State-owned weapons and armored vehicle manufacturer PT Pindad recently secured contracts from the Defense Ministry to make 625 million rounds of ammunition for delivery later this year, president director Abraham Mose told The Jakarta Post on Wednesday.

The firm was also finalizing a contract for the purchase of its recently released Maung 4x4. Pindad aimed to produce 500 of the light tactical vehicles to be delivered to the ministry by the end of this year, he added.

The plan emerged after Defense Ministry Prabowo Subianto personally tested the tactical vehicle in Sentul, West Java, on July 12. The move was apparently a follow-up after Jokowi told his ministers in a Cabinet meeting on July 7 to accelerate spending, including that of the Defense Ministry. Jokowi also told the ministers to stop foreign procurement and start buying local products from state-owned enterprises (SOEs).

Although its budget was reduced from Rp 131.18 trillion (US$8.93 billion) to Rp 122.44 trillion, the Defense Ministry still has the largest budget of all ministries and state agencies.

Defense analyst Curie Maharani of BINUS University said Jokowi’s directive should be taken as a note for the Defense Ministry to increase spending amid adverse economic circumstances and to prioritize procurement through the domestic defense industry, which has limited buyers for its products.

“The President’s statement should be read as a warning for the Defense Ministry to better target its spending amid unfavorable economic situation, as procurement from domestic [defense industries] is more urgent, because the life and death of the defense industries are determined by orders from the government as the main – and often the only – customer,” Curie said.

State-owned electronics maker PT LEN Industri, which has defense electronics as one of its business lines, has backlogs for defense contracts worth Rp 1.3 trillion, most of which were signed at the end of last year and are still in the production line.

LEN Industri’s revenue from defense electronics increased from Rp 524 billion in 2018 to Rp 1.04 trillion in 2019.

“In the last two years, the defense electronics business line recorded significant growth,” LEN Industri president director Zakky Gamal Yasin told the Post on Thursday.

Company executives have also said the government had approached local defense industries, including to support its development to reduce imported components and in turn to export some of its products.

“Exports needs to be end-to-end from upstream to downstream [industries]. We need to build a plant to process raw materials, such as a brass cap plant for ammunition and a propellant plant for small-caliber bullets,” Abraham said.

“I can see that the Defense Ministry plans to develop upstream industries so that we can gradually reduce our imports, whether it is for ammunition, armored vehicles or weapons.”

Pindad is conducting a feasibility study to build a brass cap plant that is expected to be finalized by the end of this year.

LEN Industri’s Zakky said SOEs in the defense sector were in constant coordination with the government with regard to the latter’s procurement plans.

LEN Industri is currently modernizing the electronic system of Indonesian Navy corvette KRI Usman Harun, in partnership with French firm Thales, in a Rp 800 billion contract, Zakky added. 

The electronics maker is also currently developing a medium-range radar for the Indonesian Air Force in a Rp 375 billion contract in partnership with Italian defense giant Leonardo S.p.A.

Meanwhile, PT DI is currently producing two CN235-220 medium transport aircraft for the Senegalese and Indonesian air forces and an NC212i light transport aircraft for the Indonesian Air Force, PT DI president Elfien Goentoro told the Post recently.

PT PAL is building the third batch of its own 60-meter KCR-60 fast missile ship, which consists of the fifth and sixth ships in the class, for the Indonesian Navy, corporate secretary Rariya Budi Harta told the Post on Sunday.

“The two warships are being built complete with sensor, weapons and command [sewaco] systems,” he said.

“We are installing a sewaco system in two previously built warships; the contract only included the construction of the platform.”

The shipbuilder was also building a naval hospital vessel that was about 65 percent complete, Rariya said.

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