All payments to the military should be voluntary and made through a civilian agency, not directly to soldiers or police, Juwono Sudarsono said, citing regulations that could be complete "as early as next week."
His comments follow claims that direct payments by U.S. mining company Freeport McMoRan Copper & Gold Inc. to officers commanding units guarding its massive gold mine in Papua province may have been illegal.
The New Orleans-based company has denied violating Indonesian or U.S. laws, saying it has been transparent about providing support to soldiers in the town of Timika.
Sudarsono said the practice of paying for protection from the armed forces was not limited to Indonesia, but should be regulated and clearly defined.
"All across the world ... in-kind payments are made in various kinds of arrangement, some legal, some illegal," he said. "It's a matter of scope and degree."
The use of military units to provide protection for foreign enterprises was instituted by former dictator Suharto, himself a five-star general, as a way of extorting additional funds for the military brass who formed his principal power base. But since Suharto's ouster in 1998, the police force -- previously been part of the armed forces -- has been made independent and is now tasked with ensuring domestic security.
The practice of paying Indonesia's corrupt and often brutal military came under renewed scrutiny after a 2002 attack on a convoy of teachers working at Freeport's massive mine in Papua killed two U.S. citizens.
Local and foreign rights groups accused soldiers of taking part in the attack, allegedly to extort more security payments money from Freeport.
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