Malaysia and Indonesia have agreed to promote the creation of the ASEAN Defense Industry Collaboration (ADIC) to tap massive military spending in the region.
The commitment was voiced by visiting Malaysian Defense Minister Ahmad Zahid Hamidi and his Indonesian counterpart, Purnomo Yusgiantoro, on Wednesday.
Both ministers spoke at a seminar on the revitalization of the Indonesian defense industry, jointly organized by the Indonesian Defense Ministry, Antara news agency and Sinar Harapan, an evening newspaper, in Central Jakarta.
Purnomo said military spending by the Association of Southeast Asian Nations (ASEAN) members reached US$25 billion per year.
“Currently, there are four ASEAN members with established defense industries: Thailand, Malaysia, Singapore and Indonesia,” he told the seminar.
“However, the region is still a net importer of weapons and systems.”
Purnomo, who envisioned Indonesia being self-sufficient by 2030, said in the past two decades local defense industries had progressed considerably including in the aviation, maritime, weaponry, automotive and information and communications technology (ICT) sectors.
“We will discuss the issue further at the ADMM tomorrow [Thursday],” he said, adding that the Malaysian defense minister was responsible for preparing the concept.
Zahid, who is in Jakarta for the fifth ASEAN Defense Minister Meeting (ADMM), said Purnomo was a strong supporter of ADIC.
The Malaysian minister said there already was inter-ASEAN defense trade, as Singapore exported rocket launchers to Brunei, landing platform docks to Thailand and artillery to Indonesia.
Additionally, Malaysia exported military trucks to Brunei and Indonesia exported CN-235 aircraft to Malaysia and rifles to the Philippines.
Malaysia is also buying the Anoa 6x6 armored personnel carrier from Indonesia’s state arms-maker PT Pindad for its peacekeeping operations in Lebanon.
Zahid urged ASEAN defense companies to develop niche capabilities, enter the global supply chain and engage in offset programs.
“Malaysia has bought CN-235 aircraft and Super Puma helicopters from Indonesia, who promised to buy 2,000 Proton Saga sedans.
However, in the end Indonesia had only bought 200 Proton Sagas,” he said.
“We will buy from Indonesia, but what will Indonesia buy from Malaysia at the same value?”
Defense offset could include a country purchasing a weapon system on the condition that the seller buys something from the buyer.
Other offsets includes the buyer’s involvement in producing parts of the weapon system it buys, guaranteeing a transfer of technology.
Zahid said there were a number of challenges to achieving defense industry collaboration.
He said ASEAN countries had to acknowledge common threats and challenges and agree on a degree of conformity to operate in uniformity, requiring common production standards in equipment and systems.
Zahid also suggested the production be exported to other countries and that the ASEAN collaboration plan follow Indonesia’s plan to be self-sufficient by 2030.
“Hopefully, by that time, we can reduce the imports by half to $12.5 billion,” he said.