A Brief History of Military Economic Activity
The Indonesian military’s involvement in economic activity in Indonesia dates back to the 1945-1949 Indonesian war for independence from the Netherlands. The nascent military was responsible for raising its own funds. In addition to relying on popular backing and material support, in some areas military units turned to smuggling to finance
their operations.
The pattern of self-financing continued after the formation of the Indonesian armed forces (which became known as Angkatan Bersenjata Republik Indonesia or ABRI, a combined military-police structure until 1999). Official budget allocations to the military were low. As a consequence, throughout the 1950s military commands and units continued to raise their own funds to a large degree. Their fundraising methods went beyond illegal activities such as organized smuggling and illegal levies: Increasingly, military commanders also allied themselves with local businesspeople to generate funds to cover military expenditures. In some cases the military command itself would be granted a stake in a business venture managed by a private partner.
3
Early Military Businesses
The military began to take part in large-scale businesses by the latter part of the 1950s. In the late 1950s, under martial law, the military took over control of Dutch companies. Soon afterwards President Sukarno formally placed the newly nationalized companies under the supervision of senior military personnel. The state takeover of British companies and some United States ones followed in the mid-1960s. Control of these
enterprises was likewise granted to military officers. In part, these moves responded to severe budget shortfalls that resulted in paltry salaries, poor housing, and insufficient clothing and equipment for soldiers.
4
The military also became heavily involved in managing major state-owned enterprises. Oil giant Pertamina and the logistics agency Badan Urusan Logistik (or Bulog) were both dominated by military leadership throughout the 1960s and into the next decade. Profits from military-run companies were commonly directed to the military.
5
This “unconventional financing,” moreover, allowed the government and military leadership to give the appearance of sacrificing military spending in favor of other national priorities.
6
The rapid expansion of the military’s economic engagement in the 1960s extended to the private sector. Much of the growth was from military partnerships with private businesspeople. It was the private entrepreneurs who in fact operated most military-sponsored businesses. The military’s actual contribution to its business ventures typically was nominal: military partners provided licenses and approvals, and helped secure concessions and state contracts.
7
The Situation Today
The September 2004 law mandating that the Indonesian military end its involvement in business was a watershed initiative, but one that left many questions unanswered. The language of the law is subject to multiple interpretations, and the provisions have not yet been enforced. Some preliminary steps have been taken but these have been slow and insufficient: the promise of the law remains untested. A more detailed critique is given below in the chapter on “Obstacles to Reform.” It finds that those in a position to make change happen have not shown a commitment to addressing the full costs of military self-finance, including in human rights terms. To the contrary, they have defined military business narrowly, focusing only on select elements of what is a much deeper structural problem, they have provided a number of exemptions that would leave vast parts of the military’s commercial structure in place, and they have not pursued real accountability.
Link:
Human Rights Watch Indonesia the Violence
Power Politics and the Indonesian Military
.Suharto and His Generals: Indonesian Military Politics, 1975-1983.
Military Reform and Democratisation: Turkish and Indonesian Experiences (Adelphi series).
Indonesian, US militaries join forces to deploy cargo to Lebanon.(GOVERNMENT NEWS*): An article from: Defense Transportation Journal
.U.S. seeks closer ties with Indonesian military; Wolfowitz visited Indonesia for military reasons, not tsunami relief.(Viewpoint): An article from: National Catholic Reporter
.The Indonesian military business complex: Origins, course and future (Working paper / Strategic and Defence Studies Centre, Australian National University)
Article Table of Contents
Security services for freeport Indonesia
Some illegal business activities by Military
HUMAN RIGHTS WATCH VOL. 18, NO. 5(C)
3] Richard Robison, Indonesia: The Rise of Capital (North Sydney: Allen & Unwin, 1986), pp. 250-252, 259-260.
4] Lesley McCulloch, “Trifungsi: The Role of the Indonesian Military in Business,” in The Military as an Economic
Actor, Jörn Brömmelhörster and Wolf-Christian Paes , eds. (New York: Palgrave MacMillan, 2003), p. 101.
5] Harold Crouch, The Army and Politics in Indonesia (Ithaca and London: Cornell University Press, 1978), pp. 275-285; Robison, Indonesia: The Rise of Capital, p. 252; Danang Widoyoko, Irfan Muktiono, Adnan Topan Husodo, Barly Haliem N, and Agung Wijay, Bisnis Milter Mencari Legitimasi (Military Businesses in Search of Legitimacy), (Jakarta: Indonesia Corruption Watch and National Democratic Institute, 2003), pp. vi, 27-33. A translation in English is available. See Military Businesses in Search of Legitimacy, [online]
http://www.indonesia-house.org/dbindhouse/bm/Icw_bis_mil/Daftar_Isi.htm. References in this report, including page citations, refer to the original text rather than the translation.
6] Crouch, The Army and Politics in Indonesia, pp. 274, 277.
7] Ibid., p. 284; Robison, Indonesia: The Rise of Capital, pp. 252, 268; Widoyoko et al., Military Businesses in Search of Legitimacy, p. 28.
Book's review:
 |
| Failure to End Military Business Activity |
 |
| Military & Democracy Indonesia |
 | ||
| The Indonesian Economy since 1966 |
