Indonesia’s Army Chief of Staff Advocates Allowing Defense Members To Engage in Business

By Aryo Putranto Saptohutomo for Kompas.com, July 23, 2024

JAKARTA, KOMPAS.com – Chief of Staff of the Indonesian Army (KSAD) General Maruli Simanjuntak has suggested that members of the Indonesian defense force should be allowed to engage in business activities under certain restrictions set out by law. The proposal comes amid discussions over revision of Law 34/2004 On the Indonesian National Armed Forces (TNI).

“If we can create a framework for this, we should go ahead. But if the law says it’s not allowed, then we won’t do it,” Gen. Maruli said at Army Headquarters in Jakarta on Monday, July 22, 2024, as quoted from Kompas TV’s YouTube channel. Gen. Maruli also emphasized that he would not insist on the idea if the law continues to prohibit defense force members from engaging in business.

“My suggestion is just to outline clear boundaries and regulations so that defense force members can still be allowed to engage in business. If the law prohibits it, we will comply. If the law says no, then no, and we will continue with our duties,” Gen. Maruli said.

Previously, the Indonesian National Armed Forces has proposed that active-duty members be permitted to engage in business activities through a revision of Law No. 34/2004 which regulates the national defense force. Article 39(c) of the law presently prohibits active-duty officers from engaging in business activities. So the National Armed Forces has proposed that this article be removed. Rear Admiral Kresno Buntoro, Head of the Indonesian Armed Forces Law Reform Agency, argued that it is the Armed Forces as an institution, and not the individual officers, that should be prohibited from engaging in business activities.

“We suggest removing Article 39(c) of the law. It should be the institution of the Indonesian Armed Forces that is prohibited from operating businesses, not individual soldiers. If a soldier wants to open a small shop, they should be allowed to,” Rear Admiral Kresno said at a public hearing on the current Armed Forces/Police reform Bill. The hearing was organized by the Coordinating Ministry for Political, Legal, and Security Affairs and was held at Hotel Borobudur in Central Jakarta on Thursday, July 11, 2024, as quoted from the YouTube channel of the Coordinating Ministry.

This article is based on https://nasional.kompas.com/read/2024/07/23/18022501/ksad-tetap-berharap-anggota-tni-diizinkan-berbisnis

In related news:

• https://storiesfromindonesia.com/2017/10/11/the-armed-forces-capital-and-politics-by-danang-widoyoko/
• https://news.mongabay.com/2020/10/indonesia-militarized-agriculture-food-estate-kalimantan-sumatra/
• LI, TANIA MURRAY. “The Price of Un/Freedom: Indonesia’s Colonial and Contemporary Plantation Labor Regimes.” Comparative Studies in Society and History, vol. 59, no. 2, 2017, pp. 245–76. JSTOR, http://www.jstor.org/stable/26293446. Accessed 25 July 2024.

0:24
Who can guarantee that this significant authority and substantial function won’t conflict with public interests?
0:39
A piece of legislation, a law, or a policy should address the root of the problem. It shouldn’t just tackle the symptoms, which might lead to potential misuse in the field.
1:06
The dual function of the military from the past is no longer in practice.
1:13
[Tepuk tangan]
1:25
Good evening. The revision of the TNI law has garnered considerable attention. Several articles are feared to derail TNI’s reform efforts. For instance, the article allowing active TNI personnel to hold positions in various agencies and ministries, and the proposed elimination of the article prohibiting active TNI members from engaging in business, have sparked criticism and controversy. The revision of the TNI law is seen as a step back for democracy, as it appears to reinstate the dual function of the TNI, which was opposed during the reform era. The ongoing debate suggests the government and DPR should heed the various criticisms and inputs from multiple parties, particularly regarding the controversial articles, so as not to undermine the hard-won reforms that came at great sacrifice.
2:31
Is this revision aiming to bring back the dual function of the TNI? Tonight’s forum will discuss this issue.
[Tepuk tangan]
2:39
The draft revision of the 2004 TNI law has sparked criticism and debate. Several points of the revision are considered to betray the spirit of reform, aiming to reinstate the dual function of the TNI from the New Order era.
3:05
One of the contentious articles allows active TNI personnel to hold positions in various agencies and ministries. The head of the Presidential Staff Office and former TNI commander, Moeldoko, has stated that the public should not worry about the revision of the TNI law.
3:25
He assures that the aspect related to the dual function is no longer present, so there is no need for undue concern. The TNI is committed to becoming a professional force. President Jokowi has mentioned that the TNI law revision is still under discussion in the DPR and the government, particularly the Coordinating Ministry for Political, Legal, and Security Affairs.
3:55
Regarding the controversial article on the prohibition of business for active TNI members, further analysis and possibly specific regulations or academic studies are needed to ensure that allowing TNI personnel to engage in business won’t negatively impact their duties in maintaining sovereignty.
4:39
Military observer Al Araf considers this TNI law revision a step back for democracy and reform, as the TNI is intended to stay out of politics and business. A professional military is one that focuses solely on defense, as the primary role of the military in any country is to prepare for war and serve as a defense tool for the nation.
5:15
The government and DPR are currently discussing the TNI law revision, which is still in the early stages. Criticisms and inputs from various parties, particularly regarding the controversial articles, should be taken into account so that the hard-won reforms are not overlooked or forgotten.
5:46
Returning to the topic of the TNI’s dual function, tonight’s forum features Ali Mochtar Ngabalin, DPR member Syarief Hasan, and senior researcher Al Araf. Joining us via Zoom is Agus Widjojo, former Governor of Lemhannas and a key figure in post-reform TNI restructuring.
6:24
Mr. Syarief, what is the urgency behind the sudden push to revise the TNI law?
6:38
Indeed, the current situation has prompted several ideas to revise Law No. 34. For instance, the rapid succession of commanders despite still being in their productive years at 58, whereas other developed countries like Singapore and the US have higher retirement ages. Additionally, the defense budget is minimal, only ranging from 127 trillion to 139 trillion IDR, which is less than 1% of GDP. This significantly limits the Ministry of Defense’s ability to meet equipment and welfare needs.
8:01
The low defense budget impacts the minimum essential force program, achieving only 65% of the target. There’s also the issue of soldier welfare, including field allowances, health benefits, and housing. Therefore, increasing the defense budget is crucial.
8:51
Al Araf, how do you respond to the arguments about budget and welfare issues being the reasons for revising the TNI law?
8:58
If the sole purpose of the TNI law revision is to increase the defense budget, there’s no need to amend the 2004 law. Budget increases are within the government’s and DPR’s purview. The post-1998 reforms have already led to significant budget increases. The challenge lies in implementation and addressing corruption in military procurement. The failure to improve soldier welfare should not be solved by allowing TNI personnel to engage in business.
10:19
The prohibition on TNI business activities aims to maintain a professional military focused on defense, free from political and business distractions. This ensures national sovereignty and pride in a professional military.
10:54
Mr. Agus Widjojo, as part of the TNI reform team, do you see any urgency in revising the TNI law to allow business activities for TNI personnel?
11:20
I see no urgency to change the current TNI law. The law in place addresses issues that undermine TNI professionalism. The TNI reform was part of a broader move towards a democratic political system. The existing law is designed to eliminate weaknesses that compromise TNI professionalism.
12:00
Bang Ali Mochtar Ngabalin, some suspect the TNI law revision aims to reinstate the dual function of the TNI, allowing them to engage in business. How does the Presidential Staff Office view this?
12:20
Any discussion on TNI business activities must consider the benefits and drawbacks carefully. Professionalism in the military involves both human resources and salary. TNI personnel are unique in their commitment to national defense, even at the cost of their lives. Therefore, it’s crucial to handle this issue thoughtfully and ensure any decisions support the TNI’s role in defending the nation.
13:37
Engaging in business should not distract TNI personnel from their primary duties. The idea of allowing TNI to engage in business requires clear rules and careful consideration to avoid undermining military professionalism.
14:48
In summary, any law revisions should prioritize the professional focus of the TNI and consider the impact on their primary defense duties. The discussion should remain centered on national interests and the welfare of the TNI personnel.

14:48
Active TNI officers can still serve as regional heads. This provision is a concern for many, as it may lead to a resurgence of military involvement in civilian governance, which could undermine democratic processes and civilian control over the military.
14:55
The Indonesian Military (TNI) is meant to be a professional institution, but there are fears that this dual role could lead to conflicts of interest and affect its primary function of defending the nation.
15:03
What do you think about the impact of this regulation on the reform process and democratic governance?
15:10
The impact could be significant. It’s essential for the TNI to focus solely on its defense and security roles. Allowing military personnel to hold civilian positions could blur the lines between military and civilian spheres, possibly leading to abuses of power.
15:22
The challenge is ensuring that any military involvement in governance does not undermine the principles of democracy or the rule of law. It’s crucial for the legislative framework to address these concerns adequately.
15:30
Yes, the focus should be on strengthening democratic institutions and ensuring that military reform aligns with democratic principles. Effective oversight and clear boundaries between military and civilian roles are key to maintaining a balance.
15:39
Absolutely. The military’s role should be confined to its core functions, and any involvement in governance should be carefully regulated to prevent conflicts of interest and ensure accountability.
15:48
This is a critical juncture for Indonesia, and the way forward will require careful consideration of both historical context and contemporary democratic values.
15:56
Indeed, it’s a moment for reflection and action to ensure that the military’s role evolves in a way that supports and strengthens democratic governance.

16:04
We see that fundamentally, the essence of the situation is that Pak Harto (Suharto) was the final figure from the era that governed the country. After him, we needed to think about what system would replace the one based on the 1945 generation. We agreed on a democratic system, so everything must be adjusted to democratic principles, including defense functions and the position of the TNI, which was previously a people’s army and is now becoming a professional army within the democratic political system.

16:31
Okay, Pak Agus Wijoyo, Pak Ali Murtadho, there are many suspicions that the revision of the TNI law aims to return the TNI to the era of the New Order with its dual function. What is your response to that? But after this break.

17:10
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17:39
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18:01
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19:07
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19:27
If we can establish a framework, we will work on it. If the law does not allow it, then it’s not feasible.

19:31
That was the response from the Army Chief of Staff Maruli Simanungkalit, Bang Ali Murtadho Ngabalin. There is suspicion that the revision of the TNI law intends to restore the TNI’s dual function and allow it to engage in business. What is the KSP’s view on this? Can the TNI still engage in business? It needs to be discussed further.

19:44
The terminology and the etymology need to be clarified regarding the position of whether or not business activities are allowed. This will be evaluated based on benefits and drawbacks to ensure that both the government and the parliament can discuss it properly.

20:01
The issue is whether revising the TNI law will impact the professionalism of the TNI. Two key aspects here are human resources and salary. Professionalism is often measured by salary and resources. The military is unique in its commitment to the nation, and any discussion on its role should be balanced to maintain its morale and effectiveness.

20:17
We need to have clear discussions about the implications of allowing the TNI to engage in business. This should be done transparently to avoid negative impacts on the military’s primary duties.

20:46
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21:05
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21:17
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21:31
If there is a need for regulations, we will work on them. If the law prohibits it, then it cannot be pursued.

21:37
That was the response from the Head of TNI Army Staff, Maruli Simanungkalit. Pak Ali Murtadho Ngabalin mentioned concerns that the revision of the TNI law might reinstate the TNI’s involvement in business. The discussion continues on whether this is beneficial or problematic.

21:44
The key issue is whether the TNI should be allowed to engage in business, and this needs further discussion to ensure transparency and avoid potential conflicts of interest.

22:05
The discussion should also consider the impacts on the military’s effectiveness and professionalism. Ensuring that any changes do not undermine the TNI’s primary role and its commitment to national defense is crucial.

22:11
The allocation of funds for the military should be properly managed to ensure the welfare of the soldiers. Any failure to allocate sufficient funds and the subsequent need for soldiers to engage in business is a concern.

22:21
There is suspicion of corruption in defense sector budgeting and misallocation of funds. The previous business practices in the New Order era did not contribute to the welfare of soldiers.

22:31
The draft law is being reviewed by the DPR. The spirit of the revision should focus on addressing issues related to military welfare and not revert to past practices.

22:43
The need for business activities for the TNI should be reconsidered. With proper management and funding, it may not be necessary for the TNI to engage in business. Economic growth and proper allocation of resources are essential for addressing these issues.

22:50
With the elected president promising significant economic growth, there is hope that defense and welfare needs will be met without requiring the TNI to engage in business activities.

23:00
Pak Agus Wijoyo, what are your concerns if the TNI is allowed to engage in business? What should be the focus of TNI business reform?

23:27
The core issue is maintaining the defense function properly funded by the state budget (APBN). Any other sources of funding for welfare could lead to conflicts of interest and loyalty issues.

23:47
The TNI’s loyalty should be solely to the nation and the elected leadership. Allowing business activities could create conflicts and undermine this loyalty.

24:05
We need to avoid unnecessary complexities and ensure that the focus remains on national defense and welfare provided by the state.

24:15
The discussions should aim to keep the TNI focused on its primary role and ensure that reforms do not compromise its effectiveness or the principles of professionalism.

24:20
We should ensure that any potential changes or reforms in the TNI’s role do not lead to unnecessary complications or undermine its core functions. The focus should be on maintaining a strong and effective defense force without introducing conflicts of interest or diluting its commitment to national service.

24:32
Reforms should be carefully considered to avoid any impact on the TNI’s primary responsibilities and its loyalty to the nation. The goal is to maintain the integrity of the military while addressing legitimate concerns about welfare and funding.

24:43
If the TNI is allowed to engage in business, it could lead to issues with conflict of interest, loyalty, and overall effectiveness. The emphasis should remain on ensuring that the defense function is adequately funded and that the welfare of soldiers is properly managed through state resources.

24:56
Reforming the TNI’s business activities should not compromise its professionalism or its commitment to national defense. Discussions should focus on finding solutions that support both the effective functioning of the TNI and the well-being of its personnel without creating additional complexities or conflicts.

25:07
The primary concern should be to maintain a clear and focused military role, free from the complications that could arise from business activities. This approach will help ensure that the TNI remains dedicated to its core mission of national defense and service to the country.

25:16
Pak Agus Wijoyo, what is your view on the possibility of expanding TNI’s roles into civilian sectors and allowing business activities? What should be the key considerations?

25:28
The key consideration is maintaining the separation between the military’s defense functions and any business activities. The primary role of the military should be focused on national defense and security, with funding and welfare managed by the state.

25:39
Allowing the TNI to engage in business could lead to conflicts of interest and distract from its primary responsibilities. The focus should be on ensuring that the military is well-funded and that soldiers’ welfare is properly addressed through state resources.

25:50
Any reform should prioritize maintaining the professionalism and effectiveness of the TNI while avoiding unnecessary complications or conflicts. Discussions should ensure that reforms support the core mission of the military without introducing potential issues.

26:01
The TNI’s primary role should remain centered on defense and national service, with any business activities carefully regulated to avoid conflicts and maintain loyalty. The goal is to support the TNI’s mission while ensuring that its welfare and funding needs are met through appropriate channels.

26:14
Pak Agus Wijoyo, in summary, what are the essential points to consider when discussing the TNI’s potential involvement in business and its impact on the military’s role?

26:27
The essential points to consider are:

1. Separation of Roles: Maintaining a clear distinction between the military’s defense functions and any business activities to avoid conflicts of interest.
2. Funding and Welfare: Ensuring that the TNI’s defense function is funded through the state budget and that soldiers’ welfare is adequately addressed.
3. Professionalism: Preserving the professionalism and effectiveness of the TNI by avoiding distractions or complications from business activities.
4. Loyalty and Integrity: Ensuring that the TNI remains focused on its core mission of national defense and service to the country without being influenced by external business interests.

26:43
Discussions on this topic should aim to balance the needs of the TNI with its primary responsibilities, ensuring that any reforms support its mission and avoid introducing unnecessary complexities or conflicts.

26:50
The fundamental goal is to maintain the integrity and focus of the TNI while ensuring that its operational and welfare needs are adequately met. Any reforms should be carefully evaluated to prevent any negative impacts on the TNI’s core mission and professional standards.

27:00
Pak Agus Wijoyo, given the current debate around the TNI’s role in business, what steps should be taken to ensure that any potential reforms do not undermine the TNI’s primary functions?

27:10
To ensure that potential reforms do not undermine the TNI’s primary functions, the following steps should be taken:

1. Clear Legislation: Draft clear and specific legislation that defines the boundaries of TNI’s involvement in business activities, ensuring it does not interfere with its defense responsibilities.
2. Oversight and Regulation: Establish strong oversight and regulatory mechanisms to monitor any business activities and ensure they do not conflict with the TNI’s primary role.
3. Focus on Core Functions: Ensure that any business activities do not detract from the TNI’s core mission of national defense and security.
4. Welfare Funding: Guarantee that funding for the TNI’s welfare and operational needs is provided through appropriate state budgets, without reliance on business activities.
5. Transparency: Maintain transparency in all aspects of the TNI’s business involvement and funding to avoid any potential conflicts of interest or misuse of resources.

27:24
These steps are crucial to preserving the professionalism and effectiveness of the TNI while addressing any concerns related to business activities. The aim should be to support the TNI’s primary mission and ensure its smooth operation within a well-regulated framework.

27:35
Pak Agus Wijoyo, how can the government and legislative bodies work together to address concerns about the TNI’s potential business activities and ensure that reforms are implemented effectively?

27:45
The government and legislative bodies can work together by:

1. Collaborative Dialogue: Engaging in open and collaborative dialogue with stakeholders, including TNI representatives, lawmakers, and civil society, to understand and address concerns about business activities.
2. Drafting Clear Policies: Developing and implementing clear policies and guidelines that define the scope and limits of the TNI’s involvement in business activities.
3. Monitoring and Evaluation: Establishing mechanisms for ongoing monitoring and evaluation of any business activities to ensure they align with the TNI’s core functions and do not create conflicts of interest.
4. Public Consultation: Consulting with the public and other relevant parties to gather feedback and ensure transparency in the reform process.
5. Training and Education: Providing training and education to TNI personnel on the implications of business activities and how to manage potential conflicts of interest.

28:05
By taking these steps, the government and legislative bodies can help ensure that any reforms related to the TNI’s business activities are effectively implemented and aligned with the TNI’s primary mission and professional standards.

28:15
Pak Agus Wijoyo, what do you think are the potential risks if the TNI is allowed to engage in business activities?

28:22
The potential risks include:

1. Conflict of Interest: Business activities might create conflicts of interest, diverting attention and resources away from the TNI’s primary defense responsibilities.
2. Corruption: The involvement in business could increase the risk of corruption and misuse of funds, particularly if oversight mechanisms are weak.
3. Undermining Professionalism: Engaging in business might undermine the TNI’s professionalism and credibility, as the focus could shift from defense to profit-making.
4. Loyalty Issues: There could be loyalty issues if business interests conflict with the TNI’s duty to the nation, leading to divided loyalties among personnel.
5. Public Perception: Public trust in the TNI could be damaged if business activities are perceived as compromising its core mission or leading to financial misconduct.

28:35
Addressing these risks requires careful planning, strong regulations, and effective oversight to ensure that the TNI’s core functions and professional standards are maintained while any business activities are properly managed.

28:45
In conclusion, while reforms and potential changes in the TNI’s role in business activities are under discussion, it is crucial to prioritize the TNI’s primary mission of national defense and ensure that any changes do not compromise its professionalism, integrity, or public trust.

29:00
Pak Agus Wijoyo, if the TNI is allowed to engage in business, what specific reforms or safeguards should be implemented to mitigate the risks mentioned?

29:07

1. Strict Regulations: Implement stringent regulations governing TNI’s involvement in business, including clear boundaries and operational guidelines.
2. Oversight Mechanisms: Establish robust oversight mechanisms to monitor business activities and ensure compliance with regulations.
3. Transparency: Promote transparency in financial dealings and business operations to build public trust and prevent corruption.
4. Separation of Duties: Ensure a clear separation between defense responsibilities and business operations to avoid conflicts of interest.
5. Ethical Standards: Uphold high ethical standards and integrity in both defense and business activities to maintain the TNI’s professionalism and public confidence.

29:20
Pak Ali Muktar Ngabalin, do you have any final thoughts on the discussion about the TNI’s involvement in business activities?

29:25
Yes, it is important to remember that any changes should be carefully considered and balanced against the TNI’s primary role in national defense. The focus should be on strengthening the TNI’s capabilities and ensuring that its personnel are well-supported and effective in their duties. Engaging in business should not detract from its core mission or lead to negative consequences for the institution.

29:40
Thank you for the insightful discussion. We’ll continue to follow this topic closely as developments unfold.

TBC