Reviving Indonesia’s Military Industrial Complex


Indonesia decided on Monday to buy into the South Korean Defense Acquisition Program Administration’s (DAPA) new mid-level fighter jet program. The decision comes after Jakarta ordered 16 Korean Aerospace Industries (KAI) T-50is in May 2011 for $400 million. While Indonesia has sourced its fighter aircraft from several countries, including the U.S., Russia and Brazil, finding a regional partner that it can work with in the development process is likely part of a longer-term approach to revamping its military after years of stagnation following the financial crisis of 1997. The new political leadership in Jakarta will now need the political bandwidth to keep projects such as this on track, as multiple challenges face the new presidency of Joko Widodo.

Joko will have his hands full working to improve the country’s infrastructure and economy, on top of rebuilding its military, and a prolonged political standoff with his election adversary would certainly complicate matters and potentially lead to a government stalemate. Joko’s former presidential opponent Prabowo Subianto and his coalition reportedly have plans to cause trouble for the new president.

On Wednesday, the Jakarta Post reported that “Gerindra Party deputy chairman Edhie Prabowo has insisted that the Red-and-White Coalition will not impede [Joko] inauguration.” Prabowo’s Gerindra-led Red-and-White Coalition is the counterweight to Joko’s Democratic Party of Struggle (PDI-P). Edhie’s statement came after the Red-and-White Coalition narrowly defeated the PDI-P for the speakership of the People’s Consultative Assembly (MPR) 347 votes to 330 votes. This means that while Joko may take his position as president uncontested (at least through the inauguration), Prabowo’s coalition now controls the MPR and the House of Representatives (DPR). This coalition balance between two different nodes of governmental power could cause stagnation, as it does in many other democracies, if Prabowo and his political allies do not provide enough political space to cooperate with Joko on some non-domestic issues, particularly those that improve Indonesia’s defense capabilities in light of concerns that China may be interested in challenging its maritime sovereignty.

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South Korea’s new fighter jet program is still in its nascent stages, but Indonesia’s involvement is important, since it is the only foreign partner outside of the U.S. Jakarta has agreed to fund development costs up to 20 percent for the program, which is estimated to cost as much as $8 billion. A DAPA statement said it had signed an agreement with the Indonesian ministry of defense to develop the KF-X or Boramae fighter, which Seoul plans to deploy for operations around 2025. The program is South Korea’s domestic answer to the question of replacing its own aging fleet of F-4s and F-5s, rather than purchasing abroad. While Indonesia has so far only agreed to help fund development, South Korean sources that spoke with Reuters estimate production could cost around 10 trillion won ($9.3 billion).

DAPA has said the project “will help both nations reduce their financial burdens and promote their aviation industries,” something that Indonesia needs desperately. With its domestic defense industry long stagnated, finding a partner that can develop technology that is beyond Indonesia’s own capabilities, while also driving down unit costs due to higher production with South Korea, would be a boon for both the military and its industrial complex. DAPA has said the project will be managed by one company from each country under the “Joint Program Management Office,” which will also bring government officials from both countries together. So far neither country has officially said which domestic military developer will take part, although DAPA said it will decide on a lead developer by December, and U.S. company Lockheed Martin is also expected to contribute in as part of a separate offset agreement.

While the fruits of this deal (should the partnership work out over its long project life) will not be seen until Joko and many of his political contemporaries are perhaps gone from office, a minimum amount of cooperation is necessary to prevent Indonesia’s historical political chaos from affecting such programs. Making sure the government keeps the country on at least a slow path to development is a necessary component for projects like this.

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