JAKARTA - Finance Minister Sri Mulyani Indrawati has encouraged the National Armed Forces and the Ministry of Defence to improve their budget management and spend their allocations in the 2020-2024 Minimum Essential Force (MEF) appropriately.
“Not only the amount, but the [budget] management needs to be [improved] to avoid inappropriate use of the allocated funds,” said Ms Indrawati at the 2020 National Armed Forces Leadership Meeting at the National Armed Forces Headquarters in Cilangkap, East Jakarta on Wednesday (29/1).
Indonesia’s military expenditure allocation, said Ms Indrawati, is ranked third nominally (in US dollar) among countries in the region. However, the allocation is still low relative to its ratio against the GDP and the ratio of the government’s total expenditure because the majority of military expenditure is aimed at military personnel.
“That is why we have problems building our defence equipment, because most of the budget is spent on [military] personnel only,” said Ms Indrawati.
In addition, Ms Indrawati also explained that the Armed Forces are entitled to tax facilities including VAT exemption for the import and/or handover of certain taxable goods in accordance with Government Regulation No. 38/2003, and for the import and handover of certain transport equipment in accordance with Government Regulation No. 50/2019.
“We will not tax the purchase of defence equipment. I don’t have a problem with the purchase of defence equipment such as bullets, aircraft, and submarines,” Ms Indrawati affirmed.
“However, I do have issues with—and hopefully this will not happen—the Armed Forces being used by a third party to import goods unrelated to the military. That, I will not tolerate.” (MS)