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Indonesian government overpaid $50 million for fighter jets: Lawmaker

Source
Jakarta Globe - March 4, 2012

Markus Junianto Sihaloho – Legislator Tubagus Hasanuddin raised questions on Friday about a recent Defense Ministry purchase of six Russian fighter jets, claiming the deal might have been unduly marked up by $50 million.

Tubagus, deputy chairman of House of Representatives Commission I overseeing defense and foreign affairs, pointed out the high price of the planes compared to previous purchases of the same aircraft.

Planes already acquired by Indonesia, he said, only cost $55 million each. Indonesia bought six of the Sukhoi jets from Russia in 2007 for $355 million.

There was also a discrepancy with the published list price, he added. The latest price tag published by Russia's state-run JSC Rosoboronexport, the only company authorized to export Russian defense technology, was $70 million, Tubagus said.

But the incoming batch of six Su-30s, which were approved at the end of 2010 and finalized in December 2011, cost $470 million, or $78 million each. The planes are set for delivery in July.

"Assuming a maximum price of $70 million, the total deal should have cost just $420 million, not $470 million," Tubagus said. "Why this discrepancy of $50 million? The government must explain."

Tubagus also addressed speculation that the Defense Ministry had not dealt directly with Rosoboronexport but had instead used a private broker. "Why was this company appointed as a broker when Rosoboronexport already has a representative office in Jakarta?" he said.

The purchase, Tubagus continued, should have been a purely government-to-government affair with no need for any broker involvement.

The six new jets would join Indonesia's 10 other Sukhois in a squadron that resides at Makassar's Hasanuddin Air Force Base.

In 2006, Venezuela bought 24 Su-30s and 30 helicopter gunships from Russia for only $1.5 billion. The ministry has said it expects the Sukhoi purchase will boost its capacity to secure Indonesian airspace.

The Sukhoi controversy was the latest incident pitting legislators against the Defense Ministry over suspect equipment deals. The House is currently split over the ministry's plan to purchase 100 secondhand Leopard 2A6 battle tanks from the Dutch military.

Legislators critical of the deal say the 62-ton tank is unsuitable for Indonesian terrain. They also contend that the $280 million purchase would involve no transfer of technology and leave Indonesia highly dependent on Europe for spare parts and maintenance.

However, the ministry says it will push ahead with the deal, claiming the tank is, in fact, well-suited to the archipelago's geography.

Ministry officials also say there will indeed be a transfer of technology, one that will enable state armorer Pindad to produce quality battle tanks and allow the country to meet 70 percent of its weapons systems requirements from domestic producers by 2024.

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