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Op-Ed: The Armed Forces, Capital, and Politics

Kompas Daily Op-Ed: The Armed Forces, Capital, and Politics

By Danang Widoyoko, October 11, 2017

KOMPAS – Many observers believe Indonesian National Armed Forces Commander General Gatot Nurmantyo has started campaigning for election. Some believe specifically that Gatot has started mobilizing support from political parties and Islamic organizations. Some think that flaming fears of a revival of the Indonesian Communist Party, and mobilizing the public to watch the film “G30S/PKI”, are part of efforts to build support for boosting his popularity and electability. There have even been many calls for him to resign as commander of the armed forces.
Gatot’s maneuvering has been seen by many observers as in reality representing not just his own ambition. Gatot’s action is viewed as representing the disappointment and frustration of the Indonesian Armed Forces and, in particular, the Indonesian Army which has lost both its role and access to material resources. In the context of an understanding of the history of capital formation in Indonesia it is very important to develop a policy for creating a professional armed force and its financial implications.

Domestic Capital

In his classic study Indonesia: The Rise of Capital (1986), Richard Robison demonstrated how the New Order regime generated domestic capital. He described four major sectors of domestic capital formation: Chinese conglomerates, indigenous conglomerates, state capital and state-owned enterprises (BUMN) and military businesses.
With support, facilities, and protection, these four sectors of domestic capital grew large and produced conglomerates in various parts of the economy. However, the 1997 economic crisis and the subsequent topping from power of the New Order meant that domestic capital faced a difficult situation. Reforms by the International Monetary Fund (IMF) cut all the facilities and protection for domestic capital.
Since then, policies of privatization and liberalization opened the door to international capital which has come to compete with domestic capital. In practice, that period represented a difficult time for domestic capital.
In their book Reorganizing Power in Indonesia (2004), Robison and Vedi Hadiz described the rise of an oligarchy. Rather than being sidelined, political and economic elites in fact grew stronger in the wake of the reforms.
Then, what about the development of domestic capital? According to Christian Chua in his book Chinese Big Business in Indonesia (2009), democracy and decentralization, in fact, facilitated the expansion of the Chinese conglomerates. With the large financial resources they possessed, the role of these conglomerates became important in the political system which has come to be characterized by the practice of money politics.
The second sector of capital, indigenous capital, was also able to prosper, not only in the economy but also in politics. In 2007, Forbes magazine crowned Aburizal Bakrie the richest person in Indonesia. Having once led the Golkar Party, Bakrie is possibly presently having difficulty with the burden of debt in his business group. Even so, he continues to rank among Indonesia’s richest people and is an influential figure inside the Golkar Party. Another example is the businessman Jusuf Kalla, current Indonesia’s Vice President.
The third sector of capital, state-owned enterprises, is presently rising to dominance again in a variety of sectors of the economy. President Joko Widodo’s focus on infrastructure development has positioned state-owned enterprises as important players. Capital injection and infrastructure development have made the state-owned enterprises increasingly large. Previously, the program of reform of state-owned enterprises that was supported by the Asian Development Bank (ADB) succeeded in restructuring the state-owned enterprises. In semester I 2017, the total assets of state-owned enterprises reached Rp 6,694 trillion (US$498 mil) (Kompas.com 30/8/2017) or almost 50 percent of Indonesia’s gross domestic product (GDP).
Then what about the fourth sector of domestic capital, military businesses? In contrast to the other three areas of domestic capital, military businesses are currently in a slump. Public Law 34/2004 concerning the Indonesian National Armed Forces strongly prohibited the military from operating businesses and instructed the Armed Forces to surrender business entities to the state. To date, it is not clear what progress has been made in the process of surrendering these military businesses. However, I suspect the majority of these businesses either operate at a loss or have been taken over by their business partners.
Another factor that has caused the decline in military businesses is the firm separation of the function of defense from that of security. The military has not only withdrawn from business, but also in relation to security which has now become the task of the police. The withdrawal of the Armed Forces from the task of security has closed off access for the military to informal and illegal sources of funds connected to protection and security.
Aside from the decline of the military businesses, the military has now also lost access to material resources through political positions. The generation of General Gatot Nurmantyo is the generation that prior to joining the Armed Forces expected that on retiring they would occupy important positions within the bureaucracy, parliament or regional government.
In a democratic political landscape, these positions are only obtained through stiff competition among politicians. The military, of course, has had difficulty competing with these politicians who have been developing capabilities and networks developed in fact during their days as university students.

Professional Military

In relation to the maneuver of General Gatot currently under scrutiny, there are two important points for discussion. Firstly, with the withdrawal of the Armed Forces from parliament and the closing of military businesses, the military has generally returned to barracks. However, it is now, in fact, civilian politicians who have been “inviting” the Armed Forces to jump the fence out of the barracks and to back into politics.
Secondly, returning to barracks and becoming a professional military requires funds. Without calculating this cost, the invitation from politicians who are inviting General Gatot, and later also other generals, will continue to be repeated. For this reason, the formulation of what kind of professional military is needed, and how much is needed to fund it, is a pressing issue.
Making the Armed Forces into a professional military requires a significant amount of money, however, it is very important for the future of politics and democracy in Indonesia.


Source: Artikel Opini: Tentara, Modal, dan Politik, Kompas Daily 11 October 2017 with an English version published as Soldiers, Capital, and Politics. Tempo reporting on the issue. j danang widoyoko celoteh di awan blog


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