However, most of the financial resources allocated for the MEF programs in the last 15 years have been directed toward procuring off-the-shelf weapon systems. 

Flying start: PT Dirgantara Indonesia employees stand beside an AS565 MBe Panther antisubmarine helicopter at the state aircraft maker’s hangar in Bandung, West Java, on June 15, 2022. The naval helicopter is a joint product between PTDI and Airbus. (Antara/Novrian Arbi)

The recent Iranian attack on Israel, reportedly involving dozens, if not hundreds, of drones, cruise missiles and ballistic missiles, solidified Iran’s position among a select few nations capable of executing long-range attacks on foreign soil using homegrown weapon systems. While the international community advocates for restraint to prevent a regional escalation, this event also illuminated the strategic acumen of a nation navigating resource constraints and external pressures to bolster its defense capabilities to a deterrence threshold.

Despite harsh economic sanctions, Iran has effectively honed its missile technology expertise and boasts a variety of missiles, including air defense, cruise missiles and short- to medium-range ballistic missiles, alongside various drones.

Over the last decade, Iran has consistently showcased its new missiles, some derived from Western-made systems acquired before the 1978 Islamic Revolution, while others were improved upon from Soviet or North Korean designs.

However, Iran’s success in mastering key technologies was influenced by the fact that the country was unable to modernize its armed forces, which remained heavily reliant on Western-made weapon systems after the devastating Iran-Iraq war that ended in 1988. Due to embargoes and perceived threats from neighboring countries and the United States, Iran opted to rely heavily on missiles for defense and deterrence, allocating its limited resources to master these key technologies, especially with assistance from North Korea.

Nevertheless, a country facing similar resource limitations and seeking ways to build deterrence capabilities, such as Indonesia, need not copy Iran’s playbook. No longer under military embargo, Indonesia has more options for sourcing defense technology as evident in its collaborations with South Korea for several key weapon systems and the Netherlands for corvettes.

In fact, Indonesia had better technological capabilities than Iran in the 1990s, especially in the aerospace sector. Indonesian engineers in the 1990s even secretly assisted Iran in reverse-engineering Western-made jet fighter components. Iran, in the late 2000s, also sought Indonesia’s help with subsonic wind tunnel testing for regional turboprop aircraft development.

Indonesia’s challenge in bolstering its defense posture was never about technology. It has been determining the key defense technology it needed to master. While Iran chose to focus on mastering missile technology, in the case of Indonesia, the lack of focus on necessary capabilities has hindered its deterrence goals.

The concept of Minimum Essential Force (MEF), coined by former defense minister Juwono Sudarsono in 2007 to modernize Indonesia’s military and improve the national defense industry, marked a step in the right direction. Implemented from 2010 to 2024, the MEF military modernization was structured with the ultimate objective of achieving “deterrent factors as part of building trust with friendly countries,” according to Defense Ministerial Regulation No. 19/2012 regarding the policy of coordination of main components of the Minimum Essential Force.

However, most of the financial resources allocated for the MEF programs in the last 15 years, including reportedly US$53.7 billion in foreign loan facilities to finance defense acquisitions, have been directed toward procuring off-the-shelf weapon systems. The lack of focus in the weapon system development program, whether homegrown or related to offsets from foreign procurement, necessitated the division of existing financial resources among many development projects, resulting in less-than-optimal achievements.

State-owned defense companies such as PAL, Pindad and PTDI have been involved in various defense procurement and development projects, but so far only a few have resulted in technical capability improvement. We have yet to see any homegrown weapon systems that could potentially alter the military balance in the region.

Additionally, most of the state-owned defense companies under Defense ID holding are not in good financial shape, with PTDI missing salary payments in April 2024, hinting at sustainability issues in the defense industry development program.

Several key areas in defense technology that Indonesia could have mastered in the last 20 years never really received proper attention, let alone resource allocation for their further development. The development of rocket technology, which Indonesia started learning in the 1960s, much earlier than Iran, for example, progressed at a very slow pace as the now-defunct National Institute of Aeronautics and Space (Lapan) never received serious investment from the government.

When Indonesia agreed to join South Korea in the KFX fighter jet program, it decided to shoulder only 20 percent of the development cost, limiting the potential for greater technology ownership and manufacturing rights. The total investment Indonesia needs to commit to the KFX program reportedly is only $1.6 billion, compared to $8.1 billion for the purchasing contract to buy 42 French-made Rafale fighters that the Defense Ministry signed in January 2024, but Indonesia has missed payments to South Korea for several years.

Indonesia neglected the opportunity to develop drone technology when key unmanned aerial vehicle technologies have been mastered since the mid-2000s by several private UAV developers, forcing them to sell their expertise overseas. Ultimately, the National Research and Innovation Agency (BRIN) in 2022 dropped the Black Eagle project, citing a lack of funds and technology access, which effectively killed the hope of making a homegrown combat drone.

President-elect Prabowo Subianto, during a presidential debate in early January, stressed the importance of building a strong defense posture. In mid-2021, while serving as defense minister, Prabowo conceived an ambitious plan to further develop Indonesia’s defense capabilities. Dubbed as the continuation of the MEF first phase, the ministry plans to spend a whopping $125 billion on defense procurement for the next five strategic planning periods until 2045.

Despite the plan being toned down due to its controversial nature, there is a high possibility that it will be revived after Prabowo assumes power in October. With a budget twice the amount allocated for MEF programs from 2010 to 2024, Prabowo’s plan can boost Indonesia’s deterrence capabilities.

However, without proper planning and focus, Indonesia may repeat the same pattern as in the first MEF, missing the opportunity to develop homegrown industrial defense capabilities that can produce weapon systems for deterrence.

Indonesia does not need to set an overly ambitious goal in building its defense capability, especially considering its key role in maintaining geopolitical balance in the region. Additionally, Southeast Asia’s geopolitical landscape differs vastly from more volatile regions such as the Middle East, where surrounding unfriendly neighbors are less of a concern.

Indonesia should review the kind of deterrence capability it aims to achieve and identify the key technologies it needs to master to support that goal, while also considering the issue of business sustainability in the domestic defense industry.

With the country’s economy steadily growing and positive relationships with countries possessing crucial defense technologies well-maintained Indonesia only needs to focus its resource allocation in the next MEF program more precisely on defense-related project development.

Rahmad Budi Harto

Lead Consultant, Kiroyan Partners

Source: The Jakarta Post, April 29, 2024.

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