Indonesia losing $16bn a year to theft

Indonesia losing $16bn a year to theft

By John Aglionby in Jakarta

Published: May 15 2008 16:21 | Last updated: May 15 2008 16:21

Indonesia is losing $16bn a year in natural resources to illegal logging, fishing, and mining but will be able to do little about it until military and civil servant salaries are significantly increased, according to the country’s defence minister.

New data released yesterday showed that Indonesia’s annual rate of economic growth in the first quarter of 2008 reached 6.28 per cent.

But economists estimate that the annual theft of natural resources equates to 3.7 per cent of the country’s gross domestic product and cuts a full percentage point off the country’s growth rate.

Juwono Sudarsono, the defence minister, said elements of the security forces, particularly navy personnel, were participating in the natural resources theft and were likely to continue doing so until they were paid more.

Many junior officers earn less than $200/month and are being offered 3,000 times that amount to facilitate crime, Mr Sudarsono said, adding the corruption extends up the chain of command.

Indonesia’s military will need $10.75bn this year to operate but will receive only $3.2bn from the government, said Mr Sudarsono, a reformist who has long argued for greater pay for the country’s soldiers to address corruption. “It’s all about money. You can’t save $16bn with a $3bn budget. We cannot eliminate [the theft of natural resources], only reduce it.”

The data on stolen resources was compiled by the fisheries and maritime affairs ministry. The stolen goods include forest, fish, petroleum and mining products and piracy.

Indonesia, an archipelago of 17,500 islands and with 90,000km of coastline, has extremely porous borders and has been one of the world’s piracy black spots.

Kusnanto Anggoro, a military analyst at the Centre for Strategic and International Studies in Jakarta, said the theft of natural resources was being done at the individual level to make money rather than as institutional policy.

Three years ago Mr Sudarsono launched an investigation into the 1,500 businesses, charities and cooperatives run by the military to augment their budget. He said on Thursday that only six were found to be commercially viable, with paid up capital of more than $30,000 and all but some of the cooperatives run by and for junior ranks have been closed.

Mr Sudarsono said he was working with all relevant departments, such as customs, maritime affairs, the police and home affairs to combat the threat of corruption.