clear that this article has the potential to become divisive,” admitted the 
Director-General of Defense Strategy, Major General Sudradjat to Koran Tempo 
daily. There was not much that Minister of Defense Abdul Djalil could do. He 
just said he would check whether there was any conflict between the new bill 
and the National Defense Law. 

According to the military, their position is well-founded. A Department of 
Defense source told TEMPO that the military was determined to see Article 19 go 
through due to its disappointment with civilian governments since the outset of 
reform. The secession of East Timor, and the rebellions in Aceh and Irian were 
considered by the military to be the result of a weakening in its position. “To 
the TNI way of thinking, the solutions attempted by the government to date have 
been too little too late,” explained Kusnanto. While during a meeting of its 
leadership on April 20, 2000, TNI claimed that it supported the supremacy of 
civilians, according to Kusnanto again: “They have grave doubts about whether 
or not this is the way things should be.” 

The political role of the military has been clearly diminishing. The number of 
seats occupied by those in uniform has been reduced. The police—the guardians 
of internal security—have been separated and placed beyond the reach of the 
military. From 2004, TNI, and also the police, will no longer have seats in the 
MPR. And after a further four years, the military will also be deprived of its 
seats in the House. 

It was against such a background that about 250 retired officers gathered for a 
meeting at army headquarters at the end of last month. As host, Ryamizard 
stressed TNI’s vision of its role as the guardian of the nation’s territorial 
integrity. The assembled officers heartily agreed. Present were former vice 
president, and Ryamizard’s father-in-law Tri Sutrisno, and Coordinating 
Minister for Political & Security Affairs Susilo Bambang Yudhoyono. During the 
meeting, the officers sharply questioned Yudhoyono. The faulted him for taking 
part in facilitating the negotiations between the government and the Free Aceh 
Movement (GAM). 

So where does TNI chief Endriartono Sutarto stand? According to one source, the 
TNI commander is not fully comfortable with the formulation of Article 19. 
Previously, Endriartono had frequently expressed, including on a number of 
occasions before the House, his respect for civilian supremacy. 

A person close to Endriartono tells a story. Once during an internal meeting, 
an army general said that they should go all out to eliminate GAM. Aware that 
the government was in the process of negotiating with the guerillas, 
Endriartono said angrily: “I could understand that if it came from a sergeant, 
whose job is only to fight. But when it comes from a general, I can’t help 
thinking what is happening.” The other officer went quiet after that. 

There are some who suspect that Endriartono was not fully aware of the bill’s 
drafting process. “He probably only received abridged reports,” said Riefki. In 
addition, there are reports that relations between Merdeka Barat (Department of 
Defense HQ) and TNI HQ in Cilangkap have not been good lately. However, this is 
denied by the military. “It’s not true. I think this is just a red herring 
being put about,” asserted the head of TNI HQ’s information service, Colonel 
D.J. Nachrowi 

Both the army and military chief believe firmly in their respective perceptions 
regarding the military’s political role. However, all that emerges in public is 
the name TNI. General Sutarto would appear to be sticking by his guns. “Article 
19 is final,” he asserted after the debate over the article was widely 
publicized in the mass media. Nevertheless, according to Major General 
Sudradjat, the Department of Defense was now preparing a new formula that could 
bridge the differences between the two sides (see Article 9) 

Since the polemic started, both Endriartono and Ryamizard have attempted to 
calm the situation. The TNI commander stated that he would not object if the 
formulation of Article 19 was amended, provided that its spirit was maintained. 
Meanwhile, Ryamizard has strongly denied that he and the army were behind the 
military’s renewed interest in politics. “I only think about the nation. I 
don’t understand any of the other stuff. I don’t know,” he said innocently. 

But the entire debate all really boils down to one thing: does the military 
really want to reform itself? 
-- Arif Zulkifli, Wenseslaus Manggut, Adi Prasetya, D.A. Candraningrum, Suseno 
(TNR) 
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
The Jakarta Post.com
Headline News
March 11, 2003
Military claims its reform slow due to lack of money 
Muninggar Sri Saraswati, The Jakarta Post, Jakarta

A retired military officer has admitted that reforms are moving very slowly 
within the Indonesian Military (TNI) but put the blame on the government's 
failure to provide adequate funds to achieve change within the institution.

Former Army deputy chief Lt. Gen. (retired) Kiki Syahnakri said here on Monday 
that it was difficult to change the Military but severe lack of financing had 
made it hard for TNI to reform itself. 

"There are challenges to reform the software, personnel and hardware of the 
Military," Kiki said during a book launch at the Indonesian Institute of 
Sciences (LIPI). 

Kiki, considered a reform-minded Army general, was referring to the Military's 
orientation, manpower, and equipment. 

"TNI cannot afford to hire enough trainers for its officials and to buy 
military equipment," Kiki said. 

Kiki cited as an example the Army, which has only 300 trainers, far below the 
required number of 6,000. The Army has around 230,000 personnel. 

The government allocated Rp 11 trillion (US$1.4 billion) to the Military in 
2003, up from Rp 9.5 trillion in 2002. 

In terms of the Military's orientation reforms, Kiki predicted that it would 
take at least 15 years due to lack of government funding to implement reform 
programs, especially training in human rights and humanitarian issues. 

Kiki said Military reforms started in 1993, long before the calls for reform of 
the Military from civilians. 

Military observer Ikrar Nusa Bhakti of LIPI concurred with Kiki that Military 
reform was moving at a snail's pace but argued that this was due to opposition 
by "conservative officials" within the Military itself. 

"These people basically do not want to relinquish the Military's role as the 
only guardian of the state," said Ikrar, adding that there was fragmentation 
between conservatives and reformers within TNI. However, he predicted that the 
conservatives outnumbered the reformers. 

Kiki, in contrast, denied that Military reform had been slow due to friction 
between TNI members. 

"There are no such frictions," he said, adding that reform within the Military 
was an ongoing process. 

Ikrar said the Military had recorded some progress in its reform programs, as 
clearly indicated by its agreement to accept civilian authority. 

"But there was a setback within the last two years in connection with Military 
reform as a result of the recent security situation in the country," he said, 
referring to the terrorist attacks in Bali. 

The slow pace of reform was exacerbated by incompetent politicians who failed 
to settle social and political problems, Ikrar added. 

"The Military wants to leave politics formally in 2004 but its idea to continue 
its role in politics will not disappear," Ikrar said, pointing to the recent 
debate over controversial article 19 of the draft Military bill. 

During the 32-year New Order regime, the Military played a major role in the 
country's political, security and defense affairs. Its role declined following 
former president Soeharto's downfall in 1998. 

In 2000, the People's Consultative Assembly (MPR) limited the role of the 
Military to defense affairs only, with the issuance of decree No VII. In 2002, 
the MPR agreed to end the Military's political role by 2004. 
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
The Jakarta Post.com
Headline News
March 11, 2003
More condemn `Tempo' attack 

Dozens of journalists rallied near the State Palace on Monday to protest 
against the recent attack on the offices of Tempo newsmagazine.

The protesters, representing Solidarity for Press Freedom, condemned the attack 
by 200 people demanding Tempo retract an article in its March 3 edition 
insinuating links between businessman Tomy Winata's plan to renovate Tanah 
Abang market and the fire that destroyed it. 

The journalists called on the police to investigate the case thoroughly. 

The 1999 press law threatens those who prevent journalists from disseminating 
information to the public with a maximum two-year jail sentence or Rp 500 
million fine. 

Bayu Wicaksono of the Alliance of Independent Journalists (AJI), who led the 
protest at the State Palace, told reporters the attack on Tempo was an attack 
on press freedom. 

Later in the day, the National Commission of Human Rights (Komnas HAM) held a 
meeting with a number of journalists over violence against the press. 

Komnas HAM established a special team to monitor violence cases against 
journalists in January. Anshari Tayib, who heads the team, said it would do its 
best to help Tempo settle the case legally. 

During the meeting, Tempo senior editor Fikri Jufri said the magazine would not 
bow to the mob's demands, despite the attack. 

"They can destroy our assets but not our idealism. There is only one word for 
such an action, 'fight!'" he said, adding that Tempo would settle the case in 
court. 

Separately, noted non-governmental organizations Indonesia Corruption Watch 
(ICW), Transparency International (TI), TI's Indonesian chapter and the 
Indonesian Transparency Society (MTI), condemned the attack in a joint 
statement, saying the attack could undermine press freedom. 

"The violent protest showed clearly that the protesters were arrogant, anarchic 
and ignored the supremacy of the law," said Emmy Hafild, an executive at TI's 
Indonesian chapter. She demanded the police bring the perpetrators to justice. 

TI chairman Peter Eigen said the authority's failure to address the case would 
deter foreign investment. 

He said that if the police did not act swiftly to solve the case, foreign 
investors could think that the supremacy of law was absent in Indonesia, 
discouraging investors from coming here. 

The Indonesia Legal Aid and Human Rights Association criticized the police for 
doing nothing to prevent the incident. 

"The incident occurred under their noses. They must not allow it," it said in a 
statement. 

A member of the House of Representatives' commission for information affairs, 
Djoko Susilo, concurred and urged the authorities to investigate the violence. 

Djoko said police should act immediately without waiting for a complaint from 
Tempo. 

He said he would question Minister of Communications and Information Syamsul 
Mu'arif in relation to the issue during its next hearing, the schedule of which 
had not yet been set. 

The police were present when Tomy's supporters attacked Tempo's offices and 
injured a journalist. The magazine's chief editor, Bambang Harymurti, and 
editor Ahmad Taufik were beaten by several protesters as they waited for a 
meeting with the protesters at Central Jakarta Police headquarters. 

The police insist they will only investigate if Tempo files a complaint. 

Meanwhile, Yusuf Yazid, commenting on behalf of Tomy, defended the mob's 
action, saying the incident was in response to the article, which quoted 
sources regarding Tomy's Rp 53 billion (US$5.9 million) bid to renovate the 
market. 

He also alleged that Tempo never interviewed Tomy for the article. 

Bambang dismissed the accusations, saying its reporters interviewed Tomy by 
phone. 

Tempo published Tomy's interview next to the article. 

Tomy said earlier that he had no idea about the attack and it was simply the 
idea of his men, who were members of his Artha Graha Group and the Indonesian 
Young Bulls (BMI), a youth organization belonging to President Megawati 
Soekarnoputri's Indonesian Democratic Party of Struggle. 

However, he later said that he had attempted to stop his men from protesting 
outside Tempo. 

Tomy is known for his close relationship with several high-ranking officials in 
the country. 
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
BusinessWeek Online 
Indonesia's Bailout Plan: A Partial Success
Mon Mar 10, 8:38 AM ET 
By Michael Shari 

Scott Coffey hasn't been more ebullient since the day he assumed management of 
PT Holdiko Perkasa, a state-owned Indonesian company that manages assets seized 
from the powerful Salim family in 1998. That was the year then-President 
Suharto (news - web sites) fell and his family's business partners -- the 
largest of whom were the Salims -- lost control over their respective empires 
in a nationwide bank bailout backed by the International Monetary Fund (news - 
web sites). 

After selling off 90% of Holdiko's assets for $2 billion, Coffey is counting 
the days until the government shuts down the company, scheduled to happen in 
June. "I'm looking forward to the successful conclusion of our asset-sale 
program and returning to the private sector," says the American investment 
banker, sitting behind a conference table at his 12th-floor office in Jakarta's 
Sudirman financial district. 

Billions In Debt. 
Coffey is the Lone Ranger in a massive bank bailout that's only just starting 
to wind down. Holdiko is one of five companies set up by the government to sell 
off assets that were accumulated by five powerful, well-connected families 
during the Suharto regime. 

Coffey is fortunate that the Salims, who are from Indonesia's ethnic Chinese 
minority, cooperated with the sell-off. The Salim family controlled entire 
industries, from cement to noodles, thanks to their links with the former 
President. The family went along with the bailout to avoid further unrest, like 
the wave of race riots that razed Jakarta's Chinatown and triggered an exodus 
of more than 100,000 ethnic Chinese in the days leading up to Suharto's 
resignation in May, 1998. 

However, it now seems unlikely that Holdiko will live up to all of the 
expectations many observers had for it when it was formed. The hope was that 
Holdiko would serve as a debt-workout model for the other ethnic Chinese-run 
conglomerates, which still owe billions to the Indonesian government for their 
own respective cleanups. They are Gajah Tunggal Group, Danamon Group, Modern 
Group, and a group of businesses run by timber tycoon Bob Hasan. 

Backdoor Buybacks. 
Unlike the Salims, though, the ethnic Chinese controlling shareholders of the 
other conglomerates didn't cooperate with the Indonesian Bank Restructuring 
Agency [IBRA], which was set up to handle the bailouts. Now, they're hoping to 
pull off a maneuver that, if it succeeds, would allow the same group of Suharto 
cronies to regain control over a big chunk of the Indonesian economy. 

Later in March, IBRA is planning to hold an exclusive auction of the remaining 
four conglomerates' assets. IBRA officials familiar with the auction say the 
original shareholders are expected to buy them back at a discount. Of course, 
buying them outright would be against Indonesian law, but the officials say 
they expect the assets will be bought back by the original shareholders through 
offshore companies under new names. That, too, might be technically illegal, 
but such seeming circumventions of the law aren't unusual in Indonesia, even 
today. 

IBRA, which comes under the Finance Ministry, is due to close down by yearend 
after six years in operation. The auction could be the agency's last act as it 
strives to meet a target for the year of $2.8 billion in asset sales. Any 
assets left unsold are to be transferred to the State-Owned Enterprises 
Ministry. 

Destructive Acts? 
Holdiko may end up being the agency's main success story. Coffey has won kudos 
from the Jakarta business community for diligently auctioning off the Salim 
empire piece by piece, from cementmaker Indocement Tunggal Prakarsa to TV 
network Indosiar Visual Mandiri to Pacific Indomas Plastics Indonesia. They 
were among more than 30 companies that the Salims built into monopolies during 
the 32-year Suharto regime, thanks to a close friendship between family 
patriarch Liem Sioe Liong [also known as Soedono Salim] and Suharto. 

IBRA set up Holdiko to help reimburse the Indonesian government for the $6 
billion it has spent cleaning up Bank Central Asia, the former Salim family 
bank. IBRA has accused the Salims of driving the bank into the ground by 
exceeding legal lending limits to themselves and failing to repay after the 
Indonesian rupiah depreciated by more than 90% in 1998. 

Contrary to popular belief, Anthony Salim -- son of patriarch Liem -- who is 
now Salim Group's president and CEO, didn't buy back most of the assets that 
Holdiko has sold. In fact, more than half the assets were sold to foreign 
investors. Indocement is 100%-owned by Austria's Heidelberger, Pacific Indomas 
is controlled by Dow Chemical, and mosquito-coil maker Tiga Roda is now run by 
the Netherlands' Reckitt Benckiser. 

"Formidable Businessman." 
Salim declined to comment for this article, but his aides confirm that he isn't 
attempting to regain control over the pieces of his business empire that 
Holdiko has sold off. "It's not true that we're involved in buying back our 
assets," says a senior Salim Group executive. IBRA officials say Salim would've 
found it politically unacceptable to do so because of his father's very public 
lifelong friendship with Suharto. 

Salim isn't walking away empty-handed, though. He succeeded in valuing his 
assets by about 70% more than Holdiko could sell them for, says Coffey. As a 
result, Holdiko will register a technical loss as it winds down. Salim also 
held onto Indofood, Indonesia's largest noodlemaker, and Bogasari, the 
country's largest flour mill, through his First Pacific investment company in 
Hong Kong. 

"He has felt pain through the sale of a number of his assets, half of which 
went to foreigners," says Coffey. "However, he continues to be a formidable 
businessman in Indonesia." The other four families will also probably remain 
powerful. The bottom line is that the bailout had some success, but it probably 
won't truly shake up the powerful families at the heart of the Indonesian 
economy. 
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~