8 MoUs on defense industry signed Monday

As many as eight memorandum of understanding (MoUs) on cooperation to increase the productivity of the country’s defense industry were signed Monday after the third meeting of the Defense Industry Policy Committee (KKIP) in Jakarta.

The MoUs include those between state aircraft manufacturer PT Dirgantara Indonesia (DI) and electronics company PT LEN on production cooperation; between the Defense Ministry directorate general for defense potentials and the Bandung Institute of Technology on education and science development; and between the directorate general and PT DI on the 1,000 rockets program.

The meeting decided on the need to compose a weaponry shopping list, among others, Defense Minister Purnomo Yusgiantoro said after the meeting.

“It is a list of weaponry that can be made in the country. We are aiming to finish it in October or November this year,” he said.

The meeting also decides on the drafting of a policy on technology transfer in joint productions and on fiscal policy.

“In the future, a matrix containing things that need fiscal incentives [for national weaponry] from the financial authorities will be made. The list will be submitted to the President or the Coordinating Economic Minister,” Purnomo said.

He added that the government was hoping to support weaponry production using multi-year financing, which allowed more flexibility.

The KKIP also recognizes the need to support the recovery of state-owned weaponry companies by improving cash flow with state capital participation (PMN).

“Up to now, we still need PMN support, because without PMN [the companies’] debts and burdens remain too large. The losses and financial troubles are not because of the current management, but because of our economic problem 10 years ago,” State Minister for State Enterprises Mustafa Abubakar said.

He cited as an example how PT DI and state weaponry maker PT Pindad needed about Rp 600 billion (US$69.6 million) each to add to their capital.