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The expanding ambitions of Indonesia’s naval defense industry
Setting priority scales and implementing CTLCO in procurement deals will help ensure the expansion of Indonesia's defense capabilities, capacities and independence .
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President Joko “Jokowi” Widodo visits the booth of state shipbuilder PT PAL Indonesia on Nov. 2, 2022, during the Indo Defense 2022 Expo & Forum in Kemayoran, Central Jakarta. (Antara/Malik Ibrahim)
T
he recent Indo Defense Expo & Forum has been considered a success by many. While no major contract was announced, Indonesian state-owned defense companies signed several memorandums of understanding (MoU).
During the event, national shipbuilder PT PAL Indonesia signed no less than five MoUs with major defense industry players such as Kongsberg, Thales, Havelsan and Naval Group.
It is worth noting that PAL Indonesia’s activities during the Indo Defense 2022 are nothing new.
In an interview with Kompas at the end of September, PAL Indonesia CEO Kaharuddin Djenod stated his desire to modernize the company through its Maritime Transformation 4.0 program. Kaharuddin underlined that the change would involve profound reorganization, in particular management transformation and financial restructuring. He also revealed the company’s plan to build a landing helicopter dock (LHD), aircraft carrier and submarines soon.
His statements could be reminiscent of the shipbuilder’s past attempts to manufacture other types of vessels, such as the LPH 190 and the LPH 244, which unfortunately did not manage to bring significant outcomes.
PAL Indonesia’s current narrative, while encouraging, should be carefully assessed. As a matter of fact, in addition to its willingness to increase its capacity and capability, PAL Indonesia should consider two other things to make sure its strategy will work to strengthen its posture in the years to come.
First, government support plays a key role in the state company’s growth. The current administration has shown its support by injecting capital of Rp 1.75 trillion (US$111.3 million) into the national defense holding company, Defend ID, in 2023. The budget is to be allocated to its subsidiaries, including PAL Indonesia, especially toward accelerating fulfillment of the Defense Ministry’s modernization target until 2024.
