Indonesia's State-owned enterprises (SOEs) are keen to meet the military’s needs for locally made equipment as instructed recently by President Joko “Jokowi” Widodo, with some of the defence firms still filling previous orders.

State-owned weapons and armoured vehicle manufacturer PT Pindad recently secured contracts from the Ministry of Defence to make 625 million rounds of ammunition for delivery later this year, president director Abraham Mose told The Jakarta Post on July 15.

The firm was also finalising a contract for the purchase of its recently released Maung 4x4. Pindad aimed to produce 500 of the light tactical vehicles to be delivered to the ministry by the end of this year, he added.

The plan emerged after defence minister Prabowo Subianto personally tested the tactical vehicle in Sentul, West Java, on July 12.

The move was a follow-up after Jokowi told his ministers in a Cabinet meeting on July 7 to accelerate spending, including that of the ministry.

Jokowi also told the ministers to stop foreign procurement and start buying local products from SOEs.

Although its budget was reduced from 131.18 to 122.44 trillion rupiah ($8.9 to $8.3 billion), the ministry still has the largest budget of all ministries and State agencies.

Defence analyst Curie Maharani of BINUS University said Jokowi’s directive should be taken as a note for the ministry to increase spending amid adverse economic circumstances and to prioritise procurement through the domestic defence industry, which has limited buyers for its products.

Curie said: “The president’s statement should be read as a warning for the defence ministry to better target its spending amid unfavourable economic situation, as procurement from domestic [defence industries] is more urgent, because the life and death of the defence industries are determined by orders from the government as the main – and often the only – customer.”

State-owned electronics maker PT LEN Industri, which has defence electronics as one of its business lines, has backlogs for defence contracts worth 1.3 trillion rupiah, most of which were signed at the end of last year and are still in the production line.

LEN Industri’s revenue from defence electronics increased from 524 billion rupiah in 2018 to 1.04 trillion last year.

Its president director Zakky Gamal Yasin told the Post on Thursday: “In the last two years, the defence electronics business line recorded significant growth.”

Company executives have also said the government had approached local defence industries, including to support its development to reduce imported components and in turn to export some of its products.

Abraham said: “Exports needs to be end-to-end from upstream to downstream [industries]. We need to build a plant to process raw materials, such as a brass cap plant for ammunition and a propellant plant for small-calibre bullets.

“I can see that the defence ministry plans to develop upstream industries so that we can gradually reduce our imports, whether it is for ammunition, armoured vehicles or weapons.”

Pindad is conducting a feasibility study to build a brass cap plant that is expected to be finalised by the end of this year.

LEN Industri’s Zakky said SOEs in the defence sector were in constant coordination with the government concerning the latter’s procurement plans.

LEN Industri is currently modernising the electronic system of Indonesian Navy corvette KRI Usman Harun, in partnership with French firm Thales, in an 800 billion rupiah contract, Zakky added.

The electronics maker is also currently developing a medium-range radar for the Indonesian Air Force in a 375 billion rupiah contract in partnership with Italian defence giant Leonardo SpA.

Meanwhile, PT DI is currently producing two CN235-220 medium transport aircraft for the Senegalese and Indonesian air forces and an NC212i light transport aircraft for the Indonesian Air Force, its president Elfien Goentoro told the Post recently.

PT PAL is building the third batch of its own 60m KCR-60 fast missile ship, which consists of the fifth and sixth ships in the class, for the Indonesian Navy, corporate secretary Rariya Budi Harta told the Post on Sunday.

He said: “The two warships are being built complete with sensor, weapons and command [sewaco] systems.

“We are installing a sewaco system in two previously built warships; the contract only included the construction of the platform.”

The shipbuilder was also building a naval hospital vessel that was about 65 per cent complete, Rariya said.

THE JAKARTA POST/ASIA NEWS NETWORK