Indonesia

Researcher4180: There is no effective control or monitoring of asset disposal within the TNI, and proceeds are not made clear. There are very occasional ad-hoc announcements from senior officials concerning asset disposal (such as one made by a commander on the use of some outdated equipment to be used as target practice), but these announcements are not comprehensive or consistent; there is no official process for announcing asset disposal, demonstrating a lack of transparency.

Asset disposal in Indonesia would also potentially cover the assets disposed of during the government takeover of military owned businesses in 2009. Whilst these were not equipment-based, they were still military owned assets. The TNI retains business interests despite substantial attempts at reform, aiming to remove military involvement in business through law 34/2004, which have been seemingly halted by allowing business to continue under foundations and co-operatives. This allows the continuation of internal asset disposal through TNI-linked business and reduces governmental control. This is exacerbated by poor monitoring; a Human Right's Watch report stated the inter-parliamentary monitoring group of having 'no clear authority over the Indonesia armed forces or its businesses, lacking independence, not requiring to report publicly on its progress, and facing no deadline to complete its work.'. This has led to situations where TNI assets, such as land, have been misappropriated by those no longer in the military. This appears to have created an environment in which controls have been difficult to implement. The reform process itself allowed for assets to be sold before the government takeover of military business in 2009, which led to allegations that the military had sold state assets, and there was no monitoring of where the money went, suggesting there is a wider issue.

Researcher4180: There is no evidence of independent or transparent scrutiny by defence institutions with regard to asset disposal, as there are no reports available publicly and confusion regarding the jurisdiction over asset disposal. In regards to equipment disposal, the interviewee who worked within the TNI was unaware of any departments internally which specifically oversaw asset disposal. There is no public evidence the BPK audits asset disposal, or that Commission I has any involvement.

Asset disposal in Indonesia would also potentially cover the assets disposed of during the government takeover of military owned businesses in 2009. Prior to government takeover, the military sold off much of its assets held by these businesses as to gain access to the funds before handing over the businesses themselves. It is unclear which institution has the responsibility to externally monitor this off-budget funding and assets, as well as the disposal of these prior to takeover. An oversight team was created after 2009, but this does not investigate asset disposal prior to takeover. This has led to situations where TNI assets, such as land, have been misappropriated by those no longer in the military. While there is an oversight team within the Ministry of Defence that monitors the military's foundations and cooperatives, it is composed of members of the military and has no accountability. Asset disposal is potentially problematic within the TNI due to the prevalence of military business, some of it illicit, which provides the opportunity for asset disposal. Despite this, even parliamentarians that operate within Commission I seem uncertain whether police or the KPK have jurisdiction over corruption in military business; such as one who, when asked why lawmakers didn't include articles into the military court bill that would give the KPK the authority to investigate military corruption, seemed unsure.

Due to this confusion over external jurisdiction, as well as the insufficiencies of potential agencies, there are no official reports released publicly concerning asset disposal, and questionable levels of scrutiny.

Researcher4180: Due to the nature of the budget, and its lack of detailed breakdown and transparency, it is difficult to analyse how much of the budget is spent on secret items in particular, and to a degree the intelligence services. Analysis from the Open Budget Survey confirms this; the lack of information means that instead they have to take the whole defence budget as an indicator of potential secret spending, which puts it at over 8 per cent of the total budget. Beyond the budget, the government has made no announcements clarifying what percentage of the defence budget itself is allocated to secret spending.

While the proportion related to secret spending as a whole cannot be verified, there is limited information released concerning BIN's overall budget and, due to a BPK audit report, the breakdown of this budget for 2009. BIN in 2009 operated on a 982 billion rupiah budget, out of a total 33.6 trillion rupiah devoted to defence as a whole. Out of this 481 billion Rupiah was included in spending under a post merely labeled “intelligence operation&quoute;, which officials were unwilling to clarify. This would make it 3.3 per cent of the defence budget, but this is limited to one year (2009) and there was no other information disclosed regarding spending on items relating to intelligence agencies and national security.

While the BIN budget is likely to comprise the largest proportion of secret spending, it is not possible to verify the level of spending on other items relating to intelligence agencies and national security. The score has been selected accordingly.

Response to TI Chapter Reviewer: Based on the 2009 fiscal year, the BIN budget was approximately 3 per cent of the defence budget. However, this did not detail any other secret spending, and it is unclear whether this may be consistent over the years. As there is no breakdown offered, the final percentage is impossible to ascertain. Score maintained.

Researcher4180: As Commission I is involved in the budgetary planning for defence, there is an implicit expectation that they would be aware of any budgetary allocation related to secret spending. Legislation is in place which gives the Commission oversight and influence in the budget process, but none related to secret spending specifically. With regard to BIN, the State Intelligence Agency, there is debate concerning the budget, and awareness of the budget allocated as they are primarily involved in the planning process. There are various debates within the Commission concerning the budget, as demonstrated by questions over whether to raise it in response to terrorist attacks in 2011. In 2015 the Finance Ministry granted less than requested, which led to the BIN Chief to request the help of Commission I, which suggests they are involved actively in such debates. The Commission further has access to BPK audit reports when undertaken, as demonstrated by the 2009 audit report which provided a breakdown of BIN spending in 2009.

The extent to which they are aware of detailed breakdowns of this budget, however, specifically concerning secret spending, is unclear. A legislator fromCommission I in 2010 reportedly speculated that questionable spending in 2009 may be for safeguarding activities related to the general election, which suggests the commission members are confident enough of their information to speculate on these issues publicly. However, this also demonstrates they are not provided with full information. Initial information provided is limited, and while they can request more and summon relevant actors, further information is either rarely given or insufficiently detailed, or questions go unanswered. Another Commission member, for example, in 2010 demanded that BIN improve the accuracy of its reports to the government (as reported by Tempo, cited above).

The scale of off-budget financing within the TNI, which, as aforementioned, comprises of illicit business practices, allows for secret spending which is not scrutinized at all; allowing the TNI to bypass this Commission process in this regard. This has been seen in cases where the TNI has been accused of arms smuggling, including publicised scandals of TNI officers smuggling weapons to Gerakan Aceh Merdeka (GAM), an independence movement, as well as allegations the TNI imported weapons from an arms smuggling group, including sidewinder missiles.

With regard to transparency, Indonesia may be in risk of declining with the current debate over a State Secret Bill, which would cover much of the TNI’s operations and further restrict legislation oversight by expanding secret spending of which they can access only very little information. However, the bill is controversial and facing significant opposition, which has halted progress towards its emergence.

Researcher4180: The BPK’s reports, which can cover all aspects of the security sector, are submitted to Commission I for scrutiny within a six month period following the end of the budget. This covers the security sector, including the Ministry of Defence and the intelligence services. There is precedent for the release of audits to the public, though the consistency of this occurrence in the realm of security and secret sectors is unclear; within the media only the 2009 BPK report on BIN's budget can be found, for example. However, they consistently audit the BIN, as demonstrated by the yearly reports (of which 2013 is cited above), though these are extremely vague when released to the public.

It was not possible to verify whether there are details excluded from audit reports before they are presented to Commission I.

The level of debate following these submissions is unclear. As mentioned previously, it should be noted that there is a lack of expertise and resources within Commission I, as it is made up of people from various non-security backgrounds who have limited access to experts due to a lack of focus on training, and they do not cover non-budgetary expenses.

Response to Peer Reviewer 2: Evidence indicates that audits of the seurity sector are presented to the commission, even if in aggregated form, on a regular basis concerning most secret spending (of which the largest would possibly be BIN's budget). Outside of this, there is no evidence that there is significant secret spending. Score maintained.

Researcher4180: There is significant off-budget expenditure, previously thought to account for around 70 per cent of the military budget, which was previously justified due to the government budget being insufficient to cover the costs of the security sector. Wide-ranging military reform enacted in 2004 (Law 34/2004) focused on privatizing military-owned business and transferring it to the government; and a significantly increased budget has attempted to end the need for off-budget funding, making it illegal. However, it took four years to establish the National Team for Military Business Takeover, and Presidential Regulation No. 43/2009 was viewed by NGO's and media as weakening the reform process as it offered no significant deadlines and gave no effect to a complete handover.

While reforms were declared successful in 2010 and they have accounted to a reduction to between low estimates of around 5 per cent to high estimates of around 20 per cent of military spending being off-budget (Mietzner, M., Misol, L: 2012; 102-111), legal military-owned businesses continue due to loopholes whereby companies are still owned by military-controlled foundations and co-operatives; such loopholes include exempting core businesses from the transfer plan because they were crucial for the welfare of soldiers. There is also military involvement in illicit and informal economic activity such as charging private companies protection money. Legally, therefore, off-budget military expenditure is not permitted, but the military has managed to find significant loopholes, whereby businesses are allowed to be controlled by military foundations and co-operatives, which allow continuation of their previous activities.

Practical difficulties in external control over these businesses result from two factors; the first being the simple fact that many alleged business activities are of an illicit nature, as previously mentioned, concerning protection duties and smuggling. There have reportedly been clashes between the police and army as a result of these illicit businesses, which have resulted in deaths. A further issue is the lack of institutional power in the regions they take place; at a general level Indonesia has undertaken decentralising most functions of government to the district governments in order to prevent state the 'Balkanization' and state disintegration of Indonesia. The main laws concerning Indonesia’s decentralization were Law No. 22/ 1999, Law No 25/ 1999 and Law 32/ 2004, which allowed power to be transferred to provincial and regional leaders, through degrees of regional autonomy and financial independence. This has resulted in weak central institutions within periphery regions. This is further exacerbated in regions with fundamental problems, such as West Papua, which, due to insurgency, lacks rule of law and has resulted in a strong military presence with little oversight. Due to these issues, therefore, there is essentially no control externally.

Response to Peer Reviewer 2 and TI Chapter Reviewer: While it is agreed that off-budget expenditure is not permitted by law, it is clear that the military has maintained strong business interests, which in part has been enabled by Presidential Regulation No. 43/2009 targeting only directly owned military businesses. Instead, businesses appear to have been restructured which allows for this to occur. Given the legal loopholes, score 2 cannot be justified. Score raised from 0 to 1.

Researcher4180: In practice, there are significant off-budget military expenditures, previously thought to account for around 70 per cent of the total military expenditure, justified due to the governmental budget being insufficient to cover the costs of the security sector (Mietzner, M., Misol, 2012:102-11). Recent years have seen estimates reduced to between 5 - 20 per cent of military spending being off-budget. This is thought to involve illicit economic activity, with evidence that the army has been involved in illegal logging and resource exploitation, in particular. The Environmental Investigation Agency (EIA) and the Indonesian environmental group Telapak uncovered one case whereby timber was smuggled out of Indonesia to China, and analysts suggest this practice is widespread. There is also an association with mining and are in particular involvement in charging security fees for companies operating within Indonesia, and specifically the troubled West Papua region, for protection. The Human Rights Watch also demonstrated that protection fees and rackets extend to illegal gambling operators. Such protection fees and rackets resulted in firefights between the military and police in Batam in 2014.

The TNI has been known to lease government land to private owned enterprise, and there are accusations that land has been confiscated by the TNI for this purpose. Prostitution rackets in Papua and Timika, furthermore, have been highlighted by US State Department's Human Rights report and analysts, and there have been allegations from analysts that the TNI is involved in narcotics smuggling and human trafficking.

This has significantly occurred in areas such as West Papua where there is little institutional control of the armed forces; due to aforementioned decentralisation legislation and the continuing insurgency, central state institutions have been weakened whilst there is a greater military presence, limiting state control over the TNI in these regions.

Commission I has drawn light on spending that has occurred but not been accounted for in the budget, such as the purchase of Sukhoi fighters which continued despite debate.

Response to Peer Reviewer 2: Comments regarding the misunderstanding that TNI of-budget income account for 30 per cent are accepted. However, a number of sources state that the actual value is between 5 to 20 per cent, with many disagreeing with a low estimate (which is only derived from one report) in this regard. The many sources cited suggest it is a wider problem, and not all evidence focises on conflict zones (see, for example, Batam). The fact these are conflict zones does not change the fact that the income is off-budget. Commission I has also previously highlighted areas of concern where military purchases are not accounted for in the budget (Sukhoi fighters, for example). While off-budget expenditure may not be permitted (albeit with legal loopholes) as discussed in Question 27, they are still substantial and reportedly involve illicit activities. Score maintained.

Researcher4180: There is no overarching state secrecy law currently, and it is difficult to ascertain the methods through which Indonesian documents are classified despite there being distinct classifications. It is unclear how agencies and/or individuals influence decision-making in this regard. Law No. 14/2008 can be used to categorize secrecy levels which includes national security-related information. However, the process for this is vaguely defined.

There are two contrasting movements within Indonesia currently which may impact the scale of classified documents; the first is a significant and heavily criticised State Secrecy Bill which would cover much of the defence sector; where almost all aspects of military life will be classified as state secrets. The bill has seen much debate within parliament and civil society, which stalled its emergence, but has recently seen a re-opening of discussion within the House of Representatives. Despite these discussions, the bill's future is still doubtful, as these were only preliminary and there has been a great deal of criticism.

The second is a movement to expand the implementation of the currently lacking Freedom of Information (FOI) Act in order to make it more effective, increasing transparency. Under Law No. 14/2008, all information is accessible except for 'secrets'. Current concerns, echoed by the interviewee, are that officials are not receptive to requests for information, and that information is not always forthcoming even once officials have received requests. While these concerns are problematic, they have caused civil society organisations to focus on the act and call upon the government to make it more effective, most recently demonstrated by Human Rights Watch's letter to Jokowi.

Response to TI Chapter Reviewer: Disagree. There is a FOI law, but implementation is weak. Further to this, as you state, anything presumed to endanger the interest of the country can be categorized as a state secret. This is extremely vague, and with no knowledge of the process or legal mechanisms in place for this it is open to abuse. Score maintained.

Researcher4180: Military owned businesses are now incorporated into more complex co-operative and foundation systems, which are entities that exist technically, though not always in practice, to provide some sort of social service or welfare to TNI personnel. Legally, all directly owned military businesses were transferred in 2009, in line with Presidential Decree No. 43 of 2009 on the Takeover of Business Activities of the TNI. This represented progress from Law 34/2004 which sought to abolish military ownership of businesses and involvement in the economy. However, this decree was extremely vague, and announced takeover of activities, not ownership. Furthermore, only directly military owned businesses were transferred, not TNI foundations and cooperatives which were not categorised as military owned businesses post 2009, but which are still owned by the military.

It is difficult to track the operations and finances of such businesses, due to the complexity of the foundations, and ad hoc release of data and declarations made publicly. Not all are publicly declared. Data released in 2007, the most recent, demonstrated the military had 23 foundations and over 1,000 cooperatives, including ownership of 55 companies through which a profit of $28.5 million was recorded. Evidence suggested that previously these business ventures were responsible for around 70 per cent of the military's budget, and now account for 20 per cent. Monitoring is weak, as the Ministry of Defence claims it has no responsibility over these entities which are either classified as privately or member owned. There is an inter-ministerial oversight team tasked with reviewing and monitoring military cooperatives and foundations , but it faces many problems; a Human Right's Watch report accused it of having 'no clear authority over the Indonesia armed forces or its businesses, lacking independence, not requiring to report publicly on its progress, and facing no deadline to complete its work.'

Response to Peer Reviewer 2: Disagree. The military is not allowed to directly own business. However, following 2004 and leading up to 2009 there was significant restructuring of directly owned businesses into the cooperative and foundation format, meaning that the military was able to ensure its continued involvement in business. Mietzner, M., Misol, L (2013) particularly demonstrate that this issue is far from being resolved, despite previous attempts. As you demonstrate that in practice, disengagement is debatable, and this influences the score given the question does not pertain solely to regulations concerning military businesses. Score maintained.

Researcher4180: Due to the illicit nature of some businesses, and the complexity of the foundation and co-operative system, (entities that are either privately or co-operatively owned that manage business, though are not necessarily classed as business, in order to provide social welfare to soldiers), there is no significant transparent or independent scrutiny; especially at a recognised international standard. Monitoring is weak, as the Ministry of Defence claims it has no responsibility over these entities which are either classified as privately or member-owned. There is an inter-ministerial oversight team tasked with reviewing and monitoring military businesses, and to a lesser extent the cooperatives and foundations , but it faces many problems; a Human Rights Watch report accused it of having 'no clear authority over the Indonesia armed forces or its businesses, lacking independence, not requiring to report publicly on its progress, and facing no deadline to complete its work.' Externally there is no independent scrutiny, to the point where there is considerable uncertainty with regard to the value of these businesses.

Rather, media reports suggest the military is evading the policy of giving up their businesses, as seen by the transfer of business to the foundations and co-operatives which occurred announced during the reform period. This presents many obstacles to any potential scrutiny, and the media and civil society perceive there to be little political will to continue with reforms now that military reforms have already been seen as completed, even though these reforms were amended to allow businesses to be kept under the foundation and co-operative entities, and fell short of their original goals. NGO Imparsial suggested this political will maybe lacking due to the fact the TNI remains a powerful entity, which results in leaders seeking to compromise with it.

Response to Peer Reviewer 2: As mentioned above, the military is still able to continue its involvement in business through foundations and cooperatives which are not subject to oversight or audited. Score maintained.

Researcher4180: There is evidence of private enterprise at all levels of the military; observers argue this is a result of low salaries paid to personnel, and this narrative has been employed by sources in media reports and officials such as a former defence minister, whostated that military personnel require enterprise to supplement their poor salaries. This is despite the fact that it is illegal under Law No.32/2004.

Public officials, such as those in the Defence Ministry cannot engage in commercial activities unless this has been agreed upon by supervisors, and there is no evidence of cases of defence ministry staff being involved in commercial business (those that do not serve in the military).

Within the military, however, this differs. One interviewee had his own, non-illicit, enterprise during his service in order to compliment his salary, who said that he did not fear repercussions as enforcement is lacking despite the fact that enterprise is legally not encouraged. There are no internal means to prevent unauthorised enterprise, as it is a generally accepted practice, demonstrated by its prevalence at all levels, despite its illegality. Media reports also provide evidence of unauthorized illicit enterprise from individuals in areas such as drug trafficking and selling, gambling and involvement in illegal logging. Recently in Batam, clashes occurred between the police and the military as a result of military personnel providing security for an illegal fuel store. The repeated occurrence of these issues, as well as the lack of substantial or consistent prosecutions, demonstrates weak enforcement. Often punishment occurs within the military structure and is generally restricted to lower ranked personnel, but does not always result in jail time or even dismissal, as demonstrated by the repeated offences of the individual mentioned in the Jakarta Post article on logging.

Response to peer reviewer 2: Disagree. The question focuses on private entrepreneurial activities by individual personnel, there is evidence of of it and there appear to be no, or trivial, repercussions for those who engage in it. Score maintained.

Researcher4180: Public commitment to anti-corruption measures from senior officials or the ministry have been ad hoc, despite the President's anti-corruption platform during his presidential campaign. Defence Ministers have highlighted corruption on rare occasions, and the former Defence Minister has been present at meetings where the President has called for all state officials to end corruption. Despite the latest appointment to Defence Minister being perceived in media as anti-reform, due to his role as General during Indonesia's involvement in East Timor, the new Inspector-General has recently attended meetings with the KPK, and has made statements related to anti-corruption such as “If there is any allegation of corruption acts at the Defence Ministry, please report it”. Recently the Minister of defence, Ryamizard Ryacudu, declared that his ministry would like to build a gratification management system.

Within the military, senior officials also seem willing to commit to anti corruption measures. Commander of the TNI General Moeldoko, declared and signed an integrity and corruption-free pact and an anti-corruption charter on Monday, August 11, 2014 and committed to ensuring anti-corruption messages are conveyed to soldiers. He also stated that the TNI is open to the KPK investigating corruption. However, it is not particularly a strong message as he excluded investigations into procurement as a being part of this.

Response to Peer Reviewer 2: Based on new information, agreed. Score changed from 1 to 2.

Response to TI Chapter Reviewer: Comments incorporated and score raised from 1 to 2.

(Relevant information from Peer Reviewer 1 comments have been incorporated in the main answer)

Researcher4180: Technically there are laws in place to enact measures against personnel, but due to the independence of the military from the KPK and external courts, this has not been consistently applied. Cases of internal application, furthermore, are mixed.

There are a number of laws that aim to prevent corruption and bribery; Law No. 11 of 1980 on Bribery; Law No, 28 of 1999 on State Management Clean and Free from Corruption, Collusion and Nepotism; Law No. 31 of 1999 on Corruption Eradication; Law No. 30 of 2002 on the KPK; Law No. 46 of 2009 on the corruption court. However, the enforcement of these have been lacking.

The KPK has the power to investigate corruption and bribery, but only recently has it begun investigations in the military, as demonstrated by recent commitments, meaning it is currently uncertain as to how effective investigations will be, as there have not yet been any public outcomes. The investigation process is unclear in its selection of cases; for example, complaints submitted by NGOs concerning a former defence minister have not publicly been addressed. When a case is selected, under article 6, law 30/2002 the KPK is able to immediately summon anyone suspected to be involved, request financial information from relevant institutions, block accounts and transactions, and intercept communication. Prosecution is undertaken in a Court of Corruption, overseen by an 'ad-hoc' judge.

Up to this point the military has essentially remained free of KPK investigation due to uncertainty that exists as to whether military personnel fall under KPK jurisdiction, demonstrated by their lack of involvement up until now. Despite this, increasing degrees of involvement is perceived by some analysts in media reports as being a step in the right direction; the KPK has become a relatively successful organisation, despite remaining obstacles and hindrances such as attempted amendments that would delay House members being summoned, with the presidential candidates and Jokowi's cabinet being vetted by the organisation and a number of successful high profile cases in less sensitive areas than defence, with prosecutions at all levels including Members of the House, Ministers and Regional Heads. It remains to be seen, however, to what extent this will affect defence institutions which have effectively had no external oversight, leading to no significant effective measures, as demonstrated, for example, by the repeat offenders in illegal logging. The KPK is also struggling to maintain independence. Police generals were considered for leadership of the KPK, and when the KPK accused a front-runner for police chief of corruption, it reportedly came under police investigation and harassment. Following a KPK-Police stand off, the case was handed over to the Attorney General, who gave it back to the police, which meant that the case halted.

Internally, military personnel are tried under military, not civilian, courts no matter if the crime was committed against civilians or not, due to Indonesia's 1997 Law on Military Tribunals. While military reform, specifically Law No. 4/2004 on the Supreme Court, placed the military courts under the supervision of Indonesia's Supreme Court, this has not seemed to have undergone implementation, as prosecutions of military personnel have continued with little external involvement, with each step in the process being led by military personnel. Other reforms have failed, such as the military tribunal bill under Yudhoyono which would have affirmed the equality of soldiers in regards to civil and criminal law, through amending the military court system. There was a Military Discipline Law passed in 2014 which did attempt to amend this, but it ended up being extremely limited and compromised, and instead reframed criminal offences as being disciplinary issues to be dealt with by the military. Instead, the Advisory and Supervisory Council for Military Discipline, an ad hoc institution crucial to monitoring and supervising military discipline enforcement, was implemented, though the effectiveness of such is unclear. The military tribunals have been perceived as legal institutions that protect soldiers guilty of crimes, as demonstrated by the 2014 Jakarta Post editorial cited above.

Despite these issues, there have been some adhoc demonstrations that measures are being made against personnel internally. In one case a lieutenant general was arrested and tried for four years for releasing TNI assets to a private company. However, such cases are not consistently released to the public, so it is unclear whether there is consistency in internal enforcement of sanctions.

Response to TI Chapter Reviewer: Agreed that some cases demonstrate public evidence of measures, however, these limited cases do not demonstrate any sort of consistency in enforcement. Score maintained.

Researcher4180: Whistleblowing is not encouraged despite there being a legal basis for whistleblower protection with law no. 13/2006 concerning witness and victim protection, though it is not focused on whistleblowers, but witnesses in general. However, this law stipulates that witnesses have the right to protection, with regard to security and freedom from threats, that can include new identities and places to live, as well as an allowance in order to enable this. In court cases, the Judge can allow the absence of the reporter, as well as the giving of testimony through electronic means, as stipulated in Law 13/2006. A Protection of Witness and Victim Agency (LPSK), established through this law 13/2006, decides which cases require such protection. Law 31/1999 regarding the eradication of corruption, furthermore, specifically deals with protection of witnesses in corruption cases, which stipulates identity of reporters of information cannot be identified. Due to the number of agencies involved, media reports and NGOs such as the Asian Human Rights Commission demonstrate that without co-operation, whistleblowers often end up victims of allegations themselves, especially of defamation, or face intimidation; a Detective Chief Commander General, who exposed corruption, was arrested through allegations that he had misappropriated operational funds, and the LPSK claimed they could not protect him as they required the co-operation of the police. Often investigations are perceived to be an intimidation tactic by media; a BPK auditor who uncovered corruption in the General Elections Committee was later investigated, though this was eventually halted. There have been no public cases within defence, but more broadly in some cases, whistleblowers have been prosecuted if they have been involved in the crime; one whistleblower who revealed a tax embezzlement scandal was prosecuted as it was found he had been involved in the case of corruption himself. Convictions have occurred amongst whistleblowers in all sectors, including the police, (including a Detective Chief Commander as mentioned above) above, and lawmakers from the House of Representatives including one who was convicted of bribery when exposing fraud. This has raised debate between legal experts, as some agree that this should occur, as perpetrators of crime may be freed of consequences for whistleblowing, whilst others argue this would not provide much incentive to report on illegal or corrupt activities.

In practice, furthermore, within the defence establishment a strong cohesion among military personnel discourages whistleblowing, despite there being some weak legal mechanisms in place to protect whistleblowing.

Response to Peer Reviewer 2: Agreed. Score changed from 2 to 1.

Researcher4180: There is no transparency, and therefore no information, concerning selection and vetting criteria, limitations in regards to time in post, including post rotation, or oversight of personnel in sensitive positions. Public information concerning these sensitive positions, including procurement officers and financial managers, is non-existent. There is no evidence of any restrictions regarding post-retirement activities for personnel involved in defence procurement, and one interviewee noted he was aware of colleagues who had gone on to work for companies in the private defence industry.

Response to TI Chapter Reviewer: This information does not qualify as special attention to identified sensitive positions.

Researcher4180: Detailed figures are not officially released by the government, so it is not transparent and is difficult to verify, but available secondary sources from 2009-2013 seem to list the same general figure of around 350,000-475,000 personnel within the 3 military services. These figures suggest a breakdown of 320,000 personnel in the army, accounting for around 75 per cent of personnel, 65,000 in the navy and 30,000-40,000 in the Air Force. There is no publicly available list detailing the numbers of civilian personnel within the Ministry of Defence; complicated by the fact that experts such as Sukma suggest that the Ministry of Defence is staffed mostly by uniformed personnel.

The score has been selected on the basis that information is not disclosed by the government.

Researcher4180: Currently pay-rates are transparent, with both the TNI and Ministry of Defence’s personnel rates publicly stated, including civilians. These are comprehensive, detailing different ranks or grades and the way in which these increase for each year's service. The allowance and benefits for military officers are also publicly declared.

The States Secrets Bill, however, which is being debated would include these pay rates as being confidential, which could mean they will not remain public. It would cover much of the defence sector; where almost all aspects of military life will be classified as state secrets. The bill has seen much debate within parliament and civil society, which stalled its emergence, but has recently seen a re-opening of discussion within the House of Representatives. Despite these discussions, the bill's future is still doubtful, as these were only preliminary and there has been a great deal of criticism from media, analysts and NGOs.

Researcher4180: There is no public information with regard to the payment process; while the figures of pay are published, the efficiency or mechanism of the system is not publicly reported on. In part, the lack of public information may be a result of problems not occurring as a result of late payment; base salaries are quite low, and supplemented through various co-operatives and other business interests, such as territorial command run-protection rackets previously highlighted, which means there are other sources of income.

Due to the formerly mentioned de-centralization process, much control was handed over to regional governments diluting the presence of central state institutions. The budget was not sufficient to cover all expenses of the TNI, one interviewee stated there were occasionally issues with late payments of salaries, but that this was not consistent and did not cause significant problems. Payment is non-discretionary.

Response to TI Chapter Reviewer: The document sourced specifies the remuneration system, but not the payment process and, therefore, not the system of payment. Score maintained.

Researcher4180: There is no public information concerning the mechanisms for appointments of senior personnel; public documents are limited to a pay rate figure, with little insight into the mechanisms behind movement between ranks, grades and postings. As such, there is no public evidence of a formal mechanism for objective based promotions which focus on meritocracy. While there is the Wanjakti, an adopted council that oversees promotions in the middle ranks, it is less clear if these operate at the highest appointments, and the degree to which these provide effective oversight, due to a lack of transparency, also remains unclear. For example, in the above report on the Indonesian Military Elite (2014), the analysts claim that appointments at the senior level are influenced primarily by personal ties. In one reported example, a General's senior appointment as army chief of staff, for example, was followed by a consolidation of his leadership position by allegedly appointing loyal classmates to senior positions. This is an ongoing theme throughout the report, which suggests such a thing is widespread. There are no objective job descriptions published.

Response to TI Chapter Reviewer: Disagree. This information has been added to the main comments, but the system or criteria isn't published, and they don't seem to impact senior personnel appointments. Score maintained.

Researcher4180: There is limited public information concerning the mechanisms for promotions; public documents are limited to a pay rate figure, with little insight into the mechanisms behind movement between ranks and grades. As such, there is no public evidence of a formal mechanism for objective promotions which focus on meritocracy. There are Wanjaktis, committees that review promotions, though it is unclear how effective they are or what elements they consider in the promotions process. For example, in the cited 2008 report on the military elite, promotion to consolidate positions is a common theme, and the boards do not seem to have made much impact on this, or making the process more meritocratic. Media reports tend to focus on the appointment of top officials, rather than less senior personnel. The interviewees stated there is no effective oversight outside of the chains of command, meaning promotions remain within their remit, and the lack of transparency concerning oversight would seem to corroborate this. The interviewee formerly in the TNI also noted that in his time in the army, which ended in 2010, he saw colleagues promoted who were perhaps not the strongest candidates; in some cases strong candidates were passed-over with no formal appraisal or reason given.

Response to Peer Reviewer 2 and TI Chapter Reviewer: Comments regarding Wanjakti accepted and incorporated in main comments. However, the effectiveness of these committees is highly questionable - as noted in the article on military elite, promotions appear to take place in the context of senior personnel attempting to consolidate their positions (see, for example, the report of a general promoting his classmates to senior positions in 2010). Score changed from 0 to 1.

Researcher4180: There is no compulsory conscription within Indonesia.

Researcher4180: There is no forced or voluntary conscription in Indonesia. A conscription act has been suggested, as has a military reserves act, which would follow the National Security Bill as this bill allows for conscription. All, including the National Security Bill, were delayed following public protests. They have, however, recently resurfaced. None of these have been approved by Commission I, so they have not yet become law, and neither have the new format of the bills been released to the public. This means it is unclear whether such procedures will be in place if the bills were to be accepted. For now, however, there is no conscription and therefore no procedures required.

Researcher4180: There is no evidence to suggest there are ghost soldiers on the payroll in Indonesia, but there is also no transparency with regard to personnel numbers, the payment system or process. The interviewee had not heard of this occurring during his service, but expressed doubt at the central government being able to find out if it were the case due to poor external oversight of the payment system. While there are low base salaries and the budgeting problems, as discussed previously, however, alongside other sources of income such as business interests, it seems unlikely that military commanders would need to use this method.

Researcher4180: It is extremely difficult to differentiate between chains of command and chains of payment in practice due to a lack of transparency, and the limited public information available on the payment process. While the 2012 government report above suggests that the Ministry of Defence’s internal functions would oversee payment of all soldiers, under the purview of the financial section, the interviewee noted that due to large levels of decentralization, whereby central state institutions are weakened in the regions due to delineation of power to regional institutions, there is often not much representation from the Ministry of Defence on the ground, especially in rural areas, which would suggest chains of payment would logistically have to follow chains of command. This is somewhat collaborated by literature on Indonesia’s significant decentralization programme, which highlights in a more general manner this delineation of power in governmental ministries. Therefore, limited evidence suggests they should be separate, but at times this is problematic in some cases in practice.

Other concerns arise from the fact that the Ministry of Defence is staffed largely by uniformed personnel. Experts suggest these personnel are more likely to follow the chain of command due to wishing to advance within the army, rather than the Ministry, which further blinds the distinction between chain of command and administrative function. This uncertainty, furthermore, in the separation between the two is exacerbated by the substantial off-budget income, and made more uncertain by the lack of public transparency. Analysts claim that the TNI operates these businesses in order to supplement low pay to personnel. As these businesses, as demonstrated, are run by TNI command rather than the Ministry of Defence, this suggests that payment from these sources follow the chain of command.

Researcher4180: There is a general code of conduct, named the Sapta Marga, as well as the Soldier’s Oath and the Eight Military Obligations which all focus on broad areas of discipline and conduct. These address general values rather than being specific to corruption. With regard to a more substantial code of conduct, the military are also expected to follow laws concerning criminal offences, which, while covering corruption, bribery, gifts and gratuity under the Anti-Corruption Law, are not strongly enforced in the sector. This has been previously demonstrated by questions concerning the KPK's abilities and jurisdiction to investigate the military, resulting in a low level of prosecution and enforcement. Laws and the code of conduct do not cover areas such as conflict of interest or post-separation activities. Soldiers are aware of oaths and the code of conduct, they are widely availability and distributed amongst the armed forces, and available publicly. However, there is less evidence available that demonstrates awareness of the legal system, with no public information concerning legal training or awareness building amongst personnel on a widespread basis.

Researcher4180: Due to a lack of consistent public information, it is difficult to assess the extent to which codes of conducts are addressed internally. Only some internal decisions are made public, generally those which are serious incidents, with many not being disclosed. Military tribunes can be established to prosecute military personnel for breaches, but public disclosure is again inconsistent. Internally, in regard to corruption specifically, the interviewee, a retired Major, stated that he was not aware of anyone being prosecuted for breaches, despite being aware of these activities. Due to the internal code of conduct not explicitly covering gifts and hospitality, conflicts of interest, and post-separation activities, furthermore, there is little evidence that such breaches have to be, or are effectively, addressed internally by the military structure despite gifts and hospitality being illegal under the Anti-Corruption Law. There is the suggestion by another interviewee that the military will deal with the perpetrators internally, though it is unsure of how consistent this is, through jail time, dismissal and in the cases of senior officers by offering early retirement or transferring them, as suggested by the above 2011 report looking at an officer's removal being linked to embezzlement at Citibank.

Externally, those accused of breaching these would now potentially be investigated by the KPK, due to its increased pro-activity formerly mentioned, and will face prosecution at a Court of Corruption which would result in fines and jail time. Despite this, the former lack of KPK involvement within the Defence sector means there are few public examples of this occurring.There are limited media reports available where TNI have been punished for corrupt practices such as selling ammunition or involvement in logging, but none covering bribery. Despite this, the lack of transparency makes it difficult to assess the process or its consistency.

Response to TI Chapter Reviewer: Disagree. One or two publicly reported cases does not indicate consistency in addressing breaches of the code(s). Score maintained.

Researcher4180: There is some public evidence of anti-corruption training taking place. The Ministry of Defence has published news items regarding anti-corruption seminars, though the detailed contents and effectiveness are unknown. The media has also reported on anti-corruption measures, such as training for 155 personnel. Further to this, more recently, General Moeldoko has stated that anti-corruption messages will be included in educational materials for TNI personnel. The interviewee did not attend any significant anti-corruption training whilst in service. Furthermore, as of yet there is no public information on how regular and widespread such training is, as well as how effective it is. Despite this, seminars seem to be repeated on at least an annual basis and are increasingly widespread.

Response to Peer Reviewer 2 and TI Chapter Reviewer: Agreed. Score changed from 0 to 2

Researcher4180: Military personnel are tried under military courts, not civilian courts, even it the crime was committed against civilians, due to Indonesia's 1997 Law on Military Tribunals. While military reform, specifically Law No. 4/2004 on the Supreme Court, placed the military courts under the supervision of Indonesia's Supreme Court, this has not seemed to have undergone implementation, as prosecutions of military personnel have continued with little external involvement, with each step in the process being led by military personnel; even in extremely public cases such as a TNI Officer who was arrested for assault, military personnel involved in fatal clashes with police in Batam over an illegal fuel storage depot, and murders occurring at a detention centre undertaken by military personnel. A debate concerning these problems within the House of Representatives, alongside Indonesia commitments to further reforms during the United Nations Universal Periodic Review of Indonesia’s human rights record in 2007 and 2012, has resulted in the passing of Military Discipline Law in the House of Representatives focused on further oversight of military discipline. This was an amendment of Law No. 26/1997. Through this an ad-hoc Advisory and Supervisory Council for Military Discipline will be established to monitor and supervise military discipline enforcement. Reports within media, however, suggest this may be insufficient if not implemented in a way that encourages transparency, and it is unclear how much civilian control will be implemented. It doesn’t change the military tribunal system, and it is difficult to assess the extent to which this law will change current practices where military courts often remain closed to the public which doesn’t allow for evidence of effective prosecutions.The system itself does not enable effective prosecutions, though the changes currently being implemented may positively effect this.

The KPK has the power to investigate corruption and bribery, but only recently has it begun investigations in the military, as demonstrated by recent commitments, meaning it is currently uncertain as to how effective investigations will be, as there have not yet been any public outcomes. Prosecution is undertaken in a Court of Corruption, overseen by an 'ad-hoc' judge. Whilst these are more public, there are no cases of the Court of Corruption superseding the military tribunal. Up to this point the military has essentially remained free of KPK investigation due to uncertainty that exists as to whether military personnel fall under KPK jurisdiction, demonstrated by their lack of involvement up until now. The KPK is also struggling to maintain independence. Police generals were considered for leadership of the KPK, and when the KPK accused a front-runner for police chief of corruption it came under police investigation and harassment. Following a KPK-Police stand off the case was handed over to the Attorney General, who gave it to the police, which meant that the case halted. Therefore, if this was to change, there would be considerable questions regarding implementation.

Despite these issues, there have been some adhoc demonstrations that measures are being taken against corrupt personnel internally. In one case a lieutenant general was arrested and sentenced to four years for releasing TNI assets to a private company. However, such cases are not consistently released to public, so it is unclear whether there is an internal consistency and it is not indicative of any policy in place.

Response to Peer Reviewer 2: Amended. However, I disagree that these limited cases represent any sort of policy in place. There are only limited examples. Score maintained.

Researcher4180: There is an Anti-Corruption Law, which does not specifically cover facilitation payments, though some elements of it are extremely vague and could be interpreted to incorporate facilitation payments. These wide ranging regulations are also demonstrated in law No. 20/2001, Amendment to Law No. 31/1999 on Corruption Eradication, and specifically Article 12B; which states any gratification for a civil servant or state apparatus shall be considered as a bribe. This does not specifically include or exclude facilitation payments. It has been applied in facilitation payment cases outside of the TNI, it has not yet publicly been applied to TNI personnel. As mentioned it is unclear as to the extent to which the KPK will succeed in its new intended involvement within the defence sector.

Facilitation payments are not discouraged within the Indonesian military, and there are currently no transparent effective attempts to prevent them; the interviewees noted that they are aware of facilitation payments occurring within the TNI with little in the way of criticism following. This, in line with the lack of prosecutions or announced punishments, suggest it is not something the TNI are particularly concerned about.

Response to TI Chapter Reviewer: In the article it is stated that uang pelicin, or facilitation payments, can be included within gratification and bribery. Score maintained.

Researcher4180: There is no reference to corruption in the codes of conduct within the TNI, and this omission continues into strategic doctrine. Strategic operations, such as those against separatist forces in Aceh and West Papua, furthermore, are reported to have led to an expansion of corrupt and illicit activities; with complaints emerging from NGOs, as well as research from analysts and think tanks, that demonstrate the TNI quickly used its dominant presence to engage in illicit activities and business. West Papua is a region where there is a lack of presence from central state institutions, due to legislation which grants significant power to regional governments. This weakened the presence of central institutions and their powers. The region also has a continuing independence movement and insurgency. This has created a situation where the most significant institutional power on the ground is the TNI, who have used this to further business activity, as can be seen in cases such as the previously mentioned prostitution rackets and timber smuggling. Despite complaints occurring from NGOs, and research from think tanks, the government has not publicly followed up with an official investigation or demonstrated that mechanisms exist for such a follow up. Corruption falls under the jurisdiction of the KPK, who has only recently demonstrated the intention to involve themselves in the Defence sector.

Response to TI Chapter Reviewer: The clauses in the Sapta Marga and the military doctrine are commitments to honesty and not harming people. This does not qualify as awareness of corruption as a strategic issue or even as an aspect of governance. Score maintained.

Researcher4180: There is limited public evidence of training commanders in order to ensure anti-corruption, though not always particular to deployment. According to the Defence Media Centre, 155 officers were trained. These also involve awareness talks from the KPK, as demonstrated by public news concerning anti-corruption training of defence ministry officials and TNI personnel. While the seminars focused on general regulations on corruption, this was within the context of the region of deployment or an operation.

With regard to the mishandling of corruption cases, deployment seems to be have been met with a proportionate expansion of corruption, as previously demonstrated, where regions such as West Papua that have a high military presence also have reports of military involved corrupt practices such as timber smuggling and prostitution rackets. While the involvement of senior level personnel in these activities is unknown, it is generally more accepted within research that TNI regional commanders run the large scale protection rackets, such as protecting mining interests in West Papua, which would suggest that either training is not particularly effective. The interviewee noted that he did not receive any anti-corruption training despite appointments in risk areas, and was not aware of his senior officers receiving any either.

Response to Peer Reviewer 2 and TI Chapter Reviewer: Comments accepted and added in main answer. Score changed from 0 to 2.

Researcher4180: There is no deployment of anti-corruption officers from the KPK, or any evidence of deployment of anti-corruption monitors internal to the military. In part this is due to the KPK previously not having a widely recognised mandate to investigate the defence sector. It is particularly difficult for practical reasons as well, especially logistically; the nature of insecurity resulting from insurgencies in the past in rural areas of Aceh and West Papua presents logistical obstacles to deploying non-essential personnel. Furthermore the KPK generally utilises investigators ‘on loan’ from the police and the Attorney General's Office, due to a lack of manpower within the organisation. This would potentially open up the potential for KPK to ‘loan’ soldiers, and there was the suggestion that the KPK was recruiting soldiers as investigators, which had the potential to ensure some form of anti-corruption presence, but this was denied by the KPK and also criticised by law makers and the military who stated soldiers should focus on the issue of national defence. This criticism and denial seems to have halted any suggestion soldiers be used for this purpose, and there has been no updated information on any progress towards this. The interviewee corroborated the lack of KPK personnel during his deployments, and was unaware of internal monitors.

Researcher4180: The interviewee noted that he was unaware of any training in this regard, despite being deployed himself during service until 2010. There is no public evidence available concerning such training taking place in regard to deployed operations and peacekeeping missions.

Researcher4180: The Indonesian military does not employ Private Military Companies. However, there is no legislation forbidding their use.

Contextually, there have been cases whereby private civilians served a security purpose. Pamswakarsa, or self-reliant security corps, were found to have been organised in part by the government and the military in order to smother unrest caused by students protesting against President Habibe in 1998, and the Commander at the time allegedly encouraged their formation. Therefore, militias have enjoyed some form of co-operation or have been ignored by the military due to them serving their needs. There also have been allegations from analysts and NGOs that the TNI has armed some sectors of pro-Indonesian society in west Papua, which is undergoing an secessionist insurgency, such as militia group Satgas Merah Putih and Satgas Papua for example, which is a possibility after the better documented assistance to pro-Indonesian militias in East-Timor, where integrationist militia groups, organised and assisted by the TNI, caused violence in East-Timor in order to influence a separatist referendum which led to a period of turbulence and conflict; resulting in East-Timor’s secession from Indonesia. These would not fall under the same scrutiny; as by their nature distance between militias and the military exist, and they were not held accountable to military law due to this distance. There is no evidence of accountability in regard to corruption, as there has been no evidence of accountability overall, including in relation to human rights abuses.

Despite this, both cases were not technically PMCs and ended a long time ago.

Response to Peer Reviewer 2 and TI Chapter Reviewer: Agreed. However, responding to scoring guidance, as regulation is not in place to forbid the military from using PMCs, a score higher than 2 cannot be awarded. Score changed from 0 to 2.

Researcher4180: There is legislation covering defence procurement which aims to make it a less corrupt process, through centralising and standardising the procurement process, which was previously decentralized due to the wider aforementioned decentralization legislation that transferred control of public expenditures to regions, allowing regional governments to develop their own procurement regulations. This also ensured a degree of oversight by involving multiple stakeholders such as the Ministry of Defence, Ministry of Finance, the State Ministry of National Development Planning (BAPPENAS) and parliament, which should, theoretically, assist in tackling corruption. Presidential Decree 80/2003, Presidential Decree 80/2006 and Presidential Regulation 54/2010 all attempt to move towards this more transparent process, whereby all procurement takes place in the specifically defined structure. In particular, Presidential Decree 80/2003 promotes basic principles of procurement being transparency, open and fair competition, efficiency (value for money), effectiveness, non-discrimination, and accountability. There is also legislation that is particular to defence, such as Law 16 of 2012 on the defence industry and Defence Minister Regulation No. 17 of 2011.

However, these have not necessarily provided a solid process, due to the complicated nature of Indonesian politics with regard to the aforementioned decentralization; while presidential decrees should supersede most other legislation, the large amount of decrees, regulations, and instructions in the 33 provinces ranging from Ministers, Governors, and Bupati’s (Head of administration) have confused the regulatory structure. There is a variety of legislation that is not particularly standardised. Regulation No. 17 of 2011 and Law 16 of 2012 legislation should, however, have contributed to the fair standardization of process despite the aforementioned challenges.

There is no evidence of exemption of any items from the aforementioned legislation.

In general, the legislation is not consistently implemented, especially with regard to monitoring and oversight, as demonstrated by the high percentage of potential price ‘mark-ups’, whereby middlemen, which includes officials, have expected sales commission that has resulted in a 30 per cent mark up in the past, and is now thought to account for at least a 10 per cent mark up. Monitoring and oversight are perceived to be inefficient. While auditing is undertaken by the BPK and through internal audits, there appears to be a lack of accountability. Co-ordination between the different stakeholders is weak, and there is a lack of expertise regarding defence procurement outside of the Ministry of Defence which challenges external oversight.

In July 2015, the President ordered a &quoute;fundamental overhaul&quoute; of weapons procurement processes, in response to an air force plane crash in which military personnel and civilians we killed. However, it is too soon to see any tangible results.

Response to Peer Reviewer 2: Accepted and the information provided is incorporated in the main answer. Score raised from 1 to 3.

Researcher4180: The defence procurement cycle process is not entirely transparent, with the earlier stages taking place within the Defence Ministry and TNI. The previous defence minister has provided a very general overview of this internal process.

First, there is a degree of internal planning, which is publicly demonstrated by the five year strategic plan and the overall plan aiming to reach a ‘Minimum Essential Force’. The details of these are usually made available in the military magazine Majalah Wira, which discusses the strategic plans. Once a requirement is identified, the military service involved will send the request further up the chain of command to the TNI headquarters, which decides whether or not to pursue procurement. Often, at this stage, brokers have already been involved in the process, and meetings have occurred concerning specifications. If they decide to continue with procurement of the specific item, they will begin to look at specifications and approach the Defence Ministry, whose internal procurement section under the defence facilities agency will analyse the request and specifications before it goes before a co-ordinating ad hoc body made up of the Ministry of Defence and the military services, who open it to bidders. Tenders are dependent on the item and pricing, with open tenders being public, limited tenders requiring five qualified bidders and direct negotiations for procurement costing IDR15million-50million. Once bidders are identified by the procurement inspectorate, the co-ordinating body will then submit it to the Ministry of Finance and the Parliament (particularly the Budget Commission and Commission I for Defence & Foreign Affairs) to execute the procurement. It is only the last stage that is particularly transparent, with the early stage involving internal deliberations that may already have been influenced by potential suppliers, due to the aforementioned involvement of brokers who often have links to companies, and will have discussed specifications with the TNI (as has been demonstrated by media investigations into the procurement process). This is corroborated by the interviewee and a former minister of defence who had stated in an interview with the Jakarta Post that he could not eliminate brokers or their fees from the process, due to a strong entrenchment of this system, despite regulations that attempted to prevent them.

There is an electronic procurement service, LPSE, that is utilised by the TNI and MoD. On it they post requirements, including information relating to scheduling and payment. This has made some elements of the process clearer, though the extent to which it is used is unclear as is what occurs following submission for a contract, beyond the above noted processes.

As mentioned in the previous question, the President called for an overhaul of procurement processes related to weaponry in July 2015, but there has been no observable change given this was very recent.

Researcher4180: Oversight mechanisms are in place both externally and internally. However, they are not consistently transparent, especially in the very early internal stages, in which there is no information released. There is some evidence that oversight can be successful, but this is limited and the successful cases involve only the latter stages of oversight, such as Parliamentary approval.

Internally, procurement goes through a dedicated procurement centre and evaluation team, and oversight is provided by a High Level Committee which involves other ministries and institutions, such as the State Ministry of National Development Planning (BAPPENAS), the Indonesia Bank and the Ministry of Finance. However, a lack of defence training external to the Defence Ministry results in a lack of expertise, which means there is a reliance on the Defence Ministry’s suggestions and insight, which the interviewee further highlighted. The result of this oversight is not transparent, so it is difficult to assess its effectiveness.

Externally parliament, specifically Commission I, has to approve all purchases over IDR 50 billion, and is involved in the execution of procurement. While this is not particularly effective, due to problems regarding parliamentary expertise, there have been occasions where the legislature has successfully blocked or delayed procurement. One example involves the purchase of F-16s from the USA. The Air Force attempted to purchase F-16s from the USA, though lawmakers in Commission I rejected the purchase, due to concerns of the previous arms embargo the US placed on Indonesia following the separation of East-Timor. Parliament eventually accepted the procurement which was undertaken in 2014. This case highlights the Commission can oversee and influence purchases, even if the reasoning is political, as procurement was stalled during the Commission's rejection of it. This is not always the case, whereby Leopard tanks, deemed unsuitable for Indonesia's security context, were purchased despite the lack of support from Commission I, which called into question the effectiveness of procurement oversight.

Additionally, both the KPK (the anti-corruption commission) and BPK (the state audit institution) legally have access to the procurement system and audits, which allows a degree of oversight. However,it is unclear whether the KPK has ever audited the defence sector and as mentioned previously, there remain issues regarding its jurisdiction over defence institutions. In October 2014, the KPK spokesperson stated that the KPK should oversee procurement processes at the MoD. However, according to another report in January 2015, the TNI General excluded oversight of procurement from the role the KPK could play in oversight of defence institutions.

BPK audits from 2008 and 2009 suggest that oversight is relatively consistent and effective. Jokowi has called for further oversight to be implemented following a plane crash that killed both military personnel and civilians, though this has not yet resulted in any tangible outcomes, given this was in July 2015.

As the Defence Ministry and TNI have began utilising e-procurement systems, transparency appears to have increased and oversight can be performed by external bodies. However, this is limited. The extent to which e-procurement is utilised, especially at higher levels of procurement, is unclear.

Researcher4180: It is not clear if there is a policy regarding the consistent release of information concerning procurements. Announcements are made by a variety of senior officials within the Defence Ministry, such as the Minister, Defence Secretary and their deputies, as demonstrated by announcements made regarding the procurement of Apache helicopters from the USA and Leopard tanks from Germany. Announcements are also made from the three forces, through both ranking officers' statements to media and the news sections on their respective websites; for example, the TNI Air Force released detailed information concerning the F-16 purchases, which it has updated. There have been cases whereby procurement plans or contracts have been made public by the providing nations, such as the USA, but this does not seem to suggest intentional secrecy; the bulk of purchases are made public. As there is no evidence of a standardised policy, it is unclear whether there are some purchases which are not disclosed.

Response to Peer reviewer 2: Agreed that many purchases are made public and tha many are made public, but there does not ppear to be a policy in place for consistent disclosure of purchases and as such it is difficult to verify whether there aren't some which 'slip through the cracks'. There has been contention before within parliament as they have not been informed about some purchases. For example, the Sukhoi deal in 2003, which admittedly was a while ago. Score maintained.

Researcher4180: As stipulated in Presidential Decree 54/2010, companies are expected to have signed a code of ethical conduct, an integrity pact, before they are able to bid for tenders and supply the government. This integrity pact is taken as an oath to not engage in corruption. An arms supplier who was interviewed noted that while they had to initially supply such a document, it was not followed up on or checked on for compliance. Additionally, there are no official or media reports that suggest this oversight exists, with no reports of companies being found guilty of transgressions, and a lack of transparency concerning the compliance mechanisms.

Researcher4180: There is a focus on modernizing Indonesia’s armed forces, and current procurement planning appears to follow that focus. There is a published Defence Capability Plan 2005-2019 and the Defence Strategic Plan 2010-2014, which focus on methods of achieving a minimum essential force, and provides a very general blueprint for acquisition planning in order to ensure weapon modernization. As this blueprint is vague, focusing on a broader policy shift, it does not expand on procurement requirements beyond the need to ensure procurement focuses on the purchase of modern equipment. A number of announcements concerning procurement suggest that the Ministry is following this blueprint, with the purchase of varied equipment such as heavy Leopard tanks, Apache attack helicopters and multi-rocket launcher systems - all modernizing equipment.

However, some are seen as being outside of requirements. For example, there was a debate concerning the suitability of Leopard tanks for Indonesian terrain. The debate concerning submarine purchases, whereby parliament debated the issue of submarine purchases and which ones would offer the best financial value, also focuses on utilising the budget in order to best meet Indonesia’s security concerns. The election of Jokowi may have refined this strategy; through his maritime doctrine where he foresees the purchase of submarines and other vessels in order to transform Indonesia into a significant maritime power, though this doctrine has only been outlined in speeches in public. Whilst details have been released, the whole doctrine has not. He has also expressed interest in focusing on procurement that allows technology transfer, as demonstrated by comments made to the German Chancellor, Merkel. Despite these strategies and blueprints, there is no publicly available auditing that occurs to ensure the country follows these guidelines with regard to purchases. However, currently these plans are vague enough that procurement can be extremely flexible.

Researcher4180: A number of announcements concerning procurement, made by senior officials in the Ministry of Defence and Army through media and Defence force websites, suggest that the Ministry is following the previously mentioned blueprint that focuses on modernisation and utilising the budget to meet a minimum essential force, with the purchase of varied equipment such as heavy Leopard tanks, apache attack helicopters and multi-rocket launcher systems. However, as this blueprint is vague requirements are not clearly identified.

Requirements are stated by TNI officials to their command, which is then handed over to the Ministry of Defence’s procurement team and the High Level Commission comprised of the Ministry of Defence, Ministry of Finance and BAPPENAS. Procurement over IDR 50 billion have to also be approved by parliament. There are some issues, such as the vague nature of the blueprint, which technically means any new or updated equipment follow the blueprint as long as it is more modern than previous equipment, as it is focused on the modernisation of the Indonesian Armed Forces. Despite this, the majority of public purchases suggest that this blueprint is adhered to. The debate concerning submarine purchases, whereby parliament debated the issue of submarine purchases and which ones would offer the best financial value, however demonstrated that there are occasions where the blueprint is used as a strict guide, as the debates focused on how to best utilise the budget in order to meet compromise between meeting Indonesia’s security concerns whilst seeking the best possible financial value. There have been some controversial cases which suggest that occasionally the blueprint is not followed, and some purchases have been criticised; in the widely publicised Presidential debate, for example, the question of Leopard tanks viability in an Archipelago with unsuitable terrain arose, showing differences in opinion. This was not restricted to the debate and was not purely opportunistic; the same debate also occurred in a parliament divided between those that thought the Leopard tanks did not necessarily meet the requirements of the blueprint due to the aforementioned issue, and those that justified purchases apparently on the basis that neighbours such as Singapore had already acquired upgraded tanks and they could be used in peacekeeping missions.

The definition of technical specifications required is problematic, as they are only generally laid out as demonstrated by the vagueness of the plans. Furthermore, brokers have been reported as being involved early in the process, whereby they work with the TNI to find its requirements and specifications, and then coordinate with a company which can provide these specifications; this often occurs before the procurement request reaches the Ministry of Defence, and demonstrates that often the TNI will have already been in contact with a company before the bidding opens. This influences the specifications that are initially required, which means the plan is not always followed but influenced by external actors.

Researcher4180: There is a degree of open competition, but it is difficult to ascertain the extent to which this occurs due to the lack of transparency at the bidding stage, whereby information is not publicly released regarding the bidders and the details of their offers. There is the Competition Act, Law 5 of 1999, which covers all sectors of the economy. Within defence, all tenders, beyond the lower priced direct negotiations, are expected to have a minimum of five bidders, but due to the role of brokers early on in the procurement process it is difficult to ascertain whether these are all viable options, or whether a particular company has already been chosen. Brokers have been reported as being involved early in the process, whereby they work with the TNI to find the requirements and specifications regarding specific tenders, and then coordinate with a company which can provide these specifications; this often occurs before the procurement request reaches the Ministry of Defence, and demonstrates that often the TNI will have already been in contact with a company before the bidding opens. This is publicy evidenced, and confirmed by the interviewee. One element that reduces the degree of competition is the current focus on domestic defence industry, which favours domestic companies due to a presidential decree, the Law on the Defence Industry (No. 16, 2012); Indonesia is attempting to develop its domestic industry, which means unless there is significant technology transfer or domestic companies lack capabilities, domestic companies are the preferred suppliers and procurement will be sourced from them. Some defence companies are also state owned, and are awarded contracts despite problems arising which suggest they may not be the best choice. One example is PT-PAL Indonesia's construction of a shipyard that was meant to produce Chang Bogo Class submarines, which required a further grant of $250 million and was delayed. Due to a lack of comprehensive information on tenders within the defence sector, it is difficult to assess the percentage of single sourcing, but, due to these issues with regard to competition, it seems unlikely Indonesia would be above average in this regard.

As the Defence Ministry and TNI have began utilising e-procurement systems, transparency has increased which would allow greater competition. However, this is limited. It is unclear as the extent to which this E-procurement is utilised, especially at higher levels of procurement.

Researcher4180: There is no transparency with regard to the practices of tender boards, as these all operate internally and release very little information. However, it is understood that personnel on tender boards and committees have to sign a code of ethics, and are expected to gain a certificate of proficiency. However, these are broad standards and it is difficult to assess whether this takes place in defence.

The code of ethics is not publicly available. Tender boards can be audited by the BPK, though there is no publicly released information that this has occurred within the defence sector, and there are no reports concerning this. It may be the case that tender boards within defence remain outside of the purview of standard procedures and oversight.

Researcher4180: There is legislation, specifically Law No. 5 of 1999 concerning the Prohibition of Monopolistic Practices and Unhealthy/Unfair Business Competition aimed at preventing monopolistic practices, which covers collusion. If collusion is found to have occurred by the Business Competition Supervisory Commission (KPPU), it can halt tender bidding during the investigation, and impose sanctions and class actions where the KPPU acts as prosecutor and judge.

Despite this being legally enforceable, there are no public cases of KPPU investigation or enforcement within the defence sector. The code of conduct signed by suppliers also includes elements of anti-collusion, and states that this practice is not to be pursued. The interviewee, however, had also found little evidence of enforcement in the past, though it is unclear whether this is due to a lack of cases of collusion occurring in defence or due to a lack of enforcement in cases of collusion.

There is, however, evidence of vulnerability to corruption in the process, as was discussed in Question 63. Brokers have been reported as being involved early in the procurement process, whereby they work with the TNI to find its requirements and specifications, and then coordinate with a company which can provide these specifications; this often occurs before the procurement request reaches the Ministry of Defence, and demonstrates that often the TNI will have already been in contact with a company before the bidding opens.

Researcher4180: There is no public information concerning defence procurement staff in particular, but all procurement staff follow the same training process. There is a procurement division within the Ministry of Defence. In response to World Bank, Asia-Pacific Economic Cooperation (APEC) and OECD reports and recommendations in 2001 that noted training was particularly insufficient in the procurement process, Indonesia enacted reform to ensure training. The Asian Development Bank also noted that aforementioned decentralisation which granted significant powers to regional governments had created problems associated with the training of procurement officials, due to the differing systems and variance in the capacities of regional governments to train staff. This training has proved relatively comprehensive and standardised in comparison to the previously lacking process, but is still open to problems. Procurement officers are expected to have a procurement practitioner’s proficiency certificate, whereby potential officers are tested through Indonesia’s National Procurement Officer Training Examination on their knowledge of the procurement process, the legislation that regulates it, as well as their integrity and awareness of corruption. These are administered by the LKPP (Lembaga Kebijakan Pengadaan Barang/Jasa Pemerinth) or the Government Procurement Policy. There have been problematic elements, however; while this examination demonstrates elements of knowledge, initially officers were tested before training began, and only trained further if they failed the test which is not demonstrative of being particularly comprehensive when the test was multiple choice. Furthermore, officers are not assigned specific areas of procurement and are subject to post rotation, and it has been noted by reports from OECD that officers are subject to low salaries and no satisfactory career path, which reduces efficiency and empowerment.

In response to the OECD, Indonesia has highlighted the following areas where workshops and training take place; general policy of procurement of goods or service; comparison between Presidential Decree No.80/2003 and Presidential Decree No.18/2000; legal aspects of procurement of goods or service; preparation of procurement of goods or service; valuation of post-qualification and pre-qualification (qualification valuation); and tax aspects in procurement of goods or service with state budget/local budget burden. However, it also stressed that each department/government agency performs procurement training for its own purpose.

There have been media reports to suggest this training may not have been as successful in the defence sector, but these are not comprehensive or particularly clear, and are also dated. The interviewee noted that the procurement staff he had interacted with in the past seemed empowered and well- trained. Such training has been publicized by the ministry of defence, which has held seminars for procurement officers to equip personnel with technical training and knowledge of legislation, the processes of procurement and various other factors.

While there is likely to be progress in terms of the ability of procurement personnel to hold contractors to account, corruption scandals which are indicative of the role of brokers and suppliers early on in the procurement process signifies remaining inefficiency and the likelihood of senior officials being able to unduely influence the process. There is no available information on staff shortages or rotation.

It should be noted that the President has order the overhaul of weapon procurement systems and management following a military plane crash, in July 2015.

Response to TI Chapter Reviewer: The information provided had already been factored into the main comments. However, as the inefficiencies highlighted above remain, score 2 is maintained.

Researcher4180: Mechanisms exist in regulation, especially Presidential Decree 80/2003, but these are vague and have not yet resulted in much application in the defence sector. Complaints can be made to both the procuring agency and its Minister, with the right for judicial review, and this is corroborated by the interviewee who noted that if there was a problem they could contact the internal procurement office in order to complain. Despite this, this is not an independent or external process. Whilst there is also an external body established by Presidential Regulation 106, the National Public Procurement Agency (NPPA), and whilst it aims to provide an independent procurement complaints and dispute resolution body, it is not a mandatory agency, and therefore it can be circumvented. There is no evidence that the Defence Ministry has involved itself with this agency. Complainants can also resort to contacting an attorney or the police so that the complaint may eventually be ruled upon in a court of law. As long as there is no independent or external complaint mechanism, it is unlikely complaints will be made by domestic companies; the interviewee stressed that it is important to note that the TNI is perhaps one of the only clients, or at least the main client, for these companies. Any complaints made, internally, are generally avoided due to concerns that it may affect future business dealings, if a complainant is made known to the military they may effectively sanction that business which would prove costly. Complaints cannot be anonymous, but have to be included with data about reporting person's name and address, and a copy of identity card or another identification, which exacerbates this concern. There is no public information concerning complaints made by domestic businesses.

Researcher4180: Sanctions do exist in the form of a black list that can be either temporary or permanent depending on the severity of the activities, though the extent to which this blacklist is used and whether companies were added to the list due to corrupt activities, is unclear. Based on article 49 verse (1) Presidential Decree No.80/2003 companies are also liable for penal sanctions in the case of corruption, which include the ability for the government to claim compensation, charge under civil law and report problems to the criminal code procedure. Under the anti-corruption law, furthermore, companies may be fined between 50 million and 1000 million rupiah and management may be imprisoned for up to 20 years. A list of companies blacklisted is available on the Indonesian Procurement (INAPROC) website and a typical sanction appears to be for a two year period.

In terms of the application of sanctions, the strength of links between the domestic defence companies and the military is to be noted as a risk; often retired military personnel can be found on the boards of the larger defence companies, who are expected to assist in the relationship between the two entities. The interviewee noted that he/she was aware of extreme cases, though he/she was unwilling to elaborate further.

Researcher4180: There is evidence that Indonesia is being particularly diligent with regard to its offset policies, but it is difficult to analyse due to the relative youth of offsets in Indonesia, with policy only being enacted in 2012 through Law 16/2012 (Article 43, Paragraph 5). Before negotiating its first offset contract, Indonesia ensured that the policies underwent a process to ensure there were clear and centralised guidelines in place, whereby percentages of offsets were set, through learning from other countries and holding a conference with interested stakeholders and experts from all over the world. Offsets are viewed as being particularly important for the viability of Indonesia's future defence industry, as they can improve indigenous industrial capability and provide technology transfers, demonstrated by hopes that a seminar on offsets at the recent Indonesia Defence exposition would increase the potential demand for offsets.

Despite this, however, the policy does not include clauses on any areas of anti-corruption, and it is unclear the extent to which offsets are audited despite defence offsets being overseen by the dedicated body, the Defence Industry Policy Committee (KKIP). Media reports have highlighted this lack of transparency and controls as being problematic which will potentially provide challenges to the offset policy. This suggests that due diligence, especially in the realm of corruption, is not effective following the diligence of forming the policy.

Researcher4180: Only very vague details are released to the public, usually in ad-hoc media reports or vague comments from senior officials concerning the initial costing or ideas in regards to offsets contracts in major purchases (for example the details provided in the above report about submarine purchases in South Korea, that had a degree of offset). Some programs, such as the SIGMA-class Corvette and the KF-X project were more public. The interviewee from the newspaper stated that it was difficult to find details, however, of all programs. There is no expansion, or policy for expansion in place, in regards to details of investments, full list of contracts or a detailed programme. Performance, too,completely lacks transparency; there is no publicly released information regarding the follow up of offset programmes.

Response to Peer Reviewer 2: Comments accepted and incorporated above. However, for score 2, the release of information needs to be more consistent. Currently it appears to come from external sources, and not all programs are released publicly in any sort of detail. Score maintained.

Researcher4180: There is no public information concerning competition surrounding offset policies, and it is not covered in the (relatively) new policy regulating offsets, Law 16/2012 (Article 43, Paragraph 5) . Offsets are relatively new, being in place only recently, which makes information extremely limited. The interviewee was not aware of different policy, and suggested offsets fall under the same laws as that of normal tenders. However, due to a lack of transparency concerning competition, and the lack of comments or documents concerning this, this is difficult to corroborate.

Researcher4180: Agents are seen throughout the procurement process in the form of brokers. There is no legal framework that addresses their use, and the position of the government appears to be of relative acceptance as long as their fees are not too high, as demonstrated by a former defence minister's comments in a report accoridng to which he had stated to his chiefs of staff (during his time as defence minister) that he could &quoute;tolerate 'market price fees' for procurement&quoute; and commissions of 8-10 per cent. Often these brokers are involved in the planning stages themselves, especially regarding domestic purchases, whereby they will be consulted by TNI officers in order to work out the specifications of the required equipment, which suggests that it is an acceptable practice. This is because the technology assessment procedure, one of the stages of procurement is, according to the above report, ‘highly specialized, [and] it is difficult to expect competition once the tech specs [specifications] are hard-wired to the benefit of a certain provider‘ which encourages brokers to get involved in the process at an early stage to best ensure these specifications compliment their clients products. Additionally, oversight at this stage is minimal as the High Level Commission and Ministry of Defence are not yet involved. There is additional evidence, in the form of media reports and interviews, that they are also used quite extensively with foreign purchases, as detailed in the above news report that investigates one prominent broker, due to their knowledge of equipment, language skills, and ability to fund TNI officer’s trips to meet potential suppliers. The use of brokers and agents seems to add a significant cost to the procurement process as it is often accompanied by a high commission; Sudarsono suggests that before this resulted in up to 30 - 40 per cent of the total cost. The interviewees, who operated on different sides of the process, confirm the prevalence of the use of brokers.

There have been movements to reduce the use of brokers, specifically through Yudhoyono's calls to end the practice and the use of government-to-government proposals. However, Yudhoyono's calls were not followed by any coherent policy, and the effectiveness of government-to-government contracts is unclear.

Response to Peer Reviewer 2: Comments accepted and incorporated in main answer. However, there is no real evidence that this has been effective, and it is particularly limited to major projects, leaving many minor projects open to the use of brokers and intermediaries. Score maintained.

Researcher4180: Financial packages surrounding procurement are not consistently released to the public, as there is no standardised policy concerning the release of defence purchases, and, therefore, information such as detailed breakdown of financial packages. Often large purchases are announced as having a certain cost, but there is no breakdown or detail concerning the package as a whole; for example, information concerning the purchase of F-16, Leopard Tanks and Apaches were all released through media through senior officials or TNI officers, and were accompanied by an overall cost. Sometimes, as was the case with submarines cited above, it is stated that loans are undertaken, but with no additional information, including the bank or entity that issued the loan. The interviewee argued that journalists and the media find it easier to gain information concerning financing packages from the sales country, rather than Indonesia, due to the lack of consistency in the releases of information, and the lack of transparency demonstrated through this limited lack of information, and due to the aforementioned lack of standardised policy. Examples of such, that would potentially corroborate these claims, can be seen in the case of the Leopard Tanks, where Rheinmetall, the German company supplying the tanks, released public information concerning the purchase on the website.

Response to TI Chapter Reviewer: Agree with comments but disagree this changes the score. It is one case, and the financial package was not released by the government. Score maintained.

Response to Peer Reviewer 2: Agreed there is variation, but the level of inconsistency and limited information prevents a higher score from being awarded. Score maintained.

Researcher4180: There is no requirement that sub-contractors or subsidiaries adopt anti-corruption programmes nor is there any transparency with regard to adherence of codes of ethics (or equivalent) and monitoring mechanisms in relation to them. The main contractor will be required to sign a code of ethics which covers corruption, as aforementioned, but following that there is little monitoring in place and the interviewee stated that sub-contractors are not required to sign the code of ethics. This appears to be corroborated by the above report (albeit from 2005).

Researcher4180: There is little in the way of procurement that appears to come about from political influence externally, but there are some internal political dimensions. Indonesia's procurement is currently following quite distinct needs; as aforementioned, the country is focusing on modernising its equipment due to seeking a minimum essential force by 2024, and its arms purchases, which include modern equipment such as F-16s and Apaches seem to reflect that. Indonesia also sources its purchases from a wide array of countries with different political backgrounds, including tanks from Germany, aeroplanes from the US, submarines from South Korea and planes from Russia.

There has been some political opposition from the House of Representatives to purchasing F-16s from the US, due to the US decision to impose an arms embargo on Indonesia due to NGO allegations that Indonesian military was complicit in the violence that occurred when East Timor held a referendum for independence. House members stated fears that if the embargo were to occur again it would make maintenance extremely difficult, as they would not be able to buy required spare parts. However, F-16 purchases continued, though they were initially delayed by this debate, which suggests this politically influenced concern has waned and Indonesia appears to be approaching traditional arms suppliers like Germany and the US with more frequency, which shows an element of progress from before when it had to seek other suppliers due to these embargos. Despite this, there are still concerns over the previous US embargo, which has seen a degree of a shift towards Russia, which appears to be politically motivated, in part. Russia appears less concerned about arming Indonesia in comparison to the concerns triggered in Germany, the UK, or the US. This may influence Indonesia to purchase elsewhere. Furthermore, Russia has no conditions on the usage of weapons sold, unlike the US, which also seems to have motivated this shift in part. However this also has economic dimensions; due to aforementioned budgetary issues, whereby the TNI was viewed as being under-budgeted and much of this budget was dedicated to paying personnel, Indonesia has on occasion based its purchases partly on financial considerations. One such example is Indonesia’s purchases of Russian arms, such as Sukhois, which were facilitated by extensive loans and soft credit schemes from Russia, totalling around $1 billion. It is unclear as the extent to which this will continue in light of Jokowi’s plan to almost triple the military’s budget, as such changes have not yet been implemented.

The only remaining political influence seems to be internal, rather than external, in nature; Yudyohono, the former Indonesian President, had called for a focus on expanding and developing Indonesia's internal defence industry. This was reinforced with Law on the defence Industry, a regulation mandating that armed forces should purchase domestically if possible to encourage growth and viability, as well as self-sufficiency. Through this law a Committee for Defence Industrial Policy (KKIP) was established in order to bring together arms requirement planning and the ‘domestic industry’s production master plans’. Media reports suggests that, therefore, ‘TNI/defence Ministry is also required to adjust its procurement procedures to accommodate industrial sustainability.’ This focus can be seen in Indonesia’s willingness to use domestic shipyards for submarine purchases, even though these shipyards, due to inefficiency and lack of development, have delayed the construction process and delivery of these submarines. Jokowi is seemingly reinforcing this focus with his announced intention to seek arms purchases from Germany, as he hopes these purchases will result in a degree of technology transfer and allow the continuing development of the domestic industry.