Out of Business and On Budget

The Challenge of Military Financing in Indonesia

Lex Rieffel, Jaleswari Pramodhawardani

• Publisher: Brookings Institution Press
• Year: 2007
• Print ISBN: 9780815774471
• eBook ISBN: 9780815774488
• Edition: 1
• Topic: Economics
• Subtopic: Governmental Accounting
• Index: Economics

Indonesia has the fourth largest total population and the largest Muslim population of any nation on earth. Indonesia's transition to democracy, thus, is critically important at a time when the West's relationship with much of the Muslim world is problematic and the push for greater democracy worldwide is a U.S. priority. A major impediment to democracy in Indonesia and several other nations is a military establishment that is not financially accountable to civilian leaders and thus nearly impossible to control. This new study examines what is necessary to bring the Indonesian military ""on-budget""—what policies are required, what Indonesia can learn from other nations (e.g. China, Turkey),—and what a realistic timetable looks like. More than half of what the Indonesian armed forces spend is believed to come from sources other than the national budget. These sources include a vast array of commercial enterprises, non-profit foundations, cooperatives, and rent-seeking activities. Lex Rieffel, who began doing research in Indonesia in 1968 and has extensive experience in economic development and international finance issues, is impressed by the commitment of Indonesia's new government to reduce the role of the armed forces in the economy and make it a fully professional institution. The concise treatment considers not only the requirements but also the ramifications of success—or failure—in this endeavor and can serve to inform similar efforts in other ""democratizing"" countries, such as Pakistan and Nigeria.

Table of contents

• Front Cover
• Title Page
• Copyright Page
• Table of Contents
• Foreword
• Acknowledgments
• Words and Abbreviations
• Chapter 1: Policy Objectives: Out of Business and On Budget
• Chapter 2: Policy Context: External and Internal Factors
• Part I: Getting Out of Business and Ending Off-Budget Funding
• Chapter 3: The Legacies of Sukarno and Suharto and the Shock of Reformasi
• Chapter 4: The TNI's Current Business Activities
• Chapter 5: The TNI's Off-Budget Revenues and Expenditures
• Chapter 6: From Starting Point to Finish Line
• Part II: Fully Funding a Professional TNI
• Chapter 7: Designing a National Defense and Security Strategy
• Chapter 8: Budget Realities
• Part III: The Way Forward
• Chapter 9: Observations and Implications
• Appendix A: A Brief History of the TNI and Its Current Structure
• Appendix B: Methodology for Estimating the Gross Revenue and Net Income of the TNI's Off-Budget Activities
• References
• Index
• Back Cover