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Government seeks up to $125 billion in loans to modernize military
A draft presidential regulation sees the government looking to spend heavily on defense procurement in the next few years, sparking criticisms over feasibility and transparency.
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Japanese Defense Minister Kishi Nobuo (right) escorts Indonesian Defense Minister Prabowo Subianto (center) at the end of a joint news conference following a signing ceremony for the “two-plus-two” meeting between the countries in Tokyo, on March 31, 2021. Prabowo has been making frequent overseas visits despite COVID-19 in search of potential defense procurement targets. (Pool via Reuters/David Mareuil)
T
he Defense Ministry is set to embark on a multibillion dollar shopping spree to modernize the country’s aging defense equipment in a new 25-year defense procurement plan, a draft presidential regulation reveals.
But lacking transparency has once again overshadowed the ministry’s plans to bolster Indonesia’s defense system, with military experts flagging possible conflicts of interest.
The move comes amid renewed calls to replace old military vehicles out of safety concerns, following the tragic sinking of 44-year-old submarine KRI Nanggala-402 during a military exercise in April, which claimed the lives of all 53 sailors onboard.
The draft regulation, a copy of which The Jakarta Post obtained, stipulates a new US$125 billion military procurement plan for the 2020–2044 period, which will be almost exclusively financed through foreign loans.
Some $79 billion, or 63 percent of the projected budget, was earmarked for procuring new defense equipment, while another $32.5 billion was allocated for maintenance and contingency funds. A further $13.39 billion was set aside for fixed interest payments.
The budget is expected to be fully disbursed by the ministry by 2024, according to the draft regulation. The Post was not able to independently verify this deadline or the possibility that it was a clerical error.
Defense Ministry spokesman Dahnil Anzar Simanjuntak said the draft regulation was still being discussed and that $125 billion was not the “final” figure for the budget.
