Zakir Hussain, Jakarta – Indonesia's defense spending will once again top that for all government agencies, spiking to a record 77.7 trillion rupiah (US$8 billion) next year.

The new budget is 6.6 percent higher than this year's and comes as Southeast Asia's largest country seeks to leverage its growing economy to overhaul its aging military hardware.

But unlike some of its neighbors whose beefing up of their armies comes amid growing wariness of China's military build-up, Jakarta's plans involve jointly producing C-705 anti-ship missiles with Beijing.

The move has raised eyebrows, but officials say it is all about cooperating with a range of countries so that the Indonesian Armed Forces (TNI), which have 400,000 active-duty soldiers, get the best deal for weapons and defense systems, and the domestic defense industry gets a boost.

"This is part of our effort to achieve a minimum essential force by 2024," Defense Ministry spokesman Hartind Asrin told The Straits Times Thursday, using a term that refers to the bare minimum needed to safeguard Indonesia's borders and maintain a professional and capable military.

Brigadier-General Hartind said the two sides aim to agree on quantity and specifications by the year end, so that a deal to develop the missiles here can be inked next March. The two sides had discussed the deal at the first Indonesia-China defense industry cooperation meeting here last month.

The naval missiles, which have a range of 135km, have been test-fired in the Sunda Strait.

He stressed that the plans are unrelated to and unaffected by rising tensions in the South China Sea over territories claimed by China and four Asean states. However, Indonesia's closer cooperation with China has been followed by an offer of further cooperation from the US.

Defense Minister Purnomo Yusgiantoro said last week the US had offered additional F-16 fighter jets on top of the 24 the TNI will soon receive on a grant agreed on late last year.

The latest offer from Washington comes amid closer military ties between Jakarta and Beijing. Last month, Indonesian special forces troops held a joint exercise with their Chinese counterparts in Shandong, and China has offered to train Indonesian air force pilots using a Sukhoi simulator.

Both foreign ministers also agreed to boost defense ties when they met here earlier this month.

"There is wide recognition that it is time for Indonesia to seek alternative resources for its defense needs, and China is an important partner," Bantarto Bandoro of the Indonesian Defense University said. China is more willing to share and transfer technology and "does not impose conditions."

Apart from China, Indonesia is also working with South Korea to produce jet fighters and submarines, and with Spain to build medium-range transport aircraft.

Bantarto said Washington probably made the offer of additional F-16s because it did not want the balance to be tilted too much by closer Indonesia-China military ties.

The Defense Ministry says it is happy to work closely with both sides, a posture mirroring that of the Foreign Ministry that eschews taking sides even as it seeks to carve out a middleman role for the country amid renewed great power interest in the region.

President Susilo Bambang Yudhoyono said last week the budget increase is "aimed at improving the readiness and reliability of the TNI in safeguarding (our) territorial sovereignty, in executing defensive tasks of the state during peace-time, and in participating in the maintenance of world peace."

Members of Parliament have voiced support for the increased spending.

Parahyangan Catholic University academic Mira Permatasari said there is growing recognition that security and social development needs can be mutually reinforcing. The two, just like stronger defense links with both China and the US, are not a zero-sum game, she added.

Some items on the way:

Navy

• C-705 anti-ship missiles produced jointly with China
• Eleven anti-submarine helicopters
• Three submarines produced jointly with South Korea
• Eight corvettes produced jointly with Dutch shipbuilder Damen Schelde

Air Force

• Eight light attack A-29 Super Tucano aircraft from Brazil
• Up to 34 F-16s from the US on a grant
• Six C-130H heavy transport aircraft from Australia, plus four C-130s on a grant
• KFX/IFX fighter jets jointly produced with South Korea

Army

• 100 Leopard 2A6 main battle tanks from Germany