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Jakarta Post

It’s high time for Prabowo to boost national defense industry

  • Novan

    The Jakarta Post

Jakarta   /   Wed, November 13, 2019   /   09:14 am
It’s high time for Prabowo to boost national defense industry At your command: Defense Minister Prabowo Subianto salutes journalists before his first working meeting as minister with members of House of Representatives Commission I, which oversees defense, foreign affairs, information and intelligence, at the House complex in Senayan, Central Jakarta, on Monday. In the meeting, the House and the Defense Ministry discussed bugetary allocations and the ministry's plans for 2020. (JP/Dhoni Setiawan)

During his first meeting with lawmakers on Monday, Defense Minister Prabowo Subianto offered a total or universal war strategy as the best defense in the face of a more technologically advanced adversary. Given the disparity in military power between Indonesia and advanced nations, Prabowo believes total war involving the masses is an acceptable option when the Republic of Indonesia is at war.

Previously, Prabowo, who decried the weakness of Indonesian defense during the 2019 presidential election campaign last April, had spoken during his first public appearance at Indonesian Defense University on the need to shift the defense paradigm from one centered on spending to one centered on investment.

Defense spending is usually frowned upon by economists and developmentalists as it uses public funds that could be used elsewhere for economic benefits, such as for the construction of roads, bridges and power plants, hence the guns versus butter dichotomy.

However, the defense-as-investment approach tries to change the model by making it a guns and butter partnership in which military spending provides a boost to the economy. This would be achieved through the development of the defense industry, including the mass production of primary weapons systems and defense and security equipment.

The guns and butter approach is exactly what President Joko “Jokowi” Widodo had in mind when he asked the national defense establishment to curb imports.

Procuring primary and other defense equipment from the domestic defense industry means job creation and taxes from direct activities, not to mention multiplier effects generated from related sources, such as suppliers of parts and components for weaponry, and non-related sources, such as housing and food for workers in the defense sector.

There is a striking similarity between the second-term presidential administrations of Jokowi and Susilo Bambang Yudhoyono. Jokowi started his second term by paying attention to empowering the national defense industry, which he entrusted to Deputy Defense Minister Wahyu Sakti Trenggono, treasurer of Jokowi’s election campaign team and businessman in the base transceiver station industry, to further develop the defense industry.

A decade ago, Yudhoyono started his second term by embarking on an ambitious journey to revitalize the local defense industry. The revitalization effort was spearheaded by his defense minister Purnomo Yusgiantoro and Purnomo’s deputy Sjafrie Sjamsoeddin, who organized a defense industry workshop in December 2009.

The workshop led to the creation of the Defense Industry Policy Committee (KKIP) in April 2010 and the passing of Law No. 16/2012 on the defense industry. The law stipulates that primary weapons may only be imported if local industries are unable to produce them. However, the importation must follow an offset mechanism that may include countertrade, local content and the transfer of technology.

It was also Yudhoyono who rolled out a grand strategy to modernize the Indonesian Military (TNI) through the Minimum Essential Force (MEF), which was envisioned as being achieved in three five-year strategic plans (Renstra).

Jokowi’s second term ends in 2024, coinciding with the third MEF Renstra, in which the TNI is projected to have an ideal force posture and become a respected force at both the regional and international levels.

Indonesia already has the capability, for example, to produce assets that are needed to patrol both the country’s territorial waters and its exclusive economic zones. This includes patrol boats and maritime patrol aircraft. Indonesia can also produce its own landing ship tanks, landing platform docks and transportation aircraft, which can be useful in times of natural disaster and other humanitarian crises.

The KKIP designated in 2014 seven weapons systems that Indonesia must master: medium tanks, jet fighters, submarines, propellants, missiles, radar and communications devices. Some of them have shown good results, such as the Tiger medium tank codeveloped with Turkey and three Changbogo-class submarines, built under the supervision of South Korea.

Meanwhile, other programs still must be pursued further, such the IFX-KFX joint jet fighter program developed in cooperation with South Korea, which Prabowo said he would study further.

If we consider that the Defense Ministry manages a budget of Rp 127.4 trillion (US$9 billion), the largest among ministries and state institutions, there are plenty of opportunities for local defense companies, even if the procurement budget is roughly only some 30 percent of the total budget.

Data at the ministry’s Defense Potential Directorate General show there are eight state-owned enterprises and 100 private companies that have been designated as local defense companies. In total, their assets are valued at Rp 17.3 trillion with revenue reaching Rp 11 trillion.

Most Indonesian defense companies are still working under a dual-use concept, meaning they also produce civilian goods. In fact, some 70 percent of their products are civilian and only 15 percent are military goods. The remaining 15 percent are for exports.

The national defense industry has absorbed about 15 percent of the acquisition budget.

Both Prabowo and Trenggono stand a great chance of maximizing the local defense industry, both with state-owned companies and private ones, to reach the MEF goals by 2024.