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Commitment to defense autarchy in time of pandemic
Production of non-military equipment, in this context, can be maximized not only to support government needs but also to keep the defense industries running.
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ealizing defense autarchy has always been one of the biggest dreams of Indonesia. The country’s road to the goal has been long and winding, and the raging COVID-19 is making the challenge even harder.
The struggle to develop national defense industries dates back to launch of the Strategic Industry Management Agency (BPIS), which was established through Presidential Decree No.59/1989. According to the decree, the BPIS was to consolidate the national defense industries for better efficiency and competitiveness in the global market.
One of its greatest achievements came when state aircraft maker IPTN (now PT Dirgantara Indonesia) flew the N-250 Gatotkaca aircraft on Aug. 10, 1995. It gave a morale boost to the nation’s quest to produce defense equipment to fulfill the future needs of the Indonesian Military (TNI).
The Asia financial crisis in late 1990s, however, dealt the national defense industries a major blow. Cash-strapped Indonesia was forced to agree to terms of financial loans from the International Monetary Fund (IMF), which prohibited the use of funds to develop domestic strategic industries. In the same period, from 1999 to 2005, Indonesia was subject to a military embargo by several Western countries, which stopped the sales of all equipment and spare parts of the primary weapons system (Alutsista).
Efforts to revive the national defense industries began in the 2000s. As the economy was recovering, the government initiated reforms in the defense sector through a modernization program known as the Minimum Essential Force (MEF). It must be underlined that the MEF was not only intended to revitalize defense equipment but also to empower the national defense industries toward self-sufficiency or autarchy.
Further, Law No.16/2012 on national defense industry requires the TNI to purchase defense equipment from domestic defense industries, unless the latter could not provide the goods in demand. The law also establishes the Defense Industry Policy Committee (KKIP), which inherits the responsibilities of the BPIS, with an aim to realize defense self-sufficiency by bridging the TNI’s needs and development of the domestic defense industries.
The empowerment of the national defense industries has gradually born fruit, yet much needs to be done. Currently, the national defense industries are capable of producing various weapons, combat vehicles, tactical vehicles, munitions warships and submarines, either independently or through foreign development cooperation.
Furthermore, the contribution of the domestic defense industry to the second phase of MEF (2014-2019) increased by 20 percent. While the successes are worthy of appreciation, it must be acknowledged that the majority of the TNI’s state-of-the-art defense equipment came from abroad.
Reflecting on the trajectory of the national defense industries, it is clear that the government’s commitment and efforts are still needed to realize defense autarchy. The pandemic has more or less affected this agenda, so the government needs to read these dynamics more carefully so as to minimize their impact on the development of the defense industries.
The pandemic has surely reduced production capacity as the industries have to follow the WFH policy, with only about 50 percent employees allowed to work in offices. Under these circumstances, the industries have been struggling hard to settle their sales and purchase contracts.
Some of the contracts have been delayed or extended (especially with regard to delivery time). At the same time, the defense industries are expected to join the national fight against COVID-19 by producing medical equipment such as personal protective equipment and ventilators. In fact, the defense industries also produce non-military equipment, which is a common practice in the world.
With regard to the challenging situation, the government needs to set several priorities to develop sustainable defense industries. First is to ensure the survival of the industries amid the pandemic. It is crucial for the government to anticipate the impact of the economic crisis that follows the pandemic because it can adversely affect the financial state of the national defense industries.
Production of non-military equipment, in this context, can be maximized not only to support government needs but also to keep the defense industries running. Revitalization of the core business can resume when the pandemic and economic crisis subside.
Second, the government needs to establish a common ground between defense industry development strategy and its military modernization program. Indonesia still confronts a huge gap between the military's need for sophisticated equipment and the limited capacity of the domestic defense industries. To catch up with technological advances, the government could consider a strategy that encourages the specialization of the defense industries in several products that TNI will need in the future, such as transport aircraft, armored vehicles or light tanks, patrol boats, etc.
This strategy can gradually increase the competitiveness of the national defense industries and promote defense autarchy, at least in certain sectors.
Third, the government needs to accommodate the aspirations of the defense industries. Both first tier defense industries and private defense industries have agreed that the government has proved its support through the enactment of the 2012 law but lacks commitment to its implementation. Only recently did the government formulate a domestic defense industry holding cluster, while other countries did so many years ago.
Finally, we should be aware that defense autarchy through adequate support from national defense industries is not easy to achieve. The government’s support is key, therefore it should cautiously reformulate the priority agenda and development strategy for the defense industries based on the current strategic environment. Without clear priorities, the industries will go nowhere.
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Aulia Fitri Rosadi is a researcher at the Expertise Agency of the House of Representatives. Diandra Megaputri Mengko is a researcher at the Center for Political Studies, the Indonesian Institute of Sciences (LIPI).
