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Maximizing domestic benefits from overseas defense procurement
Defense procurement can lead to the acquisition of dual-use technologies and transfer of technology for developing Indonesia's industrial sector toward achieving national goals, such as becoming a global battery producer and exporter.
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Scarf diplomacy: France's Defense Minister Florence Parly (left) wears a new scarf she received from her Indonesian counterpart Prabowo Subianto (right) during a signing ceremony for a memorandum of understanding between the two countries at the Indonesian Defense Ministry in Jakarta on Feb. 10. (AFP/Adek Berry)
F
or months, experts and observers have widely commented on the ongoing plan to modernize the Indonesian Military (TNI) and the potential benefits it should bring. As a matter of fact, after President Joko “Jokowi” Widodo pointed out on Oct. 5, 2021 that defense procurement should lead to defense investment and take into account countertrade, offsets and local content requirements as stipulated in Law No. 16/2012.
Indonesia’s domestic defense industry has been rightfully aiming to gain advantages from opportunities created by arms procurement.
For example, during the Jakarta visit of French Minister of Armed Forces Florence Parly last month, French defense companies and their Indonesian counterparts signed four major memorandums of understanding (MOUs) with the support of Parly and Indonesian Defense Minister Prabowo Subianto. Most of these agreements included discussions on offsets and transfer of technology (ToT).
In fact, the TNI modernization plan and defense procurement could profit Indonesia further, thanks to dual-use technology (DUT), referring to technologies that can be used for their originally designed purpose as well as other purposes.
Throughout history, several military technologies have been used for civilian purposes. Among them are daily appliances like the microwave oven, which was developed when an engineer at United States defense contractor Raytheon discovered that microwaves emitted from radars could cook food. Another is the global positioning system (GPS) on our smartphones we all use in our daily activities today.
In this perspective, Indonesia might be able to use and develop DUTs through the defense equipment we procure. For example, for years Indonesia had access to composite material technology for aircraft, thanks to an offset program related to the acquisition of a dozen F-16A/B aircraft in 1986. While this offset program was a real step forward in considering that the DUTs taken from the US-made combat aircraft were successfully adopted for several planes produced by state-owned aircraft manufacturer PT Dirgantara Indonesia, it was not enough for Indonesia to fully master composite material technology to support the domestic aerospace industry.
It is also important to note that whether the defense industry adopted and implemented more DUTs through post-1998 offset programs is not clear. However, the current prospects for the Dassault Rafale and Boeing F-15ID could lead Indonesia to pursue its goal to master composite materials for the aerospace sector and support its goal to develop more civilian aircraft, such as the N-219.
