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III. Obstacles to Reform

For the Indonesian government to end military self-financing, it will have to overcome several challenges. Alongside needed measures to confront military businesses and eliminate the TNI’s other economic activities, the government also will need to find ways to appropriately finance the armed forces from budgetary funds. To do so will require improvements to financial controls on the military. As part of that effort, it will be essential to clearly address a number of misconceptions about military economic activity that are often cited as excuses to scuttle reform. This chapter addresses these issues in turn. It begins with a critique of the current system of military finance control. Next, it addresses three myths about military business activity. It finds that the challenges, while difficult, are not insurmountable. Effective reform of military financing will necessarily be a complex process that will unfold over years, but delaying action will only make matters worse.

Unaccountable Military Finances

Indonesia’s constitution provides that government revenues and the annual budget must be set by law and implemented transparently and with accountability.377 Actual practice, however, falls far from the mark.378 The World Bank, for example, has critiqued Indonesian government financing, while stressing that the problem is worse in the case of the security forces:

Indonesia’s budgets are systematically underfunded, with low operations and maintenance provisions, late release of budget funds, and skimming of allocations at different levels of government by oversight departments. Government agencies are implicitly expected to find other means of meeting their needs, thus blurring the lines between public and private expenditure and encouraging rent-seeking behavior. These practices are particularly egregious in the case of the military and the police. Poor financial controls allow such practices to flourish.379

Military finances, like all public spending, should follow good fiscal management practices.380 This section analyzes the Indonesian government’s financial management of the military sector and levels of transparency. It identifies a number of major shortcomings and finds that, despite some efforts to improve financial controls, the military remains a weak area. As a general matter, the Indonesian government has acknowledged the need to improve management of government finances and taken steps in this direction.381 The progressive implementation of overall reforms is welcome, but there have been delays in applying these government-wide finance reforms to the military sector. Moreover, targeted efforts are needed to make military finances publicly accountable.

Government Funding of the Military

From budget formulation through to the execution and oversight stages, the military budgeting process in Indonesia is marked by a series of problems. The government is gradually switching to performance-based budgeting, but the military is not yet covered and has not been identified as a special priority. In the meantime, Ministry of Finance officials and members of parliament (MPs) complain that Ministry of Defense budget requests are deliberately inflated and not backed by basic information to explain why requested funds are needed. Budget amounts are set based on previous years’ allocations, they say, rather than on an examination of actual needs and priorities or even accurate information on prior spending. The net result is that decisions on the allocations of funds—for example, on spending for welfare purposes versus weapons procurement—are made without adequate analysis or due consideration of the trade-offs involved. The problem, according to officials, can be partly attributed to the dearth of information, which makes it difficult for them to form adequate judgments, but they also say that the government has unclear military spending priorities.382

One result is that approved budgets tend to be skewed toward recurring expenditures. A major portion of the budget, approximately two-thirds, is comprised of so-called routine spending that covers personnel expenses, maintenance, food, and other regular costs. Salaries alone account for about half of the official defense budget. The remainder is used for “development spending,” on items such as military hardware and infrastructure. In 2005 Indonesia moved to a unified budget framework and began tracking government finance statistics by functional and programmatic categories that correspond to international standards, but officials continue to refer to the distinction between “routine” and “development” expenditures, and to argue that not enough money is left in the budget for military modernization.383

Budget and Spending Levels

Under Law No. 3/2002 on Defense, military spending is to be exclusively funded from the central government budget.384 In 2003, Juwono Sudarsono emphasized the legal requirement: “The state should be the only source of funding for the TNI.”385 A majority of Indonesians surveyed in 2005 agreed that the armed forces should be funded solely by the government, and at the same time rejected the military’s involvement in business activities.386

Yet many observers inside and outside of government have argued that Indonesia’s military budgets have not been realistic given troop strength and current force structure. Indonesian military officials have been especially vocal on this point. They complain of chronic underfunding and variously report that the official budget covers only a third, one half, or three-quarters of the military’s minimum needs.387 The underlying concern that Indonesia’s budgets are not realistic in light of the current size and structure of the military has some merit, but the claims that government budgets are a mere fraction of what is required must be treated with caution.  The military has defined its minimum needs without recourse to a proper strategic planning process and has every incentive to inflate the figure. Moreover, approved budget levels represent only one part of official military finance. Additional funds allocated from other budget lines subsidize the defense budget and make it appear artificially low. (See “Myth 1,” below.) It also should be noted that the military receives the second-largest allocation in the government’s budget.388

Rather than focus on the size of military budgets, it can be more useful to consider the reported levels of military spending because military budgets have not been adhered to and, in theory, data on military spending should reflect the actual use of government funds. In Indonesia, however, spending data offer an imperfect indication of actual levels of expenditure. It captures only what is paid from government accounts and officially recorded as having gone to the military. Officials at the Ministry of Finance, which has been making efforts to improve the quality of government finance data, acknowledged that data on military spending has been very unreliable and remains a weak area.389

Problems with Government Statistics

The Indonesian government’s approach to collecting and reporting official military finance statistics in Indonesia leaves much to be desired.390 One result has been that these statistics have been reported inconsistently. For example, the military budget allocation for 2003, according to the Ministry of Finance, was around Rp. 17.2 trillion (approximately $2 billion), but the government variously reported actual military spending that year as Rp. 9.7 trillion ($1.2 billion), Rp. 15 trillion ($1.8 billion), Rp. 18.3 trillion ($2.2 billion), and Rp. 27.4 trillion ($3.3 billion).391 It was unclear why the discrepancies arose, but they were noticeably larger than for other countries providing data on military expenditures.392

That government officials do not trust their own numbers on military finance was made evident when Human Rights Watch requested final military budget and spending figures for a ten-year time period, as an input to this report. One Indonesian finance official declined the request, arguing that while the information was available it would not be responsible to disseminate it. He said that only statistics from the past few years were at all credible, in the time period since the government had begun improving its accounting: “Some data collected in the past is just garbage… The recording system took garbage data, so it resulted in a garbage report. There was no accounting.”393 The information the Ministry of Finance did agree to provide is detailed in Table 3, below, and matched with publicly available data on approved final budgets.

Again, the official statistics contrast sharply. Statistics on military spending by Indonesia necessarily offer an imperfect indication of actual levels of expenditure, given problems in data collection (not to mention the issue of extensive off-budget spending), but the Ministry of Finance data show actual military spending as consistently lower than budgeted. This is unusual given the complaints that budget allocations are too low, and given information from the Ministry of Finance that the military typically overspends its budget and seeks end-of-year supplementary allocations to cover its deficits.394 The Ministry of Finance official who provided the spending figures was not able to definitively explain the discrepancies, but it appeared likely that somewhat different categories were used in compiling data and no attempt was made to reconcile them.

Table 3: Official Military Budgets and Expenditures, 2002-2005


Approved Final Military Budgets in Indonesian Rupiah

Final Military Expenditures in Indonesian Rupiah


12.7699 trillion (total)

9.8748 trillion (routine)

2.8951 trillion (development)

11.122 trillion (total)

9.6 trillion (routine, including 6.6 trillion for personnel)

1.5 trillion (development)


17.1884 trillion (total)

12.0219 trillion (routine)

5.1665 trillion (development)

14.954 trillion (total)

11.7 trillion (routine, including 7.8 trillion for personnel)

3.3 trillion development


21.4079 trillion (total)

13.7419 trillion (routine)

7.666 trillion (development)

19.531 trillion (total)

13.1 trillion (routine, including 8.8 trillion for personnel)

6.4 trillion (development)


22.0786 trillion (total)

19.942 trillion (total)

9.0 trillion (personnel)

4.4 trillion (operational supplies)

6.4 trillion (procurement)


28.2292 trillion (total)

Source: Budget figures were taken from annual budget documents, whenever possible using the final figures listed for each year.395 Information on spending was provided by the Ministry of Finance at the request of Human Rights Watch.

It is helpful to look at spending figures over a longer timeframe in order to analyze trends. For that purpose, the work of the Stockholm International Peace Research Institute (SIPRI), a research institute with expertise tracking global military expenditures, is especially useful. SIPRI relies, as much as possible, on official data provided by governments. It reviews the available official statistics and selects the data series that most closely corresponds to its definition of military spending. SIPRI then adjusts the figures for inflation and exchange rate fluctuations to facilitate comparisons across countries and over time.

Table 4: Trends in Indonesia’s Military Spending, 1995-2005


Military Expenditure in Indonesian Rupiah at Current Prices

Military Expenditure in U.S. Dollars (at constant 2003 prices and exchange rates)

Military Expenditure as a share (%) of GDP


7.158 trillion (est.)

2.519 billion



8.400 trillion (est.)

2.738 billion



8.336 trillion

2.558 billion



10.349 trillion

2.005 billion



10.254 trillion

1.649 billion



13.945 trillion

2.162 billion



16.416 trillion

2.282 billion



19.291 trillion

2.397 billion



21.904 trillion

2.554 billion



25.274 trillion (est.)

2.774 billion



25.656 trillion (est.)

2.607 billion


Source: SIPRI Military Expenditure Database.396 The SIPRI figures for several years are considerably higher than those provided in official Indonesian budget or spending documents (see Table 3). The reason for the discrepancy is not known but may be due to differences in the respective definitions of what constitutes military spending.397

Table 4, above, shows that Indonesia’s spending on the military declined as a percentage of GDP following the Asian financial crisis and fall of the Soeharto government. This spending fell to 0.9 percent of GDP in 1999, the lowest level of the decade from 1995 to 2005. (This was also the year that the police separated from the military, and presumably their budgets were separated at that point.) In more recent years, by contrast, the figures have increased to approximately 1.1 percent of GDP.

Limitations in the quality of the data make comparisons difficult, but the available information also shows that official military spending by Indonesia generally has been lower, as a share of GDP, than several other Southeast Asian countries. Whereas Indonesia’s declared military expenditures have hovered around 1 percent of GDP for several years before rising to 1.1 percent of GDP in 2004, reported military spending in other Southeast Asian countries averaged 2.26 percent of GDP in 2004 (the most recent year for which comparative data is available).398 These figures support the conclusion that budgetary spending in Indonesia is low in comparison to its neighbors, as is often stressed by Indonesian officials, but it must be remembered that total Indonesian spending on the military also must include off-budget expenditures.399

The Extent of Off-Budget Funding

Minister of Defense Sudarsono has declared: “We must remain true to the budget. The defense forces must not exceed their budgetary capabilities.”400 The comment was consistent with Indonesian law and basic precepts of financial accountability, but not with present realities. The World Bank, which has expressed concern about the off-budget activity of the Indonesian security forces, has acknowledged that “no one quite knows how much of military and police expenditures are met from allocations in the government budget.”401 Ministry of Finance officials do not have any estimates of the amount of off-budget revenue generated by the military, nor have they attempted to gather such information.402 Many published sources, often citing statements by Indonesian officials, have suggested that Indonesia’s military budget only covers 25-30 percent of the TNI’s actual needs.403 This estimate, however, seemingly dates to the 1970s and appears to no longer be accurate.404

More recently, it has been suggested that budgetary spending accounts for approximately one-half of total military spending in Indonesia. This estimate was provided by Minister of Defense Sudarsono, who told Human Rights Watch in February 2005 that the military budget covered about half (46 percent) of actual spending, with the rest raised independently.405 Again, it was not clear that this was a reliable estimate, and he may have misspoken. Sudarsono and other officials more commonly have stated that the military budget is sufficient to meet only 50 percent of the military’s perceived minimum needs.406 That does not necessarily mean, however, that the military successfully raises the other 50 percent from its off-budget activity. It is possible that the military simply scales back its planned spending to better match the amount of funds the government provides.407 The latter view is supported by evidence that the military currently is not able to afford many items, such as training and additional equipment, that it argues it needs.408 As will be discussed (see Myth 1, below), some of these costs, including many weapons purchases, are covered by the Indonesian government using other budget lines.


Systematic corruption in military purchasing has resulted in vast unneeded expenditures. (See the section titled “Grand Corruption” in Part II: An Anatomy of Military Economic Activity.) Civilian authorities have worked to improve oversight with uneven results. For example, parliamentary scrutiny of military purchases has increased in the wake of past scandals. A few parliamentarians have taken a very active role and have successfully insisted that the parliamentary subcommittee responsible for defense budgeting issues be allowed to scrutinize and approve at least some individual arms deals and those financed through export credit loans.409 Other MPs serving on the House of Representatives committees on defense and on budgetary affairs continue to indicate that, despite some improvements, too little information on military procurement issues is made available, it is shared with only a select few, and that MPs as a whole lack the technical expertise or staff support to be able to thoughtfully review such matters.410

The Ministry of Defense has made efforts since 2005 to try to rationalize military procurement and increase its level of control over military purchases. It announced new rules requiring the parties to certain types of weapons contracts (those financed through export credit loans) to sign an integrity pact in which they promise not to engage in corruption, collusion, or nepotism.411 It also declared a “one-door” policy for military procurement that would centralize control in the defense ministry. Such moves were consistent with Law No. 3/2002 on Defense, which clearly grants the civilian-led Ministry of Defense authority over military “budgetary policy, procurement, recruitment, [and] management of state resources.”412

Adherence to these rules, however, was a problem from the beginning. For example, a spokesperson for the Indonesian air force said in late 2005 that it planned to order spare parts from the United States directly, rather than coordinate defense acquisitions through the Ministry of Defense, and that other service branches would do the same.413 The situation was such that civilian Minister of Defense Sudarsono called a high-level meeting with military leaders and other officials in January 2006 to try to assert the authority he had been granted by law.414 He stressed in particular that the authority of the Ministry of Defense covered all budget management matters, including arms procurement.415 That Sudarsono felt the need to hold such a meeting, and to make a further pronouncement a few weeks later, demonstrated that civilian control over military purchases was not yet in place.

Even following these meetings, the TNI refused to recognize the Ministry of Defense as the lead agency in making defense purchases. The TNI chief, Air Marshall Djoko Suyanto, gave a press interview in which he said that the service branches “routinely” arrange weapons imports independently and that the TNI would only involve the defense ministry in the case of major weapons contracts “in the hundreds of millions of dollars” or those using export credit facilities.416 This statement directly contradicted a March 2006 comment by the then TNI spokesman, Maj. Gen. Kohirin Suganda, who said weapons imports were arranged through government-to-government deals, with tenders and payments handled by civilian ministries instead of the TNI itself. The spokesman cited this claim as evidence that military purchases in Indonesia were subject to “very strict control” and to dismiss as “unreasonable” concerns that Indonesian weapons purchases from the United States might be associated with corruption.417

The concerns proved to have been well founded. In April 2006 U.S. authorities arrested arms brokers on charges of attempting to illegally export a variety of weapons to Indonesia, in a deal negotiated before the U.S. administration waived congressionally-mandated restrictions on U.S.-Indonesia military ties in November 2005.418 The arrested arms brokers were an Indonesian national and a Singaporean who represented PT Ataru Indonesia, an arms-supplying company active in Indonesia, but they did not have the proper licenses to order weapons from the U.S.419 The accused brokers sought to purchase 245 air-to-air Sidewinder missiles, 882 light machine guns, some eight hundred handguns, sixteen sniper rifles, five thousand rounds of strafing ammunition, and components for a radar system.420

According to the indictment against them, the brokers began arranging the deal with a U.S. company in March 2005, submitted a written purchase order for the radar parts in September 2005 (when the U.S. weapons embargo remained in effect), and ordered additional items in March 2006.421 In their defense, the brokers said they were acting on behalf of the Indonesian air force, which sent two officers to accompany them.422 The air force confirmed that it ordered radar equipment from the arms-supplying company PT Ataru Indonesia, a longtime partner, and sent the two officers to inspect the equipment, but it said this deal was legal and denied involvement in the alleged attempt to buy other weapons. The U.S. trial against the arms brokers was set to begin in May 2006.423

Weak Financial Management

A major shortcoming in military finance has been poor management procedures and implementation. Minister of Defense Sudarsono has acknowledged that the military must improve its financial management systems and be more accountable for its use of budgeted funds.424 Several problem areas have been identified and have been addressed only in part. One concern is that military requests for funds and the flow of the money itself have been subject to highly bureaucratic processes that greatly delay the release of funds and also increase the risk that money will disappear at each level.425 The delays in the delivery of budgeted funds to the field, together with skimming of the funds, has encouraged self-financing and also creative accounting to cover up the practice, as officials have acknowledged.426 The expenditure reports are made to match the budgeted funds, while the spending that actually took place with funds from other sources is not recorded.427 Under a memorandum of agreement between the Ministry of Finance and Ministry of Defense, salary payments have been disbursed under a more streamlined procedure since 2005; delays in the release of other funds have decreased from previous levels but still stand at about four months.428

Additional problems identified by government officials include failures to adhere to procedures, inefficiency, and ineffectiveness in the use of funds.429 Government auditors from the Supreme Audit Agency (Badan Pemeriksa Keuangan or BPK) said their review of 2004 military accounts uncovered significant misstatements and the use of inaccurate accounting.430 The Indonesian military uses a different accounting system than the rest of the government, and as of April 2006 no plans were in place to correct this situation.431 Officials also report that the military maintains incomplete records and provides only a general list, without details or documentation of expenditures, to those responsible for monitoring military spending.432 One Ministry of Finance official said of the military, “They are not reporting properly, and they are not audited fully.”433 (See below for an analysis of gaps in audits of military accounts.)

Limited Transparency, Little Accountability

Civilian authorities in Indonesia have made strides to increase their monitoring and reporting of military finance practices, but serious challenges remain. The pace of change has been unduly modest. Some needed steps have been delayed and other areas have yet to receive adequate attention. Transparency over military finances has improved as compared to dismal past levels, but a culture of secrecy still prevails in relation to military finance topics. Accountability is also lacking. Mismanagement, waste, and corruption remain endemic, and even well-documented cases resulting in significant losses to the state have not lead to consequences for those responsible. These issues are elaborated below.

Low Transparency

In 2006 transparency on military finances was on the rise, though important restrictions remained. On the positive side, by early 2006 the findings of some official BPK reviews of government spending had been made public, consistent with a 2004 reform.434 These included the results of the 2005 audit of official military spending and a special 2004 audit of the Ministry of Defense that previously had been kept from public scrutiny.435 This information was made available on government websites, which also began to post the more detailed budget documents that the Ministry of Finance compiled starting in 2004. The value of this information was limited by its incomplete and unreliable nature, as discussed above (see “Problems with Government Statistics,” above). As one finance expert commented with regard to improved transparency, “Numbers are easy to come by but they don’t tell you much.”436

At the same time that the government made some information public, officials have declined to release other data to which they had access. Only budget information was released with any level of detail. Preliminary data on spending based on cash flows also was available, but only in an aggregated format that did not show the breakdown of military expenditures.437 Final, audited financial statements, developed as part of a package of recent reforms and available for 2005, only addressed the overall accounts of the government as a whole. The Ministry of Finance did not anticipate that audited spending figures by line ministries would be public before 2007.438 It did share some disaggregated data on military spending with Human Rights Watch, reflected above (see Table 3), but said that it could not provide a copy of the document on which it was based because it contained more detailed information that was strictly for the use of the Ministry of Finance and Ministry of Defense.439

Officials frequently cited confidentiality restrictions as the rational for not sharing information on military finance, but as of this writing no law was in place to define what constituted a state secret. A draft law on secrecy introduced in 2005 would make all military matters secret, presumably blocking public access to the audit information, and contradicted a draft law on freedom of information that would allow greater transparency.440 The lack of legal clarity was not the only barrier, however. In some cases, the habit of secrecy was so ingrained that officials declined to discuss information that was available on government websites.441

Transparency and accountability remain sorely absent in relation to off-budget revenue. As one official put it, “It goes without saying that they do not report off-budget activity.”442 Few military businesses have been subjected to any financial scrutiny. Military foundations were audited once but only in part, and that audit has yet to be made public. (See the description, below, of BPK’s findings.) The TNI’s then chief Sutarto said in April 2005 that he did not have information on the number, scope, value, or profits of the military’s business investments and, in any case, considered such matters to be an “internal TNI matter.”443 When Human Rights Watch requested such information from various government officials in 2006, none agreed to provide it. Some were partially responsive to the request. While still declining to share a copy of the inventory of military businesses, the Ministry of Defense provided limited financial information on one military-owned company that was slated to be sold, and the TNI gave a partial listing of its business-related entities. (For details, see the section titled “Foundations” in Part II: An Anatomy of Military Economic Activity.)

Box 3: Opaque Funding of Military Operations in Aceh

Financial control problems have been perhaps most serious with respect to “emergency” military operations that, even if anticipated, are not included in the budget.444 Funds spent on the military presence in Aceh through 2005 illustrate this problem.

For years, parliamentarians complained about impediments to oversight on military spending. In 2003, for example, the TNI received at least Rp. 1.2 trillion ($144 million) from a government reserve account intended to cover emergency financing, which was the typical way the Aceh operations were funded.445 That year parliamentarian Djoko Susilo asserted that the approval process for budgetary allocations to the military was little more than a rubber stamp: “Far from controlling the budget, the DPR (parliament’s House of Representatives) is still nearly impotent against the military on the budget issue.” 446

An Indonesian human rights activist, speaking in 2004, summarized the continuing problem: “Civilian authorities have no agenda for control of the [military] budget. There is no accountability from the center, no transparency, and no skill to audit war operations.”447

The consequences have been felt by soldiers on the ground. Troops are poorly trained and equipped and face difficult living conditions. An analyst who conducted research on the topic found that “[t]he Aceh supplementary budget doesn’t go to the rank and file. There is huge civil and military corruption. It is institutionally systemic.”448

With the tsunami in December 2004, the TNI was granted an additional stream of money. Observers expressed concern that the military’s lack of financial accountability could hamper efforts to ensure relief and reconstruction funds were properly spent.449

In early January 2005, the Ministry of Defense submitted to parliament a budget request of nearly Rp. 237 billion (approximately $25.4 million) to cover TNI disaster assistance for a thirty-day period.450 In mid-2005 the ministry sought an extra Rp. 530.3 billion (nearly $54.5 million) to pay for military operations in Aceh for the remainder of the year.451 The defense minister and the then head of the TNI both confirmed that their intention was that this sum not be counted as part of the defense budget.452

Parliamentarians complained that the Ministry of Defense bypassed the regular budget process, and ordered it to draw the funds from the ministry’s own Rp. 2 trillion ($206 million) emergency fund or await the 2006 budget. A member of the budget subcommittee of the parliamentary commission on defense, Djoko Susilo, declared to the Jakarta Post:

“Because Aceh has been given a normal status [the state of emergency was lifted in May 2005], according to the TNI law, all funds must come from the state budget specifically allocated to the (defense) ministry. (…) But in their latest proposal, it’s not clear which post they expect us to disburse the money from. They don’t even give complete details on what they will do with the money.”453

Another member of the budget committee, Happy Bone Zulkarnaen, emphasized that the problem was not new. He said the Ministry of Defense had failed to report on its spending on military operations in Aceh for the previous two years.454 After MPs insisted heavily on this point, the ministry became more responsive to their requests for information.455

In 2006, members of parliament were considering a government request for some Rp. 400 billion ($44 million) to pay for the redeployment of troops withdrawn from Aceh under the peace agreement, as well as to cover some costs associated with those that remained.456 The funds, according to MP Djoko Susilo, were to come from the government’s emergency budget.457

The Audit Function

To date government auditors have limited themselves to reviews of non-operational expenditures, such as spending on salaries and other items that do not directly relate to military deployments. Former BPK officials said the reason was that the military had obstructed their efforts to examine operational spending. One complained that in 2003 the military leadership impeded the agency’s efforts to audit operational funds using several tactics. For example, the military—acting outside its authority—determined on its own what information would be subject to audit, claimed that the requested information was not yet available, and limited access to documents by declaring them to be confidential.458 In 2004, operational expenses continued to be treated as “off limits,” government auditors told Human Rights Watch.459 Over time, BPK’s authority has gradually increased as military cooperation has improved.460 BPK officials, perhaps optimistically, said that they anticipated being able to undertake a review of the military’s operational spending in 2007.461

Another longstanding limitation on BPK audits has been the exclusion of the military’s off-budget revenues and expenditures. A government auditor explained in 2004 that, contrary to requirements,  the military had obstructed his efforts to look at off-budget finances: “They insist we audit only what is paid by the budget.” 462 One limited BPK audit of military foundations took place in 2000, but only after international financial institutions, especially the International Monetary Fund (IMF), insisted on it. Lending agreements signed between the Indonesian government and the IMF after the Asian financial crisis, when Indonesia took out large loans, stated that “any future internal audits of financial operations of all government agencies” by BPK should “take full account of all extra-budgetary sources of support. This will begin in 2000 and will include the military.” It added, “We recognize that quasi-fiscal activities may also arise from the operations of foundations and we intend to bring their activities and accounts under government review and audit.”463  (The results of this BPK audit of military foundations are described below, in the section titled “Financial Mismanagement.”)

Unfortunately, this hard-won progress was not sustained. A separate IMF-supported initiative, to press for adoption of legislation regulating foundations, had the unintended consequence of halting BPK audits of military foundations. The military foundations used a provision of this law to argue that they were only required to open up their books to review by private auditors, not government authorities.464 BPK continued to assert its right to audit state wealth under foundation control, which was also the position of the Indonesian government and the IMF,465 but no such audits took place. In 2006 BPK officials were following with interest the government’s plans to take over control of military businesses and anticipated that they would again audit the military foundations once the handover was completed.466 That was not scheduled to happen until 2009.

Misuse of State Assets

After negotiation to secure the TNI’s cooperation, in 2005 BPK reviewed the TNI’s use of state assets the previous year. The special BPK review confirmed what many analysts had long argued, that the military has received considerable financial benefits, including access to government infrastructure (state assets), that allow it to generate added income and to compete on an unfair basis. The results, covering 2004, revealed widespread military misuse of state assets as well as a persistent failure to disclose or pay taxes on the resulting profits.

BPK’s specific findings were that the TNI misuse of state assets resulted in some Rp. 38.8 billion ($4.27 million) in profits to its partners. These funds went to third parties, rather than to government coffers. In addition, no taxes were paid on proceeds from use (presumably leasing) of 167 thousand hectares of public land controlled by the air force, Ministry of Defense, and TNI headquarters. The military branches left unreported Rp. 7.7 billion ($847,000) in profits from TNI-run hospitals. The BPK report drew particular attention to the navy, which it said failed to properly disclose Rp. 28 billion ($3.1 million) in income. That figure included Rp. 1.5 billion ($165,000) in profits earned through its cooperative, Rp. 441.9 million ($49,000) paid by a company, Rp. 255 million ($28,000) from housing on navy land, and lease payments from a supermarket and auto center in North Jakarta totaling Rp. 25 billion ($2.75 million).467

In spite of BPK’s findings that the military caused losses to the state, no penalties were contemplated for those responsible. Authorities cited a lack of clarity over reporting requirements on profits derived from the use of state assets and attributed the problem to technical errors.468 This was consistent with past complaints that, despite laws making the misuse of state assets punishable, accountability has been lacking.469

Other Financial Improprieties

Military financial improprieties are legion in Indonesia. Indonesian oversight officials, while recognizing that some improvements were underway, consistently cited the military as one of the worst, if not the worst, in terms of government waste and corruption.470

According to press accounts, a review by the BPK concluded that more than $450 million was diverted from military funds over an eight-year period ending in 2001.471 Four years later, in 2005, Defense Minister Sudarsono stated that 30 percent of all government spending, including the Ministry of Defense budget (through which allocated funds pass to the armed forces), was wasted.472 An analyst and expert on security sector reform, Riefqi Muna, put it in even starker terms:

Despite the fact that the Indonesian Armed Forces has one of the lowest budgets in the region in terms of its total and its percentage of the national budget, it is important to note that there is still plenty of money in military coffers to be misappropriated and stolen.473

The Indonesian government has declared anti-corruption a priority but its efforts have only limited applicability to the military sector. Indonesia’s Corruption Eradication Commission or KPK only has one investigation open into military corruption, related to a prominent arms procurement scandal from 2003, and had referred another to the Attorney General’s office. KPK’s ability to pursue military cases is a “sensitive” issue, according to a commission member, because its mandate limits its role to one of coordination when military personnel are involved.474 Moreover, the requirement that high-level government officials submit wealth declarations has limited applicability for the military. Only a handful of Ministry of Defense and TNI officials are subject to the requirement, less than in other government departments.475 KPK does not audit these reports in any case. It receives the information and says it verifies what it presented but says that it lacks the authority to investigate further if it suspects an official has withheld information.476

Three Myths about Indonesian Military Self-Finance

The challenge of funding the Indonesian military within the constraints of a tight budget has provided a central justification for the TNI’s independent revenue-generating activity. From the earliest days of Indonesia’s history, official funding has been deemed inadequate to meet the military’s basic needs. While there is truth in this claim, as already noted, the problem is less severe than often stated and is not insurmountable. In the form most commonly heard, the claim rests on three myths: first, that funds from official government sources are wholly inadequate to meet the essential needs of the military; second, that military businesses generate substantial revenue that goes most of the way toward filling the gap; and, third, that the proceeds of these businesses are primarily used to meet the welfare needs of the troops.

This section addresses those myths. As for the first, while it is true that official spending on the military has been relatively low over the course of many years, creating incentives for military self-financing activity, it is higher than military budget figures suggest. One reason is that outlays are hidden in other budget lines, so that total government spending on the military greatly exceeds the budgeted amount. Moreover, official budget allocations to the military are on the rise. Any plan to address under-funding in military budgets must also take on the pervasive waste that the defense minister has estimated at 30 percent. It also should account for the considerable costs to the economy of military self-financing activity.

The notion that the profits from military economic activities are keeping troops housed and fed is also a myth. The belief is strong enough, including in military circles, that government officials say it presents a “psychological obstacle” to reform of military finance.477 There is considerable evidence to support claims that regular military-owned businesses are mismanaged, profits generally low or nonexistent, and that they contribute only modest sums for welfare-oriented spending. Some military officials, even while denying widespread corruption in the activities of these businesses, have acknowledged that they offer little benefit to the troops. Irregular businesses are presumed to generate more money (no total figures are available) but these funds too tend to be allocated for non-welfare purposes. Much of the money that is raised through the military’s various economic activities goes into the pockets of individuals and does little or nothing to cover budgetary shortfalls.

Myth 1: Funds Allocated to the Military by the Indonesian Government Cover Only a Small Fraction of the Military’s Needs

The Indonesian military faces considerable financial pressure. While many observers attribute the problem to low military budgets, the issue in fact is much more complex. Importantly, official statistics only tell part of the story. Although we cannot be sure of the amounts of money involved due to lack of transparency, it is clear that the TNI has benefited from significant additional outlays made available through other budget lines and special allocations.478 For example, the use of emergency funds for military operations has not been counted against the military budget. (See Box 3, above.)

Arms acquisitions financed with alternative arrangements such as barter deals, export credit financing, or presidential contingency funds represent yet another form of government subsidy of military spending.479 The sums involved can be quite large. For example, export credit-backed loans were used to finance weapons purchases to the tune of $160 million in 2002, $448 million in 2003, and $449 million in 2004.480 In addition, official statistics do not consider the substantial payments made by companies to cover security services provided by the Indonesian military.481 Foreign military aid, whether in the form of grants, subsidies, or in-kind support for items the Indonesian government would otherwise have purchased, also supplement central government outlays for the military.482

Military expenditures paid from funds managed by other levels of government can be substantial. As decentralization has made more funds available to regional and local governments, they frequently have been asked to help underwrite military expenditures.483 Marcus Mietzner, an expert on civil-military relations in Indonesia, described how this works:

As under the New Order, the military requests a share of regional revenue, often hidden in the budget as “stability funds” or other items at the disposal of the executive. Long-serving bupati [regents] report that their administrations continue to receive bills for all major TNI operations, ranging from security interventions to disaster relief and development programs.484

A government advisor who spoke to Human Rights Watch said that he had personally reviewed financing proposals the military submitted to authorities in one part of Central Java province, which district government authorities approved and paid out using funds allocated for other purposes.485 Indonesian finance officials told Human Rights Watch that it was not unusual for local and regional governments to cover certain military costs, including for some security operations.486 Such expenditures, as well as equipment purchases made on the military’s behalf by local or regional governments, are not counted as military spending by the central government.487

It is difficult to establish how much these other outlays add up to, but it is wrong to start from the premise, as so many do, that the military only receives government funds that are explicitly designated to defense in the annual budget. Claims about major budgetary shortfalls, moreover, typically fail to take into account the pervasive waste acknowledged even by high-ranking officials. Finally, it is important to consider that the Indonesian government has increased its military budgets and spending in recent years, as seen in Tables 3, 4, and 5. The approved 2006 budget ceiling for the military was Rp. 28.2 trillion ($3 billion), a 28 percent increase from the final 2005 budget allocation.488 The Yudhoyono government also has made clear that it intends to progressively raise government spending on defense.489

Myth 2: The Businesses of the Indonesian Military Significantly Help the Military Cover Its Funding Gap

The rationale for military business activity in Indonesia rests in part on the assumption that such businesses are successful. This section reviews what we know about the operations and profits of military economic activity, both legal and illegal. It finds that military businesses, despite receiving preferential treatment that has boosted their money-making potential, in recent years have not contributed significantly to covering unbudgeted military expenses. Part of the reason is that funds have been siphoned off. Military collaborations with business, such as payments for security services, have generated large sums and have helped supplement official spending but also have been marked by corruption. Illegal economic activities are presumed to generate large sums, but not surprisingly no reliable estimates are available. In the case of unlawful businesses, it is especially easy for funds to be routed to the self-enrichment of the individuals involved rather than be used for military purposes.

Military-Owned Businesses

There is little verified information regarding the profits generated by military-owned businesses and how these are allocated, but some patterns can be discerned. While some business earnings finance military expenditures, including welfare activities and even operational expenses, the amounts involved are far lower than one might expect. The economic value of military businesses has declined since Soeharto’s fall and has continued to trend downwards. (See Box 1 and the section titled “Foundations” in Part II: An Anatomy of Military Economic Activity.) Unsustainable business practices, including the use of businesses as “cash cows” from which to draw funds without reinvesting for the future, are partly to blame. Indonesian leaders have acknowledged that the low level of profit from military businesses and the fact that many were saddled with debts helped explain why, after years of staunchly defending such businesses, in 2005 the TNI leadership committed to giving them up.490

Lt. Gen. (ret.) Agus Widjojo, in an interview with Human Rights Watch, offered his explanation for the downturn in the fortunes of military business ventures:

First, they are losing the preferential treatment they got in the past under Soeharto. Second, there’s far more competition now. Third, military business is under observation and that was not the case before…. The capital and investment [of the foundations] is not all that great. It’s not true that they play a major economic role or that the funds are used as part of the military budget.491

Others largely agreed but added that the foundations and other off-budget funds were used to finance some operational costs and at least limited procurement. A retired military officer who spoke on condition of anonymity told Human Rights Watch that the military foundation he helped run while on active duty had occasionally purchased items, such as transport vehicles, on behalf of the military. Such purchases were most commonly made during military operations, such as in Aceh and Papua. The officer said the foundation had purchased the items on the understanding that its expenses would later be reimbursed from the government budget, but the “loans” were never repaid.492

Minister of Defense Sudarsono has confirmed that “[t]he income earned by the business undertakings was partly used to finance operational activities.”493 He acknowledged that this was true of proceeds from both legal and illegal military businesses.494 Similarly, an auditor involved in a 2000 review of a military foundation told Human Rights Watch he was surprised to discover that, rather than serving strictly welfare purposes, foundation funds were used for “certain operations [that] were more related to the operations of the army command and units.495 For example, Kostrad, the Army Strategic Reserve Command, has used foundation funds to finance military training, and also solicited private donations for that purpose.496

Box 4: Financial Mismanagement

The poor business practices of military-owned companies have diminished their financial contribution. Audits of the military’s business holdings have been rare, but invariably have uncovered major irregularities. In 2000 the newly installed chief of Kostrad, Lt. Gen. Agus Wirahadikusumah, ordered a financial review of the accounts of its foundation, Yayasan Dharma Putra Kostrad (YDPK). This reportedly was the first professional audit of YDPK since its founding nearly forty years earlier. It found that Wirahadikusumah’s immediate predecessor as the head of Kostrad, Lt. Gen. Djaja Suparman, had withdrawn at least Rp. 160 billion ($19.2 million), of which a portion was later returned, from the accounts of PT Mandala Airlines, a subsidiary of the foundation.497

A follow-up investigation ordered by Wirahadikusumah revealed a wide range of anomalies in the use and management of the foundation’s funds, including payment of inflated prices, expenditures unrelated to the foundation’s welfare mission (including bulletproof vests), and overspending on marketing. An audit report determined, moreover, that YDPK operated without a budget or planned activities, that it did not adhere to good bookkeeping practices, that it lacked an internal oversight mechanism, and that its financial data, including reports, was scarce and unreliable.498 Total losses from the foundation were reportedly in the order of between Rp. 75 billion ($8.1 million) and as much as Rp. 189 billion ($20 million), the latter being equivalent to the entire worth of the foundation’s assets at the time.499 Prompted by the revelations, the army inspector general undertook an internal audit but, ignoring the indications of corruption, he attributed the problems to procedural error.500

Suparman, who went on to become the army’s Inspector General, has strongly denied the allegations of corruption. He told Human Rights Watch that the charges were unfounded, politically motivated, and amounted to “character assassination.”501

Wirahadikusumah was ostracized by fellow military officers who resented his reform efforts. They successfully arranged to have him removed from his command in mid-2000.502

The year 2000 was also the year of the official BPK audit of military foundations, mentioned above. The BPK performed a “cursory” review of eight military foundations and found a series of problems:503

- “weak or total absence of internal control and oversight mechanisms in the management of the foundations;

- “incoherent financial records and incompetent financial management;

- “violation of accounting principles in their financial management;

- “unclear connection between the foundation, the company, and the original military organization; and

- “inappropriate use of foundation fund for items that have nothing to do with the purpose and goals of the foundation.”504

One of the BPK auditors at the time described additional findings, including as follows:

- “[T]he chief of staff or the commanding officer plays a dominant role in determining the foundations’ expenses and earnings.

- “The foundation sources and the budget of the military-owned businesses are not transparent and they are not only used for the welfare of the soldiers. There are indications that the funds are used to cover its operational preparations.

- “Elements of corruption, collusion, and nepotism are very strong. There are markup practices, no regular accountability reports and an ineffective use of funds. Most of the foundation’s funds are channeled into command units and used as tactical funds.”505

The audit, which was not made public, reportedly identified one military foundation as having misused Rp. 207.437 billion ($20.7 million) and said funds in the amount of Rp. 87.975 billion ($8.7 million), Rp. 14.023 billion ($1.4 million), and Rp. 13.98 billion ($1.4 million) were missing from three others.506 The then assistant for general planning for the commander-in-chief, the outspoken Lieutenant General Wirahadikusumah, said that the absence of proper records of expenses caused him to suspect that military officers had embezzled the missing funds.507 As bad as these findings were, they could have been worse. The foundations reportedly cleaned up their books before sharing them with BPK.508 One of the auditors charged that “in addition to incompetence in bookkeeping, there is evidence to suggest that information has been deliberately ‘lost’ or fabricated.”509 Juwono Sudarsono, then serving a first term as defense minister, added: “Incompetence and corrupt practices means we must take the results of the audit as an indication only.510

In 2001, army headquarters asked external auditors from Ernst & Young to conduct an audit of the main army foundation.511 The audit reviewed YKEP’s holdings in thirty-three companies that funneled funds to YKEP as royalties or dividends.512 The report was not made public, but Human Rights Watch obtained a copy. Among its key findings, the audit found that YKEP-owned companies were marked by low profit margins, large debt exposure, overlapping of businesses, and legal uncertainties regarding business arrangements and asset ownership (the latter likely a reference to state assets used by the foundation). The majority of YKEP’s holdings showed low market share and dim future prospects.513

The audit also pointed to several management problems. It found that company directors, generally army retirees, were not appointed based on performance (suggesting a patronage system), and that third parties operated several of the companies in murky arrangements that presented potential conflicts of interest.514

The audit verified that the military was not operationally engaged in the companies it owned. It recommended divestment from some companies because the foundation “has little or no control and hence [has] not been receiving any benefits.”515 Military cooperatives have received less scrutiny but past reviews have found that, like foundations, they have misspent state funds and caused financial losses.516

Other Types of Military Business

Little is known about the flow of funds derived from military economic activity where the military does not have a formal ownership stake. According to persistent reports, in past years such funds may have been used to facilitate unauthorized activities, such as the formation of militia groups.517 More recent information strongly suggests a pattern not unlike that which characterizes military-owned businesses: while some funds might be directed for operational purposes, illegal and informal business activity is rife with corruption and individuals often benefit more than the institution.

Payments for different types of security services illustrate the point. With respect to illegal protection rackets, of the money earned by enlisted men circulates to their superior officers. A person who has researched criminality in Medan explained that when soldiers back illegal businesses “there’s an obligation to give money to the commander.”518 In the case of security services organized informally at the unit level, a patronage system ensures that funds earned at lower levels flow to more senior officers. Arrangements to hire out soldiers for protection services are often negotiated by their commanders, who assign the task and keep a fee.519 The commanders also send a portion of the proceeds to their superiors.520 For instance, the Indonesian human rights group Kontras found that in one area of West Java, the military battalion received monthly payments from several businesses (as well as the local government). These were distributed according to rank. The sums involved were tiny compared to the payments made by Freeport (see “Freeport’s Security Arrangements” in Part II: An Anatomy of Military Economic Activity), but in a country where salaries are very low they could add significantly to a soldier’s take-home pay.521

Myth 3: The Proceeds of Military Businesses are Mainly Used to Support Troop Welfare

Military businesses in principle exist for the benefit of the troops. Troop conditions can be dismal, and—particularly at the low ranks—military pay has not been enough to meet the basic needs of soldiers and their families. Salaries for soldiers are very low, as they are for all public servants and many others in Indonesia’s developing economy. Base monthly salaries for the troops start at Rp. 650,000 (approximately $70) and top out at a little more than Rp. 2 million ($220) for senior officers.522 Soldiers receive supplementary allowances that in some cases nearly double their take-home pay, but they struggle to get by on that income.523 A retired military officer informed Human Rights Watch: “It is taken for granted that a criterion for a successful commander is the ability to fund the unit to look after the welfare of the soldiers.”524

Just as the pressure to find resources to provide for the troops cannot be attributed solely to official funding levels, since poor budgetary practices, waste, and corruption are also partly to blame, it is also false to suggest, as many in the military have, that independently generated funds are mainly spent on social programs.525 Certainly there is some social spending. Military foundations provide soldiers and their families with added benefits, including health care, educational support, housing, and pensions for military widows and orphans. The foundations also sponsor various educational institutes. In addition, military businesses owned via foundations commonly employ military retirees and are considered an informal pension system.

Yet the funds available for such welfare spending are greatly depleted by the practices of military businesses, including graft. Commanders use the money largely at their own discretion and without proper record keeping, running them like “slush funds.”526 A military analyst explained that the true purpose of military companies is to siphon funds: “It’s all about rent-seeking. The formal businesses don’t exist to make a profit. The point is to facilitate scheming.”527 As senior officers milk military businesses dry, little or no profits are left for the troops for whose benefit these businesses were purportedly established. Defense Minister Juwono Sudarsono has acknowledged that the top brass are the true beneficiaries of military business.528 As an example, the former deputy army chief Kiki Syahnakri confirmed that his income when he was appointed to head a military-owned timber company was worth several times his military salary.529 A parliamentarian, Abdillah Toha, commented: “Those who profit are the generals. So it’s all lies to say that military business is needed for soldier welfare.”530

Rather than retain military businesses of dubious economic and social value, there are other means to improve soldier welfare that are less susceptible to corruption by their superiors and do not threaten human rights and military professionalism. Soldiers would benefit more directly from measures that enhance their compensation and living conditions. Military pay was due to increase in 2006 by between 15 and 20 percent under a government plan to raise the incomes of soldiers, police, and civil servants.531


The responsibility to provide for the troops lies with the government of Indonesia. For decades, civilian leaders have instead allowed the military to raise funds independently on the pretense that the funds will be used to meet budget shortfalls. The net result has been the spread of unaccountable off-budget military financing. A major overhaul military finance is needed to make the system compatible with democratic governance and human rights.

Flawed 2004 Reform Effort

In 2004, parliament passed a law that mandated an end to military involvement in business. This initiative has promise, but implementation has been very slow and the few steps taken so far have been deeply flawed, both in conception and in execution. This section reviews flaws in the law and in the limited efforts at implementing it. Our assessment is rooted in the findings of our human rights analysis, which showed that three essential elements have been missing from the reform debate to date. First, a sense of urgency is missing, commensurate with the serious nature of the problem and its harmful effects. Second, financial accountability is needed to help combat military impunity for human rights abuses. Third, the reform effort must consider the problem of military self-financing in a comprehensive way to account for the true scope of the military’s economic entanglements and associated abuses.

A Mandate for Reform: The TNI Law

In September 2004 the outgoing parliament passed a law on the TNI, Law No. 34/2004, that included several provisions related to military financing. It stated that TNI troops are entitled to an adequate income funded from the official defense budget.532 Importantly, the new law also emphasized that “professional soldiers…do not do business” and included an unequivocal prohibition on soldiers taking part in business activities.533 Even more significantly, the TNI law imposed a deadline for concrete changes: “Within five years from the passage of this bill, the government must take over all business activities that are owned and operated by the military, both directly and indirectly.”534

The adoption of these provisions represented an unexpected watershed, yet the law itself left open many questions. By imposing a deadline the law recognized the need to act without delay, but it did not spell out any consequences if the government or the military failed to comply with its provisions. In addition, the question of the law’s scope was not clearly addressed; the law did not define which types of military businesses were covered. This lack of clarity made it possible for some types of formally-established businesses to be excluded and for implementation efforts to ignore the military’s informal and illegal economic activities. Finally, the law offered no guidance on how the government should divest the military of its business interests or where it was to draw the funds to bring the military fully on budget.

Seriousness of Purpose Lacking

Past efforts to eliminate military business activity have invariably stalled, so true reform will require strong leadership and a sense of purpose commensurate with the seriousness of the problem. In April 2005, Indonesia’s then military chief, General Sutarto, pledged that the TNI would withdraw from business within two years.535 This commitment, later repeated by Sutarto’s successor and senior TNI staff, appeared to indicate an important shift in attitude that would facilitate the implementation of needed reform without delay.536 To date, however, President Yudhoyono and his defense minister, Juwono Sudarsono, have taken a cautious, go-slow approach. Both have argued that military budgets would need to be raised first before the government could be expected to tackle the problem of military self-financing. The defense minister told Human Rights Watch in early 2005 that bringing the TNI fully on budget would, in his estimation, take ten to fifteen years.537 The TNI law imposes a much shorter timeline, but the Yudhoyono government is seemingly in no rush to meet it.

The government waited until mid-2005 to form an inter-ministerial team to plan the process of transforming military businesses. This team, known as the Supervisory Team for the Transformation of TNI Businesses (Tim Supervisi Transformasi Bisnis TNI, TSTB), includes representatives from the Ministry of Defense, the TNI, the Ministry of Law and Human Rights, the Ministry of Finance, and the Ministry for State-Owned Enterprises. The TSTB is headed by Said Didu, secretary of the Ministry of State-Owned Enterprises, with Lt. Gen. Sjafrie Sjamsoeddin, secretary-general of the Ministry of Defense, serving as the deputy. Under the TSTB’s official mandate, formally issued in late November 2005, the team was tasked with conducting a verification and valuation of military businesses, including by reviewing legal, business, and financial aspects of the businesses.538

The government delayed basic information gathering by granting the military until late September 2005, a full year after the TNI law was passed, to submit an inventory of its businesses.539 Next, the inter-ministerial team moved to evaluate the identified businesses according to several criteria.540 That process also moved very slowly and had made little headway as of March 2006. TSTB members said their ability to complete this task was complicated further when the TNI submitted a revised inventory that listed more than 1,500 military businesses (up from 219).541 Based on the judgment of the TSTB that many of these businesses would not be eligible for restructuring,542 the government decided to postpone plans to assume control of the identified businesses until it could determine which ones it intended to take over.543 To carry that work forward, the TSTB proposed that a new agency, the TNI Business Transformation and Management Body (Badan Transformasi dan Pengelolaan Bisnis TNI or BTPB), be created. The BTPB’s task would be to review and verify information on military enterprises (the task originally assigned to the TSTB), to assume management control over these enterprises, and to then restructure the businesses to comply with prevailing laws.544

These various delays have pushed back action to implement the TNI law. Months have been spent collecting, reviewing, and verifying data on individual businesses but the parameters for how the government intends to reform these businesses have not been set. Regulations, in the form of a presidential decree, that the government had first been promised for October or early November 2005, then April 2006, never materialized, and the dates slipped without explanation.545 By April 2006, expectations had again been revised downward. (That month, the government belatedly initiated a review of foundations under the Ministry of Defense, in parallel to the TSTB process for TNI-owned businesses.546)

TSTB members who spoke to Human Rights Watch were keenly aware of the strong public demand for reform of military business. They affirmed their commitment to carrying out the task, as did the TNI, but emphasized that it would take more time. They anticipated that the new agency might be in place by mid-2006 on the basis of a presidential decree, and that the actual transformation of military businesses would follow later.547 The TSTB head, Said Didu, told Human Rights Watch that the agency might need until 2009—the deadline provided by law—to take over military businesses and that turning them into state-owned enterprises, returning, or disposing of them could require more time.548 The TNI continued to insist that the target date to finalize the process was two years, rather than the five provided by law,549 and the Ministry of Defense expressed hope that the government handover could be completed in 2006,550 but it was increasingly clear that these timeframes were not realistic. In the interim, the absence of clear rules has delayed action, created confusion, and opened up opportunities for mischief, as discussed below.

Plans Fail to Promote Accountability

The government’s efforts to address military self-financing have been focused almost exclusively on the 2004 TNI law’s provision requiring the government to take control of military businesses. Government planners have prioritized the identification of businesses that may be eligible for takeover, particularly the few that are profit-makers, rather than placing top priority on ending military involvement in business in any form. Similarly, they have not taken the opportunity to improve civilian control over military finances. Little attention has been given to concerns over the lack of public accountability in the monitoring, oversight, and transparency of military funds.

It does not help that the law as written overlooks important accountability issues. It refers obliquely to the requirement that the military be fully funded from government accounts, as did an earlier law, but provides no specifics about how to achieve financial accountability. It also does not define military business, which has opened the door for the government to consider exempting some business activity. The law also does not identify penalties for violations of the prohibition of military business. While it imposes a five-year timeline for the government takeover of military businesses, it does not spell out the consequences if that deadline is not met. Some of these details might be addressed in pending regulations, when those are finally issued. In the interim, however, the lack of clarity in the law and the absence of ground rules—and any anticipated punishments—leave room for the military to act independently to dispose of its assets without adequate oversight.

That has already been the case. For example, the army independently sold off its stake in Bank Artha Graha, a private company in which it held shares via the YKEP foundation, and allocated the Rp. 121 billion ($12.1 million) proceeds without notifying the authorities responsible for overseeing the transfer of military businesses.551 Numerous other deals were concluded or were in the works.552 Parliamentarians denounced the sales, saying they violated the TNI law, at least in spirit.553

The military was not deterred, however, and insisted that it was within its rights to manage the businesses as it saw fit. For instance, Kostrad’s chief announced that Kostrad intended to sell off shares in its money-losing Mandala Airline and did not need to await government regulations on the restructuring of military businesses.554 Despite concerns that advance sales or closures of businesses by the TNI undermined the ability of the government to manage the handover process in a transparent and accountable manner, the government ultimately acquiesced. It endorsed the military’s rationale and argued, contrary to the dictates of the TNI law, that the Kostrad foundation was free to go forward with the sale because Mandala Airlines was a “100 percent private company.”555 Proponents of military finance reform pointed out that what was taking place was a “fire sale” of businesses that properly should be considered state assets.556 (See discussion below.)   

With regard to legal accountability, the TNI has rejected criticism that its forces remain largely above the law.557 The then spokesman for the TNI argued in March 2006 that the TNI is firmly committed to holding military personnel accountable, including with regard to human rights abuses and business-related crimes:

[T]he TNI has consistently brought soldiers suspected of violating the law to justice. So far, no TNI personnel suspected of the violations have escaped prosecution, including those implicated in human rights abuses (…). The TNI will not turn a blind eye to the fact that some of its personnel were, in the past, involved in crooked business practices. But in line with its internal reform, the TNI is and will be taking legal actions against soldiers found to have breached the law in their business activities.558

The TNI’s claims that it has consistently pursued justice for human rights abuses is met by overwhelming evidence to the contrary.559 The TNI provided limited data on the number of military trials and convictions over a ten-year period,560 but Human Rights Watch was informed separately that most of the convictions were for infractions of military discipline, not human rights abuses or economic crimes.561 Moreover, military courts have a history of failing to prosecute soldiers for crimes against civilians.562 The TNI has strongly opposed proposals to make soldiers subject to civilian courts for such offenses.563

Similarly, TNI representatives have pledged that they will crack down on corruption, unauthorized business activity, and associated abuses, but when given the opportunity to do so—in relation to the South Kalimantan coal brokering and abuses example included in this report, for instance—they have declined to act and have offered excuses instead. Elsewhere, they have attributed misbehavior to rogue elements acting in isolation.564 The TNI leadership has been willing to act in selected cases, but it has not fully recognized its responsibility for these problems or committed to the structural reforms needed to ensure proper accountability.565 The same must be said of their civilian counterparts, who have failed to make accountability a centerpiece of military reform efforts, including in connection with military finance.

Unwillingness to Tackle the Full Scope of Military Economic Activity

Military fundraising, as shown in this report, spans four different categories of economic activity. In contemplating reform of military finance, civil and military officials have only been willing to consider steps to deal with one category—the established enterprises in which the military has a documented ownership share. Moreover, they have focused their attention on a sub-set of those businesses, the six or so most valuable companies, and suggested that they might leave the remainder in military hands.566 Upon first hearing such proposals, parliamentarians protested that the government’s intended approach fell short of the requirements of the law they had passed.567 That law, as noted, mandated that the military be divested of all its business interests within five years and prohibited military personnel from taking part in any business activities.

The inter-ministerial team formed to supervise the restructuring of military businesses for the government, the TSTB, has taken a very selective approach. It has largely focused on the goal of nationalizing the most lucrative military enterprises rather than prioritizing the task of ending TNI business activity.568 The limited focus on major military enterprises and openness to permitting the military to remain in business seemingly has been influenced by the lobbying efforts of senior military leaders. The TNI leadership has said it will comply with requirements, but from an early stage it has stressed how it thought the law should be applied. General Sutarto made clear that the TNI would readily relinquish companies that were unprofitable or served only to benefit its private partners and sully the TNI’s image, but he argued that the TNI should be permitted to retain those businesses, notably those established under cooperatives and foundations, that purportedly bring tangible benefits to the soldiers.569 The new TNI chief appointed in early 2006 to replace General Sutarto upon his retirement, Air Marshal Djoko Suyanto, also took up this cause. He acknowledged that involvement in business is antithetical to military professionalism,570 but he nevertheless argued:

We must carefully separate individual businesses from institutional businesses.…I believe that the [inter-ministerial TSTB] team will be very wise in correcting and selecting the military businesses. I mean that businesses that serve the interests of TNI members and their families must be retained.”571

True to the TNI chief’s wish, government planners developed a blueprint for the transformation of military businesses that would allow the military to retain significant investments through purportedly independent entities.572 Under this plan, the government was due to create a new agency (BTPB, as mentioned above) that would evaluate and “clean up” selected military businesses and prepare them to be transformed into state-owned enterprises, sold off, or liquidated, depending on their business prospects.573 The plan, however, would not cover military foundations, military cooperatives, and those individual businesses that, in its estimation, did not make use of government assets.574

The logic for exempting these entities was deeply flawed. Foundations and cooperatives were to be left in place on the understanding that they would limit themselves to engagement in “social business” of a “noncommercial” nature and that they would comply with prevailing regulations.575 In essence, that plan affirmed the status quo, since foundations and cooperatives have long been subject to (and successfully flouted) those dictates. TSTB members, however, defended their choice by arguing that TNI personnel, in their capacity as individuals, were entitled to form foundations and cooperatives.576 By their logic, the TNI law’s ban on military business did not apply if the foundations and cooperatives run by and for military personnel were nominally independent of the military hierarchy.577

The TSTB’s decision to disregard certain individual military businesses also was based on a dubious rationale. Operating on the principle—nowhere reflected in the TNI law—that the government should not lay claim to businesses that military personnel and their private partners built “with their own effort, without government infrastructure,”578 the TSTB said it planned to exclude all military businesses that purportedly did not use state assets.579 In offering this exclusion, the TSTB declined to weigh the many ways in which military businesses materially benefited from the authority of the government and its considerable resources.580 As a result, the TSTB did not object when the Kostrad foundation sold Mandala Airlines because it said there was no evidence that the airline had used state assets.581 This conclusion not only relied on a very limited view of the government resources utilized by military companies and on the misguided notion that the businesses of the TNI (a government entity) could be considered independent of the government; it also contradicted publicly available information, including reports that Mandala benefited years earlier from the transfer free-of-charge of six aircraft owned by a subsidiary of Pertamina, the state oil company.582 Consistent with the TSTB’s overall plan, however, the Kostrad foundation was allowed to independently sell the airline and keep its share of the proceeds rather than enter them into state coffers.583


Government planners and the TNI have continued to emphasize that they are firmly committed to ending military business activity,584 but the plans they have prepared are not designed to meet that goal. From the beginning, it was clear they had no intention to act against the military’s informal and illegal business practices, which they viewed as outside the scope of the TNI law.585 Over time, they have further narrowed their approach to also exclude from consideration precisely those businesses that the military itself wanted to keep. The result was that the TNI law’s ban on military business was being gutted before regulations to implement it were even adopted.

As a further indication of this trend, TNI headquarters prepared a “general” list of nearly fifty entities—foundations, cooperatives, and individual commands engaged in business as umbrella entities, as well as twenty individual businesses—that it claimed served welfare purposes.586 According to TNI representatives, they secured the commitment of the Ministry of Defense that the government would leave these entities untouched.587 Such moves, together with the failure to address the essential issue of accountability, seriously threatened the government’s ability to put an end to military economic adventurism. Considering how much is at stake and how little progress has been made, there is a very real risk that the TNI law will represent a squandered opportunity for reform unless the government alters its approach.

[377] 1945 Constitution of the Republic of Indonesia, as amended, at Article 23.

[378] ADB, Country Governance Assessment Report, pp. 30-33.

[379] World Bank, Combating Corruption in Indonesia, p.19.

[380] Human Rights Watch interview with government auditors, Jakarta, September 7, 2004. For an explanation of why military budgets should adhere to the rules of public expenditure management and how this should be accomplished, see, for example, Nicole Ball and Malcolm Holmes, “Integrating Defense into Public Expenditure Work,” paper commissioned by U.K. Department for International Development (DFID), January 11, 2002; Nicole Ball and Len le Roux, “A model for good practice in budgeting for the military sector,” in Wuyi Omitoogun and Eboe Hutchful, eds., Budgeting for the Military Sector in Africa: The Processes and Mechanisms of Control (Oxford: Oxford University Press/SIPRI, 2006); “Financial resources: achieving effective budgetary control in relation to security,” section VI, in Geneva Centre for the Democratic Control of Armed Forces (DCAF) and Inter-Parliamentary Union (IPU), Parliamentary Oversight of the Security Sector: Principles, mechanisms and practices (Geneva: DCAF and IPU, 2003), pp. 129-145.

[381] For example, it has begun to apply performance-based budgeting methods, to track the use of budgeted funds using improved accounting standards, and to require line ministries to submit annual financial statements. Human Rights Watch interview with Ministry of Finance officials, Jakarta, April 11, 2006; Human Rights Watch interview with another Ministry of Finance official, Jakarta, April 19, 2006. The improvements were called for under laws addressing state finance (Law No. 17/2003), treasury operations (Law No. 1/2004), and auditing (Law No. 15/2004) that were adopted with the encouragement of international financial institutions.

[382]Human Rights Watch interview with Ministry of Finance officials; Human Rights Watch interview with Abdillah Toha, member of parliament, April 15, 2006.

[383] Human Rights Watch interview with Ministry of Finance officials; Human Rights Watch interview with Lt. Gen. Sjafrie Sjamsoeddin.

[384] The law states that “state defense is funded by the APBN (state budget).” Undang-undang No. 3/2002 tentang Pertahanan Negara (Law No. 3/2002 on State Defense), at Article 25 (1).

[385] Unidjaja, “TNI nothing more…,” Jakarta Post.

[386] The opinion poll was conducted by the Indonesian Survey Institute (LSI). “Minority believe military should keep powers,” Jakarta Post, October 6, 2005.

[387] Human Rights Watch interview with Lt. Gen. Sjafrie Sjamsoeddin; Human Rights Watch interview with Brig. Gen. Bibit Santoso and other TNI representatives; “Peningkatkan Kemampuan Pertahanan Negara (Improving State National Security Capabilities),” sect. 2, chap. 7 in Presidential Regulation No.7/2005 on the National Central Development Plan for the Period 2004-09, p. 3.

[388] The budget for the Ministry of Defense (which also covers the armed forces) has for several years been second only to that of the Ministry of Education. See, for example, Minister of Defense Juwono Sudarsono, “Defense Strategy and National Security Policy,” (presentation, Jakarta, November 12, 2005), p. 22, copy on file with Human Rights Watch.

[389] Human Rights Watch interviews with four different Ministry of Finance officials, Jakarta, April 2006.

[390] Some of the problems seen with regard to data on military finance characterize government finance statistics generally. The IMF, which reviewed Indonesia’s statistical system in 2005, found that government finance data largely fell short of international standards in several areas (e.g. transparency, scope, quality of source data, consistency, and level of aggregation). IMF, “Indonesia: Report on the Observance of Standards and Codes (ROSC)—Data Module,” July 20, 2005, especially at pp. 7, 12.

[391] United Nations, Objective information on military matters, including transparency of military expenditures, A/59/192 (New York: United Nations, July 30, 2004), p. 60; data provided by the Ministry of Finance in 2004 and 2006; ADB, Key Indicators 2005: Labor Markets in Asia: Promoting Full, Productive, and Decent Employment (Manila: ADB, 2005), p. 247, citing data obtained from Bank of Indonesia (the central bank).

[392] Human Rights Watch interview with SIPRI researchers, Stockholm, January 25, 2006. It should be noted that, in keeping with the U.N.’s standard reporting format, data provided to the U.N. that year (totaling Rp. 9.7 trillion ($1.2 billion)) included spending by the army, navy, and air force for personnel, operations, and procurement, but excluded other categories and did not cover spending by the military headquarters and defense ministry.

[393] Human Rights Watch interview with a Ministry of Finance official.

[394] Deficit spending by the military in recent years has been attributed to fuel costs, but officials were skeptical if that was the true reason because the requests for added funds were not accompanied by adequate documentation. Human Rights Watch interview with Ministry of Finance officials.

[395] For 2006, the data are copied from the revised annual budget statistics published for that year, whereas for previous years the annual budget reports were used. The relevant documents are available on the Ministry of Finance website, at: [online] Researchers with the Bandung Institute for Governance Studies provided additional budget information and documents.

[396] SIPRI Yearbook 2006 (Oxford: Oxford University Press/SIPRI, 2006).  See also SIPRI Military Expenditure Database, [online]

[397] For its Indonesia statistics, SIPRI has relied on statistics published by the government and in recent years also has corresponded with the Ministry of Finance to seek additional information and clarification. Human Rights Watch interview with SIPRI researchers.

[398] SIPRI data was available for 2004 for Cambodia (2.2 percent of GDP), Malaysia (2.3), the Philippines (0.9), Singapore (4.7), and Thailand (1.2). Average military spending in 2004 for the wider East Asia region, excluding Indonesia, was 2.17 percent of GDP. See the SIPRI Military Expenditure Database, [online]

[399] The World Bank, in a 2000 report, stated that “independent observers estimated the true amount [of spending on the military and police in Indonesia] to be closer to 3 percent of GDP (about 0.5 percentage point higher than the average in the East Asia region.)” World Bank, Accelerating Recovery in Uncertain Times, p. 23. Such comparisons are complicated by the fact that the military in some other countries also makes use of off-budget funding.

[400] Hanibal W.Y.W., et al., “Juwono Sudarsono…,” Tempo.

[401] The report added that “guestimates converge around one-third.” World Bank, Combating Corruption in Indonesia, p. vii.

[402] Human Rights Watch interview with Ministry of Finance officials.

[403] ICG, “Indonesia: Keeping the Military Under Control,” pp. 16-17, citing a statement by the defense minister published in Kompas, May 24, 2000.

[404] Harold Crouch’s 1978 book, The Army and Politics in Indonesia, is the apparent source of this information. It, in turn, cites statements by military officials in the late 1960s and early 1970s about the inadequacy of the official budget in which they estimated that it covered as little as 30 percent of the military’s needs. The suggestion that the remaining 70 percent was financed independently has been repeated many times, including by Juwono Sudarsono, but by 2006 he argued that the estimate was outdated.

[405] Human Rights Watch interview with Juwono Sudarsono, minister of defense, Republic of Indonesia, Jakarta, February 17, 2005. Elsewhere he repeated that the split was approximately fifty-fifty.

[406] See, for example, Human Rights Watch interview with Lt. Gen. Sjafrie Sjamsoeddin; Hanibal W.Y.W., et al., “Juwono Sudarsono…,” Tempo.

[407] See, for example, Andi Widjajanto, “Managing the Indonesian Defense Budgeting System,” in Practices of Military Business, pp. 144-145.

[408] Human Rights Watch interviews with Lt. Gen. Sjafrie Sjamsoeddin, TNI representatives, and a retired military officer, April 2006.

[409] Human Rights Watch interview with Djoko Susilo, member of parliament serving on Commission I (responsible for defense and security affairs) and its subcommittee on budgetary matters, Jakarta, April 11, 2006.

[410] Human Rights Watch interviews with Abdillah Toha and Deddy Djamaludin Malik, members of parliament serving on Commission I, Jakarta, April 15, 2006.

[411] The changes were contained in a decree, Decree No. SKEP/01/M/I/2005. Andi Widjajanto, “Integrity pact for defense procurements,” opinion-editorial, Jakarta Post, December 12, 2005.

[412] Law No. 3/2002, at Article 16 (6), translation by Human Rights Watch. The same law continues by stating that the minister has decision-making power over “technological construction and the defense industry that is required by the TNI and other defense components” and “works with the department heads and other government agencies in arranging and planning the strategy for the management of state resources for defense requirements.”’ Ibid., at Article 16 (6) and Article 16 (7).

[413] The spokesman, Vice Marshall Sagoem Tamboen, referred specifically to the air force’s intention to purchase aircraft spare parts under contracts with the U.S. that had been suspended. He argued that it would be appropriate for the air force to arrange the purchases directly because the original contracts preceded the enactment of the 2002 defense law. “Indonesian Air Force to Continue Previous Purchase Contracts with USA,”, December 29, 2005.

[414] Hanibal W.Y.W., et al., “Juwono Sudarsono…,” Tempo.

[415] Sudarsono indicated that the armed forces should route requests for funds through his department. On arms purchases, he added that “remnants of uncontrolled purchases” that were previously negotiated would be completed, though his department would not take responsibility for paying for these past purchases. Ibid.

[416] “Marshall Djoko Suyanto: Why is the TNI being seen as smugglers?,” Tempo, April 25-May 1, 2006.

[417] Maj. Gen. Suganda, “TNI commits to reform…,” Jakarta Post.

[418] U.S. District Court, Eastern District of Michigan, Southern Division, “United States of America, Plaintiff, vs. Hadianto Djoko Djuliarso and Ibrahim bin Amran” [“U.S. District Court indictment”], criminal indictment filed April 4, 2004.

[419] Ibid., pp. 1-3; “Up in Armaments,” Tempo, April 25-May 1, 2006. The named defendants were charged with two counts: conspiracy to violate the U.S. Arms Export Control Act, which requires a license to negotiate weapons deals and to export weapons; and conspiracy to commit money laundering, a charge arising from bank transfers totaling $445,000 into U.S. accounts that the defendants allegedly made in payment for the military equipment they ordered. U.S. District Court indictment, p.  11-13.

[420] Ibid., pp. 6-10

[421] Ibid., pp. 4-10.

[422] Morgan Mellish, “Arms bust puts Indonesia under the gun,” Australian Financial Review, April 27, 2006; “Up in Armaments,” Tempo.

[423] A British national who was allegedly responsible for arranging the transport of the weapons was also arrested. See, for example, “Up in Armaments,” Tempo.

[424] See, for example, U.S. Deputy Secretary of Defense Paul D. Wolfowitz and Republic of Indonesia Minister of Defense Juwono Sudarsono, “U.S. Embassy transcript of press conference,” Jakarta, January 16, 2005, [online] For an earlier reference, see Muhammad Nafik, “RI-US military ties must focus on management: Juwono,” Jakarta Post, May 24, 2002.

[425] Human Rights Watch interview with a senior BPK auditor, Jakarta, September 6, 2004.

[426] Ibid., Human Rights Watch interview with Ministry of Finance officials, Jakarta, April 11, 2006.

[427] Human Rights Watch interview with a senior BPK auditor.

[428] Human Rights Watch interview with Ministry of Finance officials.

[429] Artjana, “The Indonesian Military Budget Transparency and Accountability,” pp. 150-151, 160-161; McCulloch, “Trifungsi,” p. 121, citing an interview with I. Gde Artjana (then a BPK official). See also International NGO Forum on Indonesian Development (INFID), “The Anatomy of the Military Budget,“ background paper, INFID Civilian Supremacy and Transparency of the Military Budget Project, 2004, pp. 3-6.

[430] BPK, “Pointer for Discussion about BPK Audit on Department of Defense and Indonesian Armed Forces” briefing document prepared for Human Rights Watch in response to a request for information [“BPK briefing document for Human Rights Watch”], April 13, 2006.

[431] Human Rights Watch interview with Ministry of Finance officials; Human Rights Watch interview with an international finance expert, Jakarta, April 8, 2006.

[432] Human Rights Watch interviews with Ministry of Finance officials, April 11 and April 19, 2006.

[433] Human Rights Watch interview with Ministry of Finance officials, April 11, 2006.

[434] Under a 2004 law (Law 15/2004 on the Supreme Audit Agency) BPK’s audit reports are to be made public. They become public when handed over to parliamentarians, which happens with some delay because the audited entities are first granted the opportunity to respond to BPK’s findings. Human Rights Watch interview with BPK officials, Jakarta, April 17, 2006.

[435] Audit reports on 2005 spending (including chapters on the Ministry of Defense and TNI) are available at: [online], while the special 2004 audit of the defense ministry is available at: [online] At this writing, older audits had not been publicly released in full, but some information was available. For example, the 2000 and 2001 BPK summary presentations to parliament are available at: [online]

[436] Human Rights Watch interview with an international finance expert.

[437] Human Rights Watch interviews with Ministry of Finance officials.

[438] Human Rights Watch interview with a Ministry of Finance official, April 19, 2006.

[439] Ibid.

[440] See, for example, Tony Hotland, “Bill limits public access to information,” Jakarta Post, January 2, 2006.

[441] Human Rights Watch interview with independent analysts who conducted research for the International Budget Project of the Center for Budget and Policy Priorities, Jakarta, April 9, 2006.

[442] Human Rights Watch interview with a Ministry of Finance official.

[443] Agus Supriyanto, “Panglima: Penertiban Bisnis TNI Selesai Dua Tahun (Chief: Reorganization of TNI Businesses Will be Completed in Two Years),” Koran Tempo, April 13, 2005, translation by Human Rights Watch.

[444] Human Rights Watch interview with a senior BPK auditor.

[445] Fitri Wulandari and Dadan Wijaksana, “Govt budgets Rp 1.7 trillion for Aceh war,” Jakarta Post, May 21, 2003.

[446] The information was published by an Indonesian legislator who authored a newspaper article. Djoko Susilo, “DPR seeks to end ‘rubber stamp' role in military budget,” Jakarta Post, March 13, 2003.

[447] Human Rights Watch interview with Munir, late director of Imparsial, Jakarta, August 30, 2004.

[448] Human Rights Watch interview with an Indonesian analyst, Jakarta, September 6, 2004.

[449] “NGOs skeptical of Aceh fund transparency,” Jakarta Post, April 28, 2005.

[450] “Free Aceh Movement leaders condemn ‘sinister’ Indonesian military,” BBC Monitoring Asia Pacific, January 5, 2005.

[451] The majority of that sum, Rp. 314.8 billion ($34.6 million), reportedly was intended for security operations and the remainder for supplies. “Ministry seeks defense fund payout,” Jakarta Post, June 30, 2005.

[452] “Defense Ministry Asks for More Funds,” Antara, August 3, 2005. This press account reported the amount of the Aceh supplementary request as Rp. 526 billion ($52.6 million). Ibid.

[453] “Ministry seeks…,” Jakarta Post.

[454] Tony Hotland and Rendi Witular, “House OKs funds [for] Aceh military operation,” Jakarta Post, July 2, 2005.

[455] Human Rights Watch interview with Djoko Susilo.

[456] Ibid.

[457] Ibid. Human Rights Watch inquired about the proposal in April 2006 with members of parliament, military experts, international finance officials, and others working to support the Aceh peace process. None were aware of it.

[458] Artjana, “The Indonesian Military Budget Transparency and Accountability,” p. 158.

[459] Human Rights Watch interview with government auditors.

[460] Human Rights Watch interview with BPK officials.

[461] Ibid.; BPK briefing document for Human Rights Watch.

[462] Human Rights Watch interview with government auditors. In refusing to cooperate, the military apparently contravened a May 1999 government order that required all state institutions to report off-budget revenue. The government subsequently committed to audit on a regular basis those official institutions that did not comply and to make them subject to sanctions for any misreporting. Government of Indonesia, Letter of Intent (LOI) and Supplementary Memorandum of Economic and Financial Policies (MEFP), signed September 7, 2000, para. 56.

[463] Government of Indonesia, LOI and MEFP, signed January 20, 2000, para. 31, 32. This IMF loan agreement was the first to address the issue.

[464] The foundations law, Law No. 16 of 2001, mandated financial statements prepared by “public auditors,” a reference to professional auditors who work in a private capacity (as distinct from government auditors). See Widoyoko et al., Military Businesses in Search of Legitimacy, pp. 71-74, 80-81.

[465] The IMF loan agreement of 2003 provided that “military and other foundations that received state funds or help finance state functions” would be subject to government audit. Government of Indonesia, LOI, signed June 11, 2003, para. 8.

[466] Human Rights Watch interview with BPK officials; BPK briefing document for Human Rights Watch.

[467] Tony Hotland and Tiarma Siboro, “Military hands in inadequate report on wealth: BPK,” Jakarta Post, September 26, 2005.

[468] Human Rights Watch interview with BPK officials; Hotland and Siboro, “Military hands…,” Jakarta Post. Parliament responded to fill the gap by adopting new regulations on the matter.

[469] The then deputy chairman of BPK, I. Gde Artjana Artjana, mentioned in 2002 that penalties were prescribed under civil service regulations, the criminal code, and anticorruption laws, but that these had not been employed. Muninggar Sri Saraswati and Tiarma Siboro, “Irregularities in budget spending 17 percent – BPK,” Jakarta Post, September 18, 2002.

[470] Human Rights Watch interview with Ministry of Finance officials, Jakarta, April 11, 2006; Human Rights Watch interviews with Deddy Djamaludin Malik, member of parliament, April 15, 2006.

[471] Djoko Susilo, “DPR seeks to end `rubber stamp' role in military budget,” Jakarta Post.

[472] “Defense ministry boosts efficiency,” Jakarta Post, August 30, 2005.

[473] Muna, “Money and Uniform: Corruption in the Indonesian Armed Forces,” p. 22.

[474] The statute creating KPK limits its authority over such cases because those implicated are under the jurisdiction of the military justice system or, in some cases, hybrid civilian-military courts. Human Rights Watch interview with Erry Riyana Hardjapamekas; Law No. 30/2002 on the KPK, at Article 42. The TNI and KPK signed a memorandum of understanding to clarify these and other issues. “Kerja Sama Pemberantasan Tindak Pidana Korupsi (Cooperative Efforts to Eliminate Criminal Acts of Corruption),” August 10, 2005, provided by TNI headquarters, copy on file with Human Rights Watch.

[475] A KPK commissioner explained that government officials holding the highest-level departmental posts are required to submit such declarations, but for the military this corresponds to only a few posts (approximately five in the case of the TNI and a few more in the Ministry of Defense). There would be no constraint to expand this number, as has been done for the judiciary branch. Human Rights Watch interview with Erry Riyana Hardjapamekas.

[476] Ibid.

[477] Ministry of Defense letter to Human Rights Watch.

[478] Consistent with government-wide practice, military pensions are not counted against the military budget. For critiques of military budgeting in Indonesia prepared by independent experts, see INFID, “The Anatomy of the Military Budget”; and LOGOS, “Transparency, Accountability and Control in Military Expenditure: Problems and Recommendations,” INFID Background Paper on Military Reform, 2003. 

[479] Government officials were inconsistent in their description of how export credit loans were counted. Government auditors indicated that the down payment for export credit-backed deals (amounting to 15 percent of their value) was counted as part of military spending in at least some cases, but that the remainder was charged as a Ministry of Finance expense. Human Rights Watch interview with BPK officials. A Ministry of Finance official, however, said the figures are excluded from the military budget but incorporated into spending figures under procurement expenses. Indonesian finance officials separately indicated to SIPRI in late 2004 that arms imports were included in reported figures for military spending. Again, it was unclear whether that information referred to all arms acquisitions for the military or only those that were financed from funds specifically allocated to the military in its budget. Human Rights Watch interview with SIPRI researchers, Stockholm, January 25, 2006.

[480] The 2003 figure includes $128 million granted in an additional allocation (beyond the initial budgeted amount for that year). Sudarsono, “Defense Strategy and National Security Policy,” p. 21.

[481] Human Rights Watch interview with Ministry of Finance officials.

[482] A budget line for international military cooperation in the 2005 and 2006 budgets, which provided disaggregated information, refers instead to spending on international peacekeeping deployments. Ibid.

[483] For example, a church leader from West Papua, Rev. Sofyan Yoman, charged in 2005 that some Rp. 2.5 billion ($275,000) in local autonomy funds had been used to finance military operations. Transcript of “Dateline,” Australian TV weekly news program, March 16, 2005. In another example, a district military commander in Lampung province called on the local government to underwrite proposed military action to remove illegally felled timber from a national park. Oyos Saroso H.N., “Corruption, no coordination benefit illegal loggers,” Jakarta Post, December 12, 2005.

[484] Mietzner, “Business as Usual?,” p. 255. Such activities have increased under decentralization.

[485] This person said that the reporting of the use of the funds given to the military did not indicate their true purpose. Human Rights Watch interview with an advisor to a district government, Jakarta, April 2006.

[486] Human Rights Watch interview with Ministry of Finance officials.

[487] In 2003 the Indonesian navy requested regional governments to purchase patrol boats. Riau province agreed to the proposal, and other provinces were considering it as well, but plans stalled after critics said only the central government was authorized to make military purchases. Imparsial, “Cataran Imparsial,” Critical Analysis on Defense Policy, vol. 1, March 2004.

[488] 2006 budget documents provided by the Ministry of Finance show that Rp. 10.9 trillion ($1.2 billion) was allocated to the army, Rp. 4.3 trillion ($473 million) to the navy, Rp. 3.3 trillion ($363 million) to the air force, Rp. 3.4 trillion ($374 million) for TNI headquarters, and Rp. 6.2 trillion ($682 million) for the defense ministry. The Ministry of Defense announced plans to raise the relative budgets of the navy and air force, which historically have been much lower than those of the army. Tony Hotland, “Air Force, Navy to get bigger chunk of funds,” Jakarta Post, April 19, 2006.

[489] President Yudhoyono has argued that the ideal military budget should be between 3 and 5 percent of GDP. Ridwan Max Sijabat, “Synergies needed to build modern defense industry,” Jakarta Post, January 29, 2005. The Indonesian military, in a 2003 white paper, argued that 3.65 percent of GDP would constitute “a reasonable budget for defense needs,” to be achieved gradually over a ten-to-fifteen year time span. Ministry of Defense of the Republic of Indonesia, “Mempertahankan Tanah Air Memasuki Abad 21 (Defense of the Homeland Entering the 21st Century),” white paper, 2003, translation by Human Rights Watch. The defense minister has instead proposed dramatic increases that would result in a 2009 defense budget of more than 141 trillion ($15 billion). Sudarsono, “Defense Strategy and National Security Policy,” p. 25.

[490] Human Rights Watch interview with Said Didu.

[491] Human Rights Watch interview with Lt. Gen. (ret.) Agus Widjojo, December 15, 2004.

[492] Human Rights Watch interview with a retired military officer who asked to remain anonymous, Jakarta, April 2006.

[493] “Minister Wants Almost Three-Fold Increase in Country’s Defense Budget,” LKBN Antara, October 24, 2004.

[494] Sudarson referred in particular to reports that the Indonesian military’s operations in East Timor were partly funded with proceeds from, in his words, “the military’s efforts in the gambling sector.” McCulloch, “Trifungsi,” p. 114, citing a July 2000 interview with Sudarsono.

[495] Human Rights Watch interview with a senior BPK auditor.

[496] ICG, “Indonesia: Next Steps in Military Reform,” p. 14.

[497] See, for example, Fatchurrochman, “Military Foundation Governance”; Widoyoko et al., Military Businesses in Search of Legitimacy, pp. 10-12; Widoyoko, “Questioning the Military Business Restructuring,” pp. 120-121; O’Rourke, Reformasi, pp. 371-372; and Karaniya Dharmasaputra et al., “Lubang Kebocoran di ‘Kapal Keruk’ Kostrad (A Leak in Kostrad’s Money-Making ‘Ship’),” Tempo, October 6-13, 2000.

[498] Fatchurrochman, “Military Foundation Governance.” See also Widoyoko et al., Military Businesses in Search of Legitimacy, pp. 10-12; McCulloch, “Trifungsi,” pp. 118-119.

[499] McCulloch, “Trifungsi,” p. 119. A source close to Wirahadikusumah suggested that the true losses were likely double those amounts. Ibid.

[500] Muna, “Money and Uniform: Corruption in the Indonesian Armed Forces,” p. 20. A newspaper survey found that 97 percent of those asked felt the foundation’s operations had been marred by corruption. Ibid., pp. 8, 20.

[501] Human Rights Watch interview with Lt. Gen. (ret.) Djaja Suparman, Jakarta, April 18, 2006.

[502] O’Rourke, Reformasi, pp. 371-373. Wirahadikusumah, who was not given a new posting, died in August 2001.

[503] I. Gde Artjana, “Audit Terhadap Yayasan Militer (Audit on Military Foundations),” May 17, 2001, copy on file with Human Rights Watch, translation by Human Rights Watch.. The audit also covered a ninth foundation, established by the police.

[504] Artjana, “Accountability in the Revenue and Expenditure of the Military Budget.”

[505] Artjana, “The Indonesian Military Budget Transparency and Accountability,” p. 155.

[506] Rinakit, The Indonesian Military After the New Order, citing Tempo, November 19, 2000.

[507] Ibid., p. 176.

[508] McCulloch, “Trifungsi,” p. 117.

[509] Ibid., citing an interview with I. Gde Artjana.

[510] Ibid., citing an interview with Sudarsono in July 2000.

[511] In a disclaimer, the auditors said their work constituted a “high level review,” not a full audit, and that they could not express an opinion on the accuracy of the financial data, which was provided by YKEP management. Ernst & Young, “YKEP: Strategic Review Report," December 2001. A second firm, CSA Lingkarmitra (also known as CSA Strategic Advisory) participated in the review of YKEP, and its findings were included in the Ernst & Young report.

[512] Ibid. The foundation holdings included eleven subsidiaries and twenty-two joint ventures. The disparate companies fell into five broad categories: forestry/plantation, construction, property, manufacturing, services, and mining. Of them, the timber holdings were deemed to be “cash cows.” None of the companies were publicly listed. Ibid.

[513] Human Rights Watch interviews with four people involved in the review, April 2006; Ernst & Young, “YKEP: Strategic Review Report.”

[514] Ernst & Young, “YKEP: Strategic Review Report.”

[515] Ibid.

[516] Otto Syamsuddin Ishak, “Sociology of the Military Business in Indonesia,” in Practices of Military Business, p. 85, citing Kompas, April 4, 2002.

[517] See, for example, Kontras, When Gun Point Joins the Trade, p. 22; ICG, “Indonesia: Next Steps in Military Reform,” p. 14; ICG, “Indonesia: Keeping the Military Under Control,” pp. 17, 25; O’Rourke, Reformasi, p. 371.

[518] Human Rights Watch interview with a researcher who has studied Medan’s underworld, Medan, November 28, 2004.

[519] Human Rights Watch interview with someone who had hired soldiers to provide security. See also M. Taufiqurrahman, “Military Told to Get Out of Business,” Jakarta Post, August 15, 2004.

[520] Human Rights Watch interview with a Western diplomat familiar with the arrangements.

[521] Kontras, When Gun Point Joins the Trade, pp. 33-34.

[522] “Daftar Gab Pokok Anggota Tentara Nasional Indonesia (Primary List of Salaries for Members of the TNI),” January 30, 2006, document provided by TNI headquarters, copy on file with Human Rights Watch.

[523] Human Rights Watch interview with two privates in the Indonesian army, TNI headquarters, Cilangkap, April 13, 2006.

[524] Human Rights Watch interview with Lt. Gen. (ret.) Agus Widjojo, December 15, 2004.

[525] See, for example, “Bisnis Militer (Military Business),” Jakarta Independent Media Center, April 29, 2005, [online], translation by Human Rights Watch.

[526] McCulloch, “Trifungsi,” pp. 117-118.

[527] Human Rights Watch interview with a foreign military analyst.

[528] “Four Ministries to Straighten Up Military Businesses,”, February 23, 2005.

[529] Greenlees, “Indonesia wants…,” International Herald Tribune.

[530] Human Rights Watch interview with Abdillah Toha.

[531] Part of the plan was to add an extra month’s salary each year. “Govt to raise civil servants [sic] salaries,” Antara, October 1, 2005; Muninggar Sri Saraswati, “SBY confirms salary hike for officials,” Jakarta Post, August 18, 2005.

[532] Undang-undang No. 34/2004 tentang Tentara Nasional Indonesia (Law No. 34/2004 on the Indonesian National Armed Forces or TNI), at Article 49. The law, at Article 50(4), defined “decent income” to include a soldier’s salary and various supplemental payments such as family allowances.

[533] Ibid., at Articles 2(d) and 39(3).

[534] Ibid., at Article 76(1).

[535] “TNI to surrender businesses in two years,” AFP, April 12, 2005.

[536] Human Rights Watch interview with Brig. Gen. Bibit Santoso and other TNI representatives; Maj. Gen. Suganda, “TNI commits to reform…,” Jakarta Post.

[537] Human Rights Watch interview with Minister of Defense Sudarsono.

[538] The reviews were to be carried out by consultants under the supervision of TSTB working groups. Ministry of Defense, “Informasi Bisnis TNI (Information on TNI Business),” briefing document prepared for Human Rights Watch in response to a request for information [“Ministry of Defense briefing document for Human Rights Watch”], April 12, 2006.

[539] Ministry of Defense letter to Human Rights Watch. TSTB members said the various delays were due to legal and technical problems, not any political concerns or resistance from the TNI. Human Rights Watch interview Lt. Gen. Sjafrie Sjamsoeddin, secretary-general of the Ministry of Defense and vice-chair of the TSTB; Human Rights Watch interview with Said Didu, secretary to the Ministry of State-Owned Enterprises and chair of the TSTB.

[540] The criteria for the evaluation were as follows: the nature of the business activities; the value of business assets; the ownership structure; and the purpose of the business (whether profit- or welfare-oriented). Secretary-general of the Ministry of Defense of the Republic of Indonesia, “Informasi Tentang Proses Pengalihan Bisnis TNI (Information on the Transfer Process of TNI Businesses),” September 9, 2005, [online]

[541] They indicated that the longer list was of only limited utility because it included many small-scale economic ventures that, in their view, were not worthy of consideration as businesses. The head of the TSTB, Said Didu, also noted that a great number of the entries were missing basic data. Human Rights Watch interviews with Lt. Gen. Sjafrie Sjamsoeddin and Said Didu.

[542] In the absence of an official definition of military business in the TNI law, the TSTB developed its own concept. As explained further below, it employed a very restricted definition that deliberately left out several categories of businesses.

[543] Human Rights Watch interview with Said Didu. See also “Indonesia sets up agency to clean up military business,” AFP, March 2, 2006.

[544] Ministry of Defense briefing document for Human Rights Watch; Human Rights Watch interviews with Lt. Gen. Sjafrie Sjamsoeddin and Said Didu. In principle, at least, the TSTB was to have begun some of these tasks in 2005. For example, the government had announced in 2005 that two audit firms would examine the financial data of inventoried military businesses. Devi Asmarani, “Jakarta to take over only 10 military businesses,” Straits Times, October 26, 2005; “Verificasi Bisnis Militer, Keppres Penetapan Auditor, April 2006 (Verifying Military Business, An Auditor’s Decision on the Presidential Decree, April 2006),” Gatra, December 28, 2005, translation by Human Rights Watch. The TSTB later concluded that a new body was needed to analyze the complex structure of TNI business as revealed in the TNI inventory. Human Rights Watch interview with Said Didu.

[545] “Verifying Military Business…,” Gatra.

[546] Human Rights Watch interview with a person involved in the military business review process, April 18, 2006.

[547] Human Rights Watch interviews with Lt. Gen. Sjafrie Sjamsoeddin and Said Didu. See also Maslan, “Draft Presidential Regulation…, ” detikcom.

[548] Human Rights Watch interview with Said Didu.

[549] Human Rights Watch interview with Brig. Gen. Bibit Santoso and other TNI representatives. See also Maj. Gen. Suganda, “TNI commits to reform…,” Jakarta Post.

[550] Maslan, “Draft Presidential Regulation…,”

[551] “Before a New Master Comes,” Tempo, no. 02/VI, September 13-19, 2005; Tony Hotland, “Military allowed to sell assets from business ventures,” Jakarta Post, September 29, 2005. For additional information on the army’s financial ties to this company, see, for example, “The House Urges Gov’t to Acquire Artha Graha,” Bisnis Indonesia, February 17, 2005; Indria Semego et al., When ABRI Does Business, pp. 80-81; Ernst & Young, “YKEP: Strategic Review Report.”

[552] Hotland, “Military allowed…,” Jakarta Post.

[553] Ibid.

[554] Fanny Febiana, “Pangkostrad: Mandala Airlines Dijual Tanpa Perpres (Mandala Airlines to be sold without a Presidential Regulation),”, October 7, 2005, translation by Human Rights Watch.

[555] Ministry of Defense letter to Human Rights Watch.

[556] Lisa Misol, “High Time for the Government to Take Over All Military Businesses,” opinion-editorial, Jakarta Post, October 7, 2005. In principle the government retained the option to reclaim the proceeds of these sales or take other action if it later discovered that there had been improper asset-stripping by the military. Human Rights Watch interview with Said Didu.

[557] Human Rights Watch interview with Brig. Gen. Bibit Santoso and other TNI representatives; Maj. Gen. Suganda, “TNI commits to reform…,” Jakarta Post.

[558] Major General Suganda, “TNI commits to reform…,” Jakarta Post. See also TNI Headquarters, “Langkah Agenda Reformasi TNI 1998 (Progress of the 1998 TNI Reform Agenda).” This document was provided by TNI representatives to Human Rights Watch on April 13, 2006.

[559] As one indication, many officers remain on active duty even after being indicted for war crimes in East Timor by a United Nations-organized court. See also, for example, Human Rights Watch, “Indonesia: Acquittals Show Continuing Military Impunity,” Human Rights Watch press release, July 12, 2005, [online] It describes the flawed legal process that failed to provide justice for a 1984 massacre of at least thirty-three civilians. In addition to the soldiers who were acquitted in the case, a number of military suspects (several of them senior officials at the time) were never put on trial. Ibid.

[560] This document itself showed the number of cases for the different service branches but did not specify the nature of the crimes, the rank of the individuals who were prosecuted, nor the sentences received by those who were found guilty. “Data Perkara Yang Diputus/Diselesaikan Dalam Tahun 1995 S.D. Tahun 2005 Dari DILMIL/DILMILTI (Data on Completed Military Court Cases, 1995-2005),” March 2006. This document was provided by TNI representatives to Human Rights Watch on April 13, 2006, copy on file with Human Rights Watch. The document was not clearly labeled but appeared to indicate that at least one thousand cases had been opened each year, with the army showing the highest incidence of cases. Human Rights Watch sought an explanation of the data presented, but had not received one as of the time of writing.

[561] This additional information was provided to Human Rights Watch in April 2006 by a person who received a briefing on the matter but did not want to be identified.

[562] According to Minister of Defense Juwono Sudarsono, the problem has been that reforms passed in the TNI law (No. 34/2004) mandating that civil crimes be tried in civilian courts had not yet been implemented and, in any case, contradicted the military criminal code. “Military Criminal Code ‘needs amending,’” Jakarta Post, February 18, 2006.

[563] Human Rights Watch interview with Brig. Gen. Bibit Santoso and other TNI representatives. See also Tiarma Siboro, “Military sticks to guns on tribunals for soldiers,” Jakarta Post, April 8, 2006. Some cases (such as those in which both military and civilian personnel are implicated) are referred to joint military-civilian tribunals.

[564] Human Rights Watch interview with Brig. Gen. Bibit Santoso and other TNI representatives. The Ministry of Defense Secretary-General, like the TNI, argued that military involvement in illegal activity should only be attributed to soldiers, not the TNI as an institution. Human Rights Watch interview with Lt. Gen. Sjafrie Sjamsoeddin.

[565] TNI representatives provided Human Rights Watch with a list of fourteen steps the TNI says it has taken as part of a gradual internal reform process. None related to accountability, whether for human rights crimes or for military finances. Approximately half the items listed were professions of new attitudes on topics such as maintaining a politically neutral stance. The others were concrete actions it said the TNI had taken, ranging from eliminating certain posts to the separation of the police and military and the withdrawal from parliamentary representation. TNI Headquarters, “Progress of the 1998 TNI Reform Agenda.”

[566] See, for example, ”TNI may give up 6 businesses by year end,” Bloomberg News, May 10, 2006.

[567] “Government muscles in on military businesses,” Jakarta Post, January 26, 2005; Achmad Sukarsono, “Indonesia military to lose its big companies,” Reuters, December 9, 2005.

[568] See, for example, Asmarani, “Jakarta to take over only 10 military businesses,” Straits Times;

[569] Supriyanto, “Chief: Reorganization of TNI Businesses…,” Koran Tempo; Tony Hotland, “TNI wants to retain rich foundations,” Jakarta Post, September 10, 2005.

[570] “Indonesia’s future military chief vows respect for human rights,” AFP, February 1, 2006, citing Antara. Suyanto defended the TNI’s territorial structure, however, thereby undercutting his reformist credentials. Ibid.

[571] Soeryo Winoto, “Military must have a presence in the region,” interview of Air Marshal Djoko Suyanto, Jakarta Post, February 3, 2006.

[572] See, for example, Tiarma Siboro, "Military may retain many businesses," Jakarta Post, October 20, 2005.

[573] The larger, more profitable military businesses would be transformed into individual state-owned enterprises; some of the less successful military businesses would be grouped together to make them profitable (while also turning them into state-owned enterprises); shares of military businesses that show poor prospects would be sold off, with the proceeds going to the government; and those military businesses that present legal, financial, or operational problems would be liquidated. Ministry of Defense briefing document for Human Rights Watch; Human Rights Watch interview with Said Didu.

[574] Ministry of Defense briefing document for Human Rights Watch; Human Rights Watch interview with Said Didu. It remained unclear how the government would count businesses in which ownership of company shares was unclear between military foundations and individuals (presumably military officers) under them or those businesses run by soldiers and their families in a private capacity. Ministry of Defense letter to Human Rights Watch; Human Rights Watch interview with Lt. Gen. Sjafrie Sjamsoeddin.

[575] Ministry of Defense briefing document for Human Rights Watch. For foundations, that means that they should operate as independent entities serving a charitable purpose and limit their business investments to no more than 25 percent of their wealth. Cooperatives also would be expected to operate independently of the military command structure and, in their case, to conduct commerce only insofar as it benefits the members. Human Rights Watch interview with Said Didu. Another TSTB member described the plan differently. He said foundations and cooperatives would be prevented from engaging in “external business” with the public or having joint ventures with private partners. Human Rights Watch interview with Lt. Gen. Sjafrie Sjamsoeddin.

[576] The head of the TSTB, Said Didu, said this was the provisional decision of the group (as stated separately by his deputy, Lt. Gen. Sjafrie Sjamsoeddin) but that he was awaiting a legal opinion to validate it. Human Rights Watch interview with Said Didu.

[577] Human Rights Watch interviews with Lt. Gen. Sjafrie Sjamsoeddin and Said Didu. The Ministry of Defense had earlier identified the apparent conflict between Law No. 16/2001 on foundations and Law No. 16/2001 on cooperatives, on the one hand, and the mandate of the TNI law (Law 34/2004), as a main challenge to the effective implementation of the ban on military business. Ministry of Defense letter to Human Rights Watch.

[578] Human Rights Watch interview with Lt. Gen. Sjafrie Sjamsoeddin.

[579] The businesses that did not employ state assets would be “returned” to their owners (normally military foundations and cooperatives) or possibly sold off, with these entities allowed to keep the proceeds. Human Rights Watch interview with Said Didu. See also Ministry of Defense briefing document for Human Rights Watch.

[580] The TSTB applied a definition of state assets that referred only to physical assets, such as land and equipment, that the Ministry of Finance had recorded as having been assigned for a particular purpose. Human Rights Watch argued that doing so ignored the financial, personnel, and other government resources employed by these companies, and also falsely assumed that accurate records on the use of physical assets would be available. According to the TSTB head, the government had no legal basis to count “intangible assets” and retained the right, in any case, to carry out audits if at a later point if it came to suspect that some companies had improperly failed to disclose to the government that they had used (physical) state assets. Human Rights Watch interview with Said Didu.

[581] Human Rights Watch interview with TNI representatives, April 13, 2006; Human Rights Watch interview with Said Didu.

[582] The transfer allegedly resulted in a loss to the state of Rp. 40.2 billion ($14.5 million) in 1997. Widoyoko, “Questioning the Military Business Restructuring,” p. 122.

[583] Human Rights Watch interview with TNI representatives; Human Rights Watch interview with Said Didu.

[584] Human Rights Watch interviews with TNI representatives and members of the TSTB, April 2006.

[585] They argued that because most such activities were already illegal under other laws, it was not necessary for the TSTB to take them into account in formulating plans to implement the TNI law. Human Rights Watch interview with members of the TSTB, April 2006.

[586] TNI Headquarters, “List of TNI Corporate and Enterprise Units.”

[587] Human Rights Watch interview with TNI representatives.

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