Indonesia’s military: it’s business, baby!

TNI Commander Admiral Agus Suhartono

Over the past 13 years, there have been several attempts to reform the deeply entrenched practice of the Indonesian military (TNI) to self-finance. However, as discussed below, without reforms that dismantle core cultural and structural traits of TNI, change in both legal and illegal business practices will be slow and incremental. During Suharto’s presidency, such behaviour was pursued not only out of budgetary necessity, but became culturally entrenched in a military that was autonomous in outlook and considered itself omnipotent in Indonesia’s socio-political realms.

To a large extent, cultural traits of TNI have been the source of resistance to attempts in the post-Suharto era to reform business practices, and have led to the consequential impotence of such reforms hitherto. There are several factors to this outcome. First, successive presidents after Suharto failed to implement reforms and enforce laws that would have weaned TNI from self-financing, particularly in illegal and corrupt practices.[1] Second, although TNI ostensibly withdrew from the political sphere by virtue of Paradigma Baru (New Paradigm)[2], their continued influence was demonstrated under Presidents Abdurrahman Wahid and Megawati Sukarnoputri; they played a decisive role in Wahid’s undoing and were left to self manage under Megawati.[3] Third, while some debate on the matter was entertained under Wahid[4], no steps were taken to seriously dismantle TNI’s territorial command system and hence pervasive archipelagic presence. When considered in totality, these factors have led TNI to believe that, in the post-Suharto period, it still wields considerable influence and is autonomous, despite its withdrawal from a prominent public role. This belief has not, therefore, provided an ideological fissure with the past; rather it has allowed TNI to act in such a way that is in keeping with its pre-Reformasi practices.

The ability of TNI to maintain its structural influence through self-financing have been further enabled by permissive environments at the subnational level. These permissive environments have been brought on through decentralisation processes (Laws 22/1999 and 25/1999) that, in the devolution of power to the kabupaten (district) and kota madya (local) levels and the reallocation of funds in the form of dana alokasi umum (translating to 25 percent of domestic revenues), have shifted money politics and corruption away from the centre.[5] By virtue of their territorial presence, TNI have been able to access these networks and continue business practices at this level.[6] Weak governance and accountability structures coupled with poor security have meant that illegal business activities such as logging, drug-smuggling and prostitution have been able to thrive.[7] In order to mitigate the effects of the East Asian Financial crisis on its wealth, TNI increasingly fostered informal ties with private businesses[8] that, at the local level, employ TNI to provide security.[9]

Many attempts at reform under the current President Susilo Bambang Yudhoyono founder on their inability to address the root causes of continued TNI business practices. One attempt to audit TNI businesses in preparation for transfer to civilian control lacked clear terminology and was hence ineffective in identifying the extent of TNI business assets.[10] Some observers point to individuals such as former Defense Minister Juwono Sudarsono for his perceived soft approach to pushing reform under Law 34/2004 which calls for the transfer of TNI business to civilian control.[11] Overall, these official channels have had a limited effect on addressing TNI’s whole culture of self-financing ostensibly because they target only legal practices and declared business holdings. They fail to address illegal practices for two main reasons. First, pervasive reforms on military business practices have not been framed in such a way that seeks to root out corruption and money politics at the local level. Without increased governance and oversight of local and district commands, there is little incentive for TNI to alter its behaviour. Second, and perhaps most important, is that these reforms still fail to address the deeper ideological question of why TNI’s pervasive archipelagic presence is still justified. In practical terms, one could argue that, if reduced in size, oversight of TNI could be more manageable and moreover, with a leaner military, arguably the need for extra-budgetary fundraising might be circumvented. That said, Defense Ministry and TNI officials would argue, official budgetary increases over the past few years have rectified, in part, the latter shortcoming.[12]

Returning to the ideological challenge of TNI’s territorial structure, perhaps the greatest obstacle to reform is posed ironically by Paradigma Baru. While the new military doctrine signalled a shift away from direct political meddling, it simultaneously placed greater emphasis on TNI’s role as the guarantor for national security while making clear the police were responsible for internal matters. With the police being largely ineffective (and arguably unable to demonstrate better performance with the constant presence of and rivalry with TNI), TNI has been able to put forward arguments for maintaining its territorial presence based on the fear of regions such as Papua seceding.  Effective reforms must be crafted in such a way that addresses this issue but does not inadvertently allow the police to assume TNI’s place in corrupt local practices from the power vacuum created.[13] Aside from the ideological implications of Paradigma Baru, as has been demonstrated by recent cases of torture and human rights abuses[14], there are practical implications resultant from TNI’s perceived right and duty to maintain its territorial presence when coupled with its culture of impunity.

Overall, profound changes in TNI’s business practices will need to be approached holistically, not least in the regions in which it is allowed to thrive. While developments such as the announcement[15] on 15 March 2011 of the “complete transfer” of all TNI holdings (except for assets such as state land) are to be welcomed, until there is complete transparency on such transfer processes, they are best seen as incremental steps rather than a fait accompli. As has been mentioned, illegal practices at the local level continue due to ostensibly structural and cultural factors that, at the outset of reformasi, were left unaddressed. Hence, veritable reform to business practices will come from efforts at dismantling territorial structures, addressing both military and civilian corruption at the local level through better governance, security sector reform, and the remodelling of an appropriate narrative for TNI that neither negates nor undermines these reform attempts.

Photo courtesy of Jakarta Post.

Postscript: This piece is a short essay (submitted as part of my course assessment) based a presentation I delivered on the state of TNI business practices. It provides only a cursory outline of some of the issues involved; for a more detailed examination, I direct you towards any of the books and reports cited in the footnotes. 

[1] Marcus Mietzner, Military Politics, Islam, and the State in Indonesia: from turbulent transition to democratic consolidation, ISEAS, Singapore, 2009, pp. 217-219.

[2] The military doctrine of dwifungsi (dual function) that justified ABRI’s (as TNI was known during the New Order) engagement in politics was replaced in 1998 with a new doctrine that explicitly eschewed prominent and direct political involvement and promoted power sharing with civilians: Jun Honna, Military Politics and Democratization in Indonesia, Routledge, London, 2003, p. 166.

[3] Notably, TNI were left to self manage from August 2003 to October 2004 following the departure of then Defense Minister Matori Abdul Djalil (p. 227): Mietzner, Military Politics, pp. 219-227.

[4] Mietzner, Military Politics, pp. 213-214.

[5] Marco Bünte, ‘Indonesia’s protracted decentralization: contested reforms and their unintended consequences’, in Marco Bünte and Andreas Ufen (eds), Democratization in Post-Suharto Indonesia, Routledge, London & New York, 2009, p. 110: Lex Reiffel and Jaleswari Pramodhawardani, Out of Business and on Budget: the challenge of military financing in Indonesia, Brookings Institution, Washington DC, 2007, p. 21.

[6] Mietzner, Military Politics, p. 315.

[7] ‘Jakarta accused over Papua’, The Age, 23 December 2010,, accessed 3 March 2011.

[8] Human Rights Watch, ‘Too High a Price: The Human Rights Cost of the Indonesian Military’s Economic Activities’, vol 18, no 5(c), June 2006, p. 16.

[10] Human Rights Watch, ‘Unkept Promise: Failure to End Military Business Activity in Indonesia’, Report, New York, January 2010, pp. 4-6.

[11] Human Rights Watch, ‘Unkept Promise’, p. 4.

[12] In encouraging the military to give up its business practices, in 2009, SBY pledged a 30 percent increase in the 2010 budget: ‘SBY Urges Armed Forces To Accelerate Transfer Of TNI Businesses to Govt’, Jakarta Globe, 9 October 2009,, accessed 20 March 2011.

[13] Human Rights Watch, ‘Too High a Price’, p. 16.

[14] ‘SBY orders thorough probe of Papua torture video, Jakarta Post, 23 October 2010,, accessed 17 March 2011.

[15] ‘TNI assets transfer proceeding’, Jakarta Post, 15 March 2011,, accessed 21 March 2011.

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