Markus Junianto Sihaloho – The government has moved to bolster the domestic defense industry by requiring the military and police to purchase weaponry manufactured by state-owned enterprises over the next five years.
The policy was stipulated in a memorandum of understanding signed on Friday by the Ministry of Defense, Ministry of State-Owned Enterprises, the Indonesian Armed Forces (TNI) and the National Police.
Defense Minister Purnomo Yusgiantoro said the MOU was the result of a series of meetings and workshops attended by officials from the various bodies in an attempt to find ways to develop the defense industry, which has become one of President Susilo Bambang Yudhoyono's leading priorities.
Indonesia has at least four large state-owned arms manufacturers, including shipbuilding company PT PAL, which is capable of manufacturing landing craft, patrol boats and frigates; PT Pindad, which makes tanks, pistols, assault rifles and ammunition; aircraft company PT Dirgantara Indonesia, which produces planes and helicopters; and PT Dahana, which specializes in explosives.
A senior defense ministry official had earlier said that the ministry had proposed a budget of Rp 800 billion ($84.8 million) to buy locally produced weaponry next year.
Military Chief Gen. Djoko Santoso previously said that the military needed new helicopters, artillery, armored vehicles, Hercules aircraft, small aircraft for maritime patrols, submarines and patrol vessels.
"Each of us is committed to this program," Purnomo said. "The police and military are committed to using armaments manufactured by state-owned companies."
State-Owned Enterprise Minister Mustafa Abubakar said the MOU was a step forward in providing multi-year arms purchasing contracts, which were important for arms manufacturers.
"This will provide good momentum to wake up our strategic industries," said Mustafa. "I'm sure these agreements will boost strategic SOE growth significantly. The ministry will help the SOEs to increase and enhance their performance, including product quality and meeting production deadlines."
Purnomo, however, said that in order to implement the MOU the government must issue several regulations, including a decree allowing direct procurement of military and police weapons. Presidential Decree No. 80/2003 stipulates that any procurement must be done through open and transparent bidding.
The Defense Ministry also signed an agreement with Dirgantara Indonesia for the purchase of three new CN235-220 maritime patrol aircraft worth $80 million. Dirgantara Indonesia Director Budi Santoso said the aircraft would be equipped with sensors enabling them to be used for surveillance and targeting missions.
Navy Chief Vice Admiral Agus Suhartono said separately that he expected Dirgantara to start manufacturing the aircraft immediately.
He noted that the first aircraft would be delivered 24 months after the contract was signed, with the second coming two months later and the third two months after that. "We really need these aircraft to help improve our capability on surveillance missions," Agus said.
In addition to the aircraft, he said the Navy would also receive 17 new Russian BMP 3F amphibious tanks, as part of a $1 billion loan agreement signed between the two countries in 2006. "I hope all the tanks will be delivered from Russia next year," Agus said.