Indonesian Army soldiers watch from their armored vehicles during a security preparation in Denpasar, Bali, Indonesia, May 8, 2006

A new report by a human-rights group says the Indonesian military's business operations put human rights in the country at risk.

The report by Human Rights Watch, a New York group, says the Indonesian military's involvement in business ventures fuels human-rights abuses in the country and leaves the military beyond government control.

Human Rights Watch Asian Division Executive Director Brad Adams says the military, known as the TNI, businesses are harming the government's efforts to reform and professionalize the institution.

"Our report documents how the military continues to commit human-rights abuses in the name of making money. This is not surprising," he said. "In fact, in our discussions with the Ministry of Defense and the TNI, no one has disputed this central finding, that military financing as it currently exists does lead to human rights abuses."

The Indonesian military has long raised money outside the government budget. Many Indonesian and international-rights groups have said the military's business networks include illegal ventures such as protection rackets, mining, logging, and extortion. These are areas where abuses of civilians are likely.

The government passed a law in 2004 requiring the military to withdraw from all business by 2009, but have not yet adopted regulations on how the government will take over legal businesses.

In March, the military declared that it owned more than 15-hundred businesses, many of them collapsing after years of mismanagement.

The military says its budget is too low and meets only about half its needs. Military leaders also deny most allegations of human-rights abuses by troops and say they are working to halt corruption in the ranks.

Human Rights Watch agrees the defense budget is low. But the group says the problem is not as severe as the military often states, because the military draws funds from other government accounts, but not in a transparent manner.

The main researcher and author of the report, Lisa Misol, says the people of Indonesia pay a price for the military's activities - because troops often use violence and intimidation to protect the military's business interests. She called on the government to enforce the 2004 law.

"We call on the Indonesian government to take a serious look and to address this question full square and eliminate the exceptions and enforce the ban, address the defense budgeting in a transparent and accountable way, and stop military business once and for all," said Misol.

The report says the government must agree on an appropriate defense budget that is strictly monitored and reported accurately.