VI. Conclusion and Recommendations

To address the main weaknesses of the government’s effort, Human Rights Watch recommends that the president and the ministers of defense and finance take the steps detailed below.

Widen the Scope of Military Business Reform

Comprehensive reform is needed to fully disentangle the military from business. The Indonesian government should:

1. Reject the fiction that the businesses under the military’s foundations and cooperatives are independent from the TNI as an institution and reject the argument that such foundations and cooperatives should be permitted to retain businesses that can be said to be consistent with the original social purpose of those entities. Instead, the government should require the military, including its foundations and cooperatives, to fully divest all business holdings and cease any profit-oriented activity consistent with the spirit of the 2004 law. The regulations of the Ministry of Defense should be revised accordingly.
2. Further tighten the planned reforms to regularize income from military use of state assets, along the lines proposed by the 2008 advisory team. Namely, any public land or buildings the TNI is not utilizing for a legitimate military purpose should be immediately transferred to government control and the military should be prohibited from leasing out state assets to private parties.
3. Address other forms of military business (for example, individually owned businesses, protection payments from private companies, and other informal arrangements) with a view to eliminating them. The government should require the Oversight Team to monitor all military business activity and grant it powers to coordinate with law enforcement bodies to shut such activity down. Alternatively, it could create an independent body to carry out this oversight and coordination function.

1. Task an additional mechanism, complementary to the Oversight Team and involving law enforcement personnel, with cracking down on illegal military businesses and reporting to the government, parliament, and the public on its progress. Again, the government could create an independent body for this purpose.

Ensure Civilian Oversight and Participation

A central purpose of military business reform is to strengthen civilian control over the armed forces, so civilians should be thoroughly involved in planning for, executing, and monitoring the reform process. The Indonesian parliament should have a clear role in tracking the government’s progress in implementing changes. In addition, the government should seek input from civilian experts, including critics of military business from civil society organizations. Specifically, the president should:

1. Explicitly require the ministers of defense and finance to submit regular reports to Indonesia’s parliament and the public concerning progress on military business reform. Parliament’s Commission I, which is responsible for defense matters, and Commission III, which has responsibility over law and human rights, should also call these ministers to answer questions about the failure to meet the deadline and other requirements set out in the 2004 law, and to hear their plans to ensure that the process is transparent and accountable as provided for in the decree. In addition, they should hold periodic hearings to ensure appropriate parliamentary oversight of the reform effort.
2. Amend the presidential decree to alter the composition of the Oversight Team to reduce the dominance of the military and ensure greater civilian representation, including at the leadership level.
3. A complementary step is also needed to enhance participation in the reform process by persons outside of government. The ministries and the Oversight Team should actively seek advice and input from independent experts, including members of nongovernmental organizations and think-tanks, to inform their plans. The presidential decree authorizes the minister of defense to create additional sub-teams or working groups as needed and authorizes the Oversight Team to consult with outside experts. These government institutions should fully utilize this provision to ensure that civilian experts are given a meaningful role in such mechanisms.

Provide for Greater Transparency and Strict Accountability

The problem of military businesses has festered for years in part because of a failure to enforce existing rules governing military conduct. For the current reform effort to have an impact the government needs to counteract this longstanding impunity. It is also essential that the government itself be held accountable for completing the reform, particularly as it has already missed the legal deadline. The government should:

1. Release any legal and financial audits already undertaken on military foundations, cooperative, and businesses, and carry out new ones on those that have not been audited. The audits should be carried out by qualified independent personnel. It is particularly urgent that a detailed legal audit be conducted of the businesses under the TNI’s foundations and cooperatives, as proposed in 2008 by the government’s advisory body on TNI business reform. Such audits might clarify the degree to which they do fall under the effective control of active-duty military officers, contrary to their ostensibly independent status.
2. Hold military personnel, including commanding officers, accountable for abuses connected to military economic activity, including violence, extortion, property seizures, and misuse of state assets.
3. Bolster the ability of the Supreme Audit Agency (BPK) to review military finances in full. Particularly in light of the government’s assertions that it has imposed some measure of control over military foundations and cooperatives by requiring closer supervision, these entities must be subject to BPK audits. The government also should facilitate prompt and full public dissemination of BPK's audit findings, including past audits on military finances, consistent with international best practices and the principle of maximum transparency.
4. Impose a clear deadline on the work of the Oversight Team and mandate regular briefings to the parliament and public, as indicated above, regarding progress.