Mismanaged state assets
sources of corruption

Ridwan Max Sijabat, The Jakarta Post, Jakarta

Take a sightseeing trip in any major city or other urban area and you will perhaps find on a piece of deserted land or unoccupied buildings placards reading, ""Tanah ini milik Depsos"" (this land belongs to the Social Affairs Ministry), ""Tanah ini milik Kostrad"" (this land belongs to the Army's Strategic Reserves Command), or ""Gedung kosong ini milik Dinas Pertambangan"" (this deserted building belongs to the local mining and energy ministry office).

A question will immediately spring to mind: Do such state assets belong to government offices and do the latter have the right to sell state assets to third parties?

The Indonesian Air Force had already sold its headquarters, located at a strategic site on Jl. Gatot Subroto, Jakarta, to the private sector before it moved to Cilangkap several years ago. The police in Bandung, West Java, are still negotiating with a holding group on the ruislag (sale) of personnel accommodation in a strategic location in the city. The Medan, North Sumatra, military plans to sell a barracks in Padang Bulan in the city, occupied by cavalry personnel, to a noted businessman.

A local military official said the planned sale of the cavalry barracks had won approval from the Indonesian Military leadership and the finance minister. He argued that the funds from the sale would be used to purchase a larger site on the city's outskirts on which a larger barracks would be constructed to accommodate more cavalry personnel. But he declined to say for how much the barracks was sold and how it would appear in accounts.

Sri Sumantri, a professor of constitutional law at Jayabaya University, criticized the government for having mismanaged (fixed) state assets such as land and construction, saying the government and military could not claim the state assets as their own.

""In this case, both the state and government must be separated in term of functions or the government should not take over the functions of the state. The government is only the user; it must be open about the accountability of state assets and cannot sell them to third parties without the approval of the House of Representatives,"" he told The Jakarta Post.

Sri emphasized that the issue had to be brought out into the open, especially in view of the recent controversy over the award by President Megawati Soekarnoputri of a US$1.3 billion real estate project at state-owned Kemayoran township, Central Jakarta.

""The questions are why the management of a state asset and of the Senayan sports complex have been handled by the state secretary; does he have authority to rent it to a private third party, ie. PT Theda Nusantara Persada (TPN), controlled by the President's eldest son?"" he asked.

The Supreme Audit Agency (BPK) has discovered irregularities at the State Secretariat with regard to mismanagement of the two plots of land in 2000 and 2001, but so far State Secretary Bambang Kesowo has denied any wrongdoing concerning the management of state assets or the awarding of the project to a member of the President's family.

The House of Representatives once investigated alleged irregularities when the President provided Rp 30 billion in presidential aid that was raised from government income from the Senayan compound, to rehabilitate police and military barracks in January, 2002.

Abdul Muis, executive director of the Kemayoran New Town Authority (DPPPKK) has conceded that the former international airport site has belonged to the state since 1985 but nothing from the site's rental income has been handed over to the state.

""DPPPKK's annual income has been used to cover our annual budget and develop the area to become a center of information and an international exhibition center, as stipulated in the Jakarta Spatial Zoning plan,"" he said.

Arifin Soeria Atmadja, a professor of state administrative law at the University of Indonesia, concurred, saying that fixed state assets have been a source of corruption for government officials, as they have been badly mismanaged.

""Certain officials, in the name of their institutions, have taken personal financial advantage from such deals, including the ruislag and land lending, which are really against the Dutch Indonesisch Comptabiliteitswet (ICW), still effective in the country,"" he said.

He said state institutions and government offices had no ownership rights over the land or buildings they utilized.

""According to the law, they have authority to utilize land and buildings provided by the state but they have no rights and authority to sell them to third parties. If they no longer need the assets they should return them to the state,"" he said, citing as an example that state assets in the U.S. are managed and procured by the general accounting body.

""If the government wants to lend or sell state assets to third parties this, according ICW, must gain approval from the volkskrad (House of Representatives). Thus, state asset sales are against ICW because they did not gain approval from the House,"" he said.

He added that so far no data existed on fixed state assets.

Sri and Arifin hailed the treasury bill that the government has already submitted to the House to allow for more transparent management of state assets.

They said it was the legislative right of the House to decide who or which agency should manage state assets. ""If the House decides to entrust the authority to the finance ministry, as stipulated by the bill, it has a legal basis because the finance minister has an obligation to produce an annual balance sheet of state assets,"" said Arifin.

Abdul Muis also supported the two experts' other alternative -- to request state universities, rather than state institutions, conduct an indepth study to produce recommendations on how state assets should be managed.

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