Indonesia’s strategic industries are expected to capitalize on the government’s plan to increase its weapons procurement budget to Rp 63 trillion (US$6.83 billion) over the next five years.
Defense Minister Purnomo Yusgiantoro said Wednesday this could provide opportunities to revitalize the domestic defense industries, one of the government’s 15 priority programs.
“We hope this year to begin the revival of the Indonesian defense industries, which suffered from the 1998 monetary crisis,” Purnomo said.
He was speaking at the hand over of 33 armored personnel carriers (APCs) at the factory of the state-owned arms maker, PT Pindad, in Bandung.
The Army will get 20 of the APCs, while the other 13 will go to Indonesia’s peace keeping forces serving under the United Nations Interim Force in Lebanon (UNIFIL).
The Wednesday hand over was the third in a purchase of 154 APCs (comprising 150 6x6 APCs and four 4x4 reconnaissance APCs) worth a total Rp 1.127 trillion. The order contract is dated June 12, 2008.
In 2008 and 2009, Pindad completed 60 of the vehicles from the order. The remaining 61 will be completed this year.
Purnomo said that as the buyer the ministry could understand all weaknesses of locally made weapons systems, which included inefficiency, non-standard quality, and a lack of after-sales service and spare parts.
“These obstacles cannot justify the dependence on imported weapons systems,” he said.
“We should increase the locally made components of the locally made weapon systems.”
Purnomo said there was a large budget for new weaponry, which could help revive national strategic industries.
“The 2010 state budget can only provide Rp 6.4 trillion for weapons procurement out of a budget of Rp 42 trillion for the defense ministry,” he said.
“However, over the next five years the budget will be increased by up to Rp 20 trillion per year ... reaching an estimated Rp 63 trillion by 2015.”
“If this is not enough to revitalize our strategic industries, at least it will form a base.”
“We are currently waiting for a presidential decree on the revitalization of the strategic industries, which will facilitate various policies including financing.”
The minister said all strategic industries would be grouped under the Defense Industries Policy Committee under the coordination of the defense minister, and the state ministers of state enterprises and research and technology.
The director general of defense facilities at the Defense Ministry, vice marshal Eris Heryanto, said the government would pay PT Pindad once the APCs were completed.
“The government paid Rp 148.57 billion for 20 APCs in 2008, and Rp 505.49 billion for 73 more in 2009 in the second and third deliveries,” he said.
“The remaining Rp 473.1 billion for 61 units will be paid upon completion.”
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