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Last Updated: Tuesday, 12 April, 2005, 16:13 GMT 17:13 UK
Indonesia bans army business ties
Indonesian marines on training exercise
The army is being told to concentrate on military matters
Indonesia's military has announced that it will close down its lucrative business ventures within two years.

The country's armed forces control a huge business empire ranging from golf courses and luxury hotels to building firms and fish sellers.

The announcement comes after a pledge by President Susilo Bambang Yudhoyono to clean up public life.

Critics have long accused the Indonesian military of involvement with illegal logging and prostitution.

Indonesia's military chief, Gen Endriartono Sutarto, made the announcement after a meeting of the heads of the navy, army and air force in Jakarta.

"Whether [their assets] amount to one trillion rupiah ($105m) or five million ($525), they will no longer exist in two years," he told a news conference.

President's pledge

The military turned to private business ventures during years of low central funding under Indonesia's former dictator General Suharto.

Pledging to dismantle the businesses, Gen Sutarto admitted some of the ventures had had "negative effects" despite being profitable.

Susilo Bambang Yudhoyono
President Yudhoyono has pledged to root out corruption
Legislation passed in 2004 required the military to end business activities within five years, but Gen Sutarto brought that forward to 2007.

The military has been dogged by accusations of involvement in illegal activities including logging and poaching.

But it has come to rely on profits from businesses as funding has remained low since Gen Suharto's fall.

Currently the central government covers just 30% of the military's funding needs, the Reuters news agency reports.

President Yudhoyono has vowed to root out corruption since he came to power, and the country's military has seen its once vast power steadily eroded.

The military lost its 38 guaranteed seats in parliament earlier this year.

In 2003 Gen Sutarto was forced to ban the military from undertaking private security work for foreign governments and corporations, after the US government and oil giant BP were found to be relying on Indonesian troops for protection.

"We are not mercenaries," the general insisted.

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Country profile: Indonesia
25 Mar 05 |  Country profiles


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