Featured Indonesia reveals USD125 billion military modernisation plan

[Reashot Xigwin]

by Jon Grevatt & Andrew MacDonald




A draft regulation from Indonesia’s presidential office has outlined the requirement for investment of USD125 billion in military modernisation through to the mid-2040s. The funding proposal is indicative of Indonesia’s military ambitions and its growing concerns about regional security.


The draft regulation – entitled ‘Fulfilling the Defence and Security Equipment Needs of the Ministry of Defence and Indonesian Armed Forces (TNI) 2020-24’ – was issued recently but requires various approvals from ministries and the House of Representatives before enactment. The investment plan also highlights Indonesia’s continuing dependency on foreign loans.

Indonesia has stated a requirement for funding worth USD125 billion in military investment through to the mid-2040s. The country’s modernisation requirements are thought to include Lockheed Martin F-16V fighter aircraft. (Lockheed Martin)

The proposed regulation details the requirement for USD124.9 billion for TNI modernisation funding over a period of five ‘strategic plans’ each lasting five years. The first strategic plan runs 2020–24 and coincides with the final phase of the TNI’s Minimum Essential Force (MEF) programme, while the last will be 2040–44.


The document proposes funding of USD79 billion for defence equipment during this 25-year period, USD32.5 billion for sustainment, and the remaining USD13.4 billion for interest payments on foreign loans.


The regulation prioritises sourcing TNI modernisation requirements from local industry. However, it states, “In the event that domestic products cannot be [procured], then foreign products can be used.”


When defence equipment is imported, the regulation identifies the requirement to enforce “technology transfers and offsets” to support local industry’s involvement in the procurement. This industrial strategy also includes the provision of countertrade through which Indonesia seeks to export local commodities in part exchange for materiel.

Indonesia reveals USD125 billion military modernisation plan

A draft regulation from Indonesia’s presidential office has outlined the requirement for investment of USD125 billion in military modernisation through to the mid-2040s....

www.janes.com

 

[Ahmet Pasha]

Imo instead of buying foreign why not focus on IFX??

 

[Reashot Xigwin]

Imo instead of buying foreign why not focus on IFX??

It's already on the budget. But this is a historic increase of the defense budget if approved

 

[Titanium100]

Imo instead of buying foreign why not focus on IFX??

Indonesia doesn't have airforce concerns since that project with K-TX is already on-going and they may buy TFX at some point if there is need but there is no need since they can upgrade KTX to gain air-superiority and they are set for life in the airforce department but I believe majority of this modernisation package is going to other sectors such as to the conventional land forces and Navy hence why I think there will be up-scaling in these two departments

 

[Mohamed Bin Tughlaq]

This is signficiant upscaling @Indos do you have more info on this

 

[Reashot Xigwin]

In case anyone ask the defense budget will go up from 0.8% to 1.5% of the GDP if it passed.

 

[Whizzack]

There are still questions on how this budget will actually be implemented... Mindef has proposed this amount for modernization plans covering the period of 2020 - 2044 (25 years) divided into five 5-years plans (Renstra)... but the actual plan and procurement details under this modernization bill is still unclear...

Some suggests that most of the budget will be spent on the first Renstra (5-year) period (up to 2024), while the rest of the budget will then go to sustainment contracts and payment servicing until 2044... some others think that the amount will be roughly divided equally between the 5 Renstras and will be implemented with each new Renstra period... while some others think that the implementation will be more flexible and can be used as or when the need arises (that is, each Renstra might get more or less depending on the plans and needs of that particular Renstra) ...

So we will need to see how this actually develops...

 

[Falcon26]

@Indos must be going over the moon with this news. It was only a matter of time before Indonesia flexed its economic muscles. This is a great country with amazing people that I have been fortunate to tour.

 

[PakFactor]

Nice! Navy, Air Force / Air Lift capabilities I feel would be a strong focus for this island nation. Would be interesting how their armament plan develops.

 

[KAL-EL]

Well, that’s quite the modernization plan

I wish Indonesia the best

 

[Indos]

This is signficiant upscaling @Indos do you have more info on this

@Falcon26

This is still a draft being worked by Mindef and get leaked a month ago and produce many critics inside Indonesian. Unlikely to pass Presidential office and also budget in Indonesian should pass Minister of Finance and Minister of Planning as well.

What is more certain is that the foreign loan ( for foreign defense equipment provided by OEM origin country ) which is around 20 billion USD that will be disbursed until 2024. This amount has been approved by Minister of planning but the allocation every year depends on Minister of Finance.

For instant, Minister of planning has approved 1.6 billion USD for fighter acquisition until 2024 but Finance Minister slash it further into 1.1 billion USD. This figure is the same like the budget previously approved by Mindef for SU 35 some years ago but cannot be disbursed due to CATSA.

Jokowi trust his economic team more and I think this draft is unlikely to be a Presidential Decree

Parliament has ask this to Prabowo but he is shy to explore more about the plan and said that the draft is still in discussion within Mindef office and hasnt yet become Mindef product. This happened 2 days ago when Prabowo met Parliamen in Parliament building

 

[Indos]

Imo instead of buying foreign why not focus on IFX??

It is still a draft inside Mindef circle, not even discussed with Finance Minister and Ministry of Planning. After that it should go toward Presidential office.

Some one IMO plan to get large kick back before KFX program inshaAllah reach mass production phase, because if KFX reach mass production phase, they cannot buy foreign fighter anymore because our law prohibit buying foreign defense equipment that can be provided by local defense industry

 

[Mohamed Bin Tughlaq]

@Falcon26

This is still a draft being worked by Mindef and get leaked a month ago and produce many critics inside Indonesian. Unlikely to pass Presidential office and also budget in Indonesian should pass Minister of Finance and Minister of Planning as well.

What is more certain is that the foreign loan ( for foreign defense equipment provided by OEM origin country ) which is around 20 billion USD that will be disbursed until 2024. This amount has been approved by Minister of planning but the allocation every year depends on Minister of Finance.

For instant, Minister of planning has approved 1.6 billion USD for fighter acquisition until 2024 but Finance Minister slash it further into 1.1 billion USD. This figure is the same like the budget previously approved by Mindef for SU 35 some years ago but cannot be disbursed due to CATSA.

Jokowi trust his economic team more and I think this draft is unlikely to be a Presidential Decree

Parliament has ask this to Prabowo but he is shy to explore more about the plan and said that the draft is still in discussion within Mindef office and hasnt yet become Mindef product. This happened 2 days ago when Prabowo met Parliamen in Parliament building

I hope it passes because it is key for the next 20 years staying ahead of time.. It is crucial despite Indonesia having good defense but constantly improving is key and you just can't sit on that type of money either and defense is first pillar nothing is more crucial then that

 

[Indos]

I hope it passes because it is key for the next 20 years staying ahead of time.. It is crucial despite Indonesia having good defense but constantly improving is key and you just can't sit on that type of money either and defense is first pillar nothing is more crucial then that

Nope, this plan is reckless and stupid. As I said in Indonesia Defense thread, it is good to see Jokowi put Prabowo as Mindef so we will know his plan if he becomes President. Now what in his mind is open already and show his lack of strategic thinking, low knowledge about economy and Indonesian economy situation.

Unlikely to pass if we see what has been done by Jokowi in his first term of administration which show huge focus on economy and industrialization. Even under him most weapon bought from local defense industry and Indonesian people already understand his pro local defense industry point of view.

Indonesia economy will grow inshaAllah and base on CEBR projection (even Mckensey is more optimist) our nominal GDP will surpass India current nominal GDP before 2035, it shows we have strong financial capability to have large defense budget without the need to rely on foreign loan to buy most weapon.

In 2030 Indonesia inshaAllah will have already had ability to construct complete submarines, build frigate using its own design, build its own fighters, MALE UCAV, possibly cruise missile as well (currently underdevelopment), balistic missile with 700 km range (two stages of RX 550 rocket), possiblly we have already had unmanned submarine prototypes that will be able to launch torpedo and cruise missile.

Better we use the money for our own local defense products. Prabowo plan can screw our defense industry future market and hamper its natural growth.