Margareth S. Aritonang, Jakarta – The House of Representatives passed a national defense industry bill on Tuesday, a new regulation designed to improve the country's struggling defense industry.

Provisions in the bill will allow for innovation in the country's defense firms, be they state-run or privately owned, with the ultimate goal of independently producing primary defense equipment.

The bill welcomes cooperation between privately owned and state-run firms, but it mandates state-owned firms, such as state-owned aircraft manufacturer PT Dirgantara Indonesia (PT DI), state-owned shipbuilder PT PAL, and defense company PT Pindad as the main contractors in the defense industry.

"We can do a lot more with what we have now. We have the potential. And we will save so much in the state budget by not procuring weapons from overseas, possibly between Rp 30 trillion [US$3.12 billion] to Rp 35 trillion," said Tubagus Hasanuddin,deputy chairman of the House of Representatives Commission I, which oversees defense and foreign affairs.

He said that the bill would help the local defense industry make a leap in technology by 2017, as foreign firms working with local defense companies are required to transfer their technology to their local partners.

"We can still purchase defense equipment from abroad only if there are no domestic firms that can provide them. If we are forced to do so, foreign firms are required to work fully with us in the production," Tubagus said.

Article 48 of the bill stipulates that the defense industry is open for foreign partnerships, regionally, bilaterally, and multilaterally, with a permit from the Defense Industry Policy Committee (KKIP), if it prioritizes national interests.

The article also requires foreign defense firms to provide education, training and transfer of technology in order to participate in improving the capabilities of domestic companies.

"Endorsing the bill is a strategic move for our defense industry because it [the bill] promotes efficiency in producing defense and security equipment," Defense Minister Purnomo Yusgiantoro told reporters on Tuesday prior to the plenary session.

Purnomo said that the bill provides a roadmap for the KKIP in empowering an independent and sustainable domestic defense industry.

The KKIP, which is chaired by the President, has members from several relevant ministries including the Defense Ministry, Law and Human Rights Ministry, Industry Ministry, Finance Ministry, State-Owned Enterprises Ministry and the Research and Technology Ministry.

Article 18 of the bill says that the President sets up the KKIP to coordinate policies in planning, formulating, implementing, controlling, synchronizing and evaluating the country's defense industry. An early draft of the bill had provisions that said all forces in the Indonesian Military must use weapons produced by local defense firms, or face a minimum of five years imprisonment and pay a maximum of Rp 500 billion in fines. The House scrapped the provision in the final draft.