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Indonesia defense expenditure to reach $9.7 billion by 2028, forecasts GlobalData


Jul 25, 2013
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With a total defense budget of $8.8 billion in 2023, Indonesia presently ranks as the second-highest military spender after Singapore in the Southeast Asia region. Driven by ongoing defense modernization initiatives, the country’s defense expenditure is forecast to reach $9.7 billion by 2028, according to GlobalData, a leading data and analytics company.

GlobalData’s latest report, “Indonesia Defense Market Size and Trends, Budget Allocation, Regulations, Key Acquisitions, Competitive Landscape and Forecast, 2023-28,”Australia Defense Market Size and Trends, Budget Allocation, Regulations, Key Acquisitions, Competitive Landscape and Forecast, 2022-27’ reveals that the country’s cumulative defense spending is anticipated to touch $46.6 billion from 2024-28, out of which the acquisition budget share is estimated to be approximately 28.4%, amounting to $13.3 billion. The defense acquisition expenditure is expected to register a compound annual growth rate (CAGR) of 1.5% over 2024-28 and reach $2.7 billion by 2028.

Abhijit Apsingikar, Aerospace & Defense Analyst at GlobalData, comments: “ Indonesia’s defense budget is majorly driven by the need to mitigate natural disasters and undertake military modernization initiatives. The country is looking to expand its defense posture as well as augment its indigenous defense manufacturing industrial complex through military modernization initiatives. Furthermore, increasing fundamentalism has aggravated the threat of terrorism, which coupled with online radicalism, has compelled Indonesia to heavily invest in cybersecurity and counter-terrorism apparatus.”


Over the period 2018-23, Indonesia sanctioned several defense deals to modernize its air force fleet, including the acquisition of 42 Dassault Rafale as well as 24 F-15ID multirole strike fighters. The country also invested in modernizing its airlift capability and signed a contract to acquire two units of the A-400M Atlas transport aircraft.

Apsingikar continues: “Although the focus on expanding the domestic defense industry slightly curtails market opportunities for international manufacturers and exporting countries, Indonesia’s burgeoning economy, coupled with its expanding defense modernization needs, offers several opportunities for mutual cooperation.”

Indonesia’s current cooperation with South Korea over the KF-21 Boramae project offers a template for future engagement with the country. Owing to the need to secure a vast geographic area spread across more than 17,000 individual islands, Indonesia is anticipated to continue investing heavily in defense, especially through joint developments and production of defense equipment. This, in turn, offers an effective option for foreign defense OEMs to enter the Indonesian defense market.

Apsingikar concludes: “Although the Indonesian defense budget is relatively small, the country’s robust economy assures a stable outlook for defense expenditure over the next five years. The country has already signed a deal to acquire 24 units of Sikorsky S-70M Black Hawk helicopters over next few years. Indonesia is also anticipated to emulate Philippines and close a deal for the acquisition of the Brahmos missile system. These acquisitions indicate the country’s intentions to continue modernizing its military fleet, despite budgetary limitations.”

Unlikely we will order F15 EX in my opinion based on my analyst

1. President and Finance Minister in my opinion will not approve it
2. Ganjar Pranowo is likely becoming our next President and he is unlikely to follow Prabowo plan in defense acquisition if he is elected as our new President. The guy will likely be head to head with Prabowo for our 2024 Presidential Election second phase with just 2 candidates.


This thread is for Indonesia 2025-2028 defense acquisition, an extension from previous thread I made for 2020-2024 period.

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Indonesian F 16 AM/BM will likely continue to be operated until 2040


F16 C/D will likely be gradually phased out starting in 2035.


Likely replacement

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For Naval assets, Indonesia will likely keep focusing on Red and White Frigate program for frigates class warship.

For Land asset, concentration on Maung tactical vehicle, Harimau medium tank, and Badak FSV is likely the case for 2024-2028 period. AK 47 rifles currently still used within the marine force will likely be gradually replaced with Pindad rifles that have already become organic rifles for Indonesian army.









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Pretty conservative projection, but I tend to agree that the projected figure will likely be quite close with the actual ones, particularly if Prabowo lost on next Presidential election. If that is the case than our defense spending to GDP ratio will likely decrease into 0.5 % from currently at 0.6 % as our GDP is expexted to keep growing at 5 % until 2028 based on IMF latest projection (October 2023)

My own projection will be around 10 - 12 billion USD though until 2028. Indonesia defense spending to GDP ratio is likely to increase starting from 2030, while currently it (the ratio) is still in downward trend due to the focus is still on the economic growth, fiscal consolidation and prudency, gov institution reform including through gradual salary increase, education (20 % of state budget), industry, fuel subsidy (300 trillion Rupiah for 2024 budget), rural areas development through villages fund, and infrastructure development.

Some factors that will push defense spending up are sufficient and healty GDP growth, macro economic increased strenght, particularly currency strenght, gradual increase of tax ratio, local defense industry improvement (less worry to spend if the money being circulated back to the economy), fuel subsidy decline, and also the increase of public saving that will likely increase the demand of local currency state bond.
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Based on IMF recent projection, Indonesia nominal GDP in 2028 will likely be at 2.09 Trillion USD. I think after 2028, the defense spending ratio to GDP will start increasing gradually due to the local defense industries advancement and possibly better tax ratio.

With more available of big ticket defense products like tanks, frigates, submarines, radars, rockets, cruise missiles, MALE UCAV and fighters that can be potentially provided by our local defense industry after 2028, the acquisition spending during that time will be more seen as investment rather than purely lushing out the money into the pocket of foreign defense OEMs, so there my speculation to start seeing the raise of defense spending ratio to GDP beyond 2028 comes from.

Our Finance Minister has the final words when it comes to determine how much we should spend on our defense, every guy in that ministry always put multiplayer effect calculation as the basis to determine yearly state spending. Pretty much Indonesian gov since the time of Soeharto until now is very economic focus. If Ganjar is elected, then pretty much we will likely keep continuing Jokowinomics with some minor changes here and there.

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Latest investment on production facilities conducted by Defense Holding SOE

PT PAL Indonesia :

2013 Submarine production and overhaul facilities : 1.5 trillion Rupiah (around more than 120 million USD - based on Rupiah value in 2013-2014)
2021 Submarine and ship production facilities : 1.28 trillion Rupiah (around 90 million USD- based on Rupiah value in 2021)

Total around 2013-2021 : 210 million USD for submarine and ship production (mostly for submarine production)

2023 for new shipping dockyard acquisition ( expansion in Batam Island) + production facilities upgrade: 427 billion Rupiah (27 million USD)

PT Dirgantara Indonesia :

2012 for production facilities : 1 trillion Rupiah ( around 100-130 million USD - Based on Rupiah value in 2012-2013) - modernization of old production facilities.

KF21/IFX production facilities : Not yet complete - Production Hangar, some production equipment, and additional land - connected to current production complex - Not yet included on asset calculation since it is done by Ministry of Defense but it will be transferred to PTDI and becomes PTDI asset expected to complete in 2024/2025.

2023 for production facilities : 543 billion Rupiah (34 million USD) - CN 235 and N 219 production facilities upgrade, revitalization of supporting production facilities

PT LEN Industry

I dont follow their investment prior to 2023

2023 for radar production facilities : 367 billion Rupiah (23 million USD)

PT Pindad

I dont follow their investment prior to 2023

2023 for small calliber ammunition production (7.62 mm and 5.56 mm), medium tank and military vehicle production (fabrication and assembling facilities) : 417 billion Rupiah (27 million USD)

PT Dahana

Recent investment is in 2020-2022 period for ammonium nitrate factory at 1.1 trillion Rupiah (around 80 - 90 million USD - based on Rupiah value in 2020-2022). The investment is joint venture with another SOE in fertilizer industry.
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3 SOE in shipbuilding sector is planned to be merged, if this to happen then PT PAL will have bigger asset and bigger production facilities in the future as other shipbuilders SOE will likely be absorbed by PT PAL Indonesia. Defense SOE Holding, PT LEN Industry, will get more asset as well if it is realized. We need to wait for this............

One of shipbuilder SOE that will be merged is located in Jakarta, while PT PAL Indonesia asset is in Surabaya, East Java, and also Batam Island in Sumatra (2023 acquisition plan - fund is already available).

That shipbuilder is the one that design Teluk Bintuni Class LST and build several of them


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Indonesian Navy (TNI AL) current assets and its target

1. More frigates : Current 9, Target is 36 ships
2. Destroyers : Current 0, Target is 4 ships
3. Submarines : Current 4, Target is 12
4. Corvettes : Current is 25, around 22 of them will be decommissioned gradually and adding with additional 15 new ones + 3 relatively new ships = 18 ships.
5. OPV : Current 2, target is 42 ships

Indonesian OPV is basically corvette, take a look on the weapons of the ship. They call it as OPV because the ships will likely only be equipped with cannon, but it will be weaponized with missiles if there is need to do so.


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Expected Indonesian Air Force Fighter Squadrons in 2030-2040 period




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