Defense industry to receive shot of life

Purnomo Yusgiantoro acted fast after being installed as defense minister by conducting a series of workshops aimed at revitalizing Indonesia's strategic industries, as if to allay the public's doubt over his capabilities to handle the defense portfolio.

The workshops were a success, for the first time all stakeholders were assembled together at one place and discussed all their concerns.

First, the Indonesian Military (TNI) and the National Police, the main users of domestically-made weapons systems, outlined on Nov. 18, 2009, their projected needs.

Based on these requirements, the defense industries then presented on Nov. 24, 2009, their options based on their current capabilities.

After the end-users and producers had presented what they need and what they can do, a discussion on the financial side was held with Finance Minister Sri Mulyani and national bankers presenting their ideas.

These presentations have created a complex yet complete map of the positions of all stakeholders.
The end-users, for example, complained that the products were not reliable in delivery and quality.

Producers lamented the fact that there were not enough orders to sustain an economical production due to small quantities of products per order as well as the government's lack of support by preferring to use foreign suppliers.

PT Pindad president director Adik Avianto Soedarsono, for example, expected the government to integrate its procurement program into a continuous policy so that defense companies might better plan their production cycles.

"Most procurement is made at such short notice that it is prone to delay," he told the meeting.

Domestic financiers also questioned the government's commitment and guarantee before the banks could channel funds to the weapon producers.

Purnomo admitted the domestic strategic industries, especially those producing weapon systems, still had to work on improving its product quality, timely delivery, after sales service and spare parts.

But he maintained these problems should not prevent the country from procuring more locally-made weapon systems.

He also said strategic industries would be expected to spur the whole national industry sector by providing parts and components down in the supply chain feeding the defense industries.

Indonesia has been under a US and UK-led arms embargo sanctioned by Western countries for alleged human rights abuses.

Many Indonesian weapons are idle due to limited spare parts or restrictions put by the foreign makers on how to use those weapons.

This has revived dreams of an indigenous defense industry especially with current production capabilities, which range from transport vessels and aircraft, armored personnel carriers to small-calibre firearms.

PT Dirgantara Indonesia (PT DI), for example, is producing the medium CN-235 and the light NC-212 Aviocar transport aircraft in a cooperation with Spanish aerospace firm CASA EADS.

CN-235

 

NC-212

These transport aircraft could also modified for maritime patrol and surveillance airfracft. PT DI, based in Bandung, West Java, is also working on anti-submarine warfare (ASW) variants for Turkey.

PT DI also license produces a number of helicopters from American Bell and European Eurocopter.

Also based in Bandung, PT Pindad has moved from license producing SS-1 asault rifles from Belgian company FNC to its own design of SS-2 assault rifle, which is said to combine the accuracy of the American M-16 with the reliability of the Russian AK-47.

State shipyard PT PAL Indonesia has just delivered two landing platform docks (LPDs) for the Indonesian Navy.

The two LPDs were part of a contract of four LPDs with a South Korean company that agreed to have PT PAL build two LPDs as its sub-contractor.

PT PAL has also submitted various designs, from 60-meter offshore patrol vessels to helicopter carriers, based on its 50,000-ton cargo vessel.

It also seems the government is short-funded when it comes to procuring weapons systems, despite the fact the defense ministry's budget is always ranked among the top three.

Mulyani told the workshop her ministry would soon implement regulations allowing domestic banks to finance the procurement of locally made weapons.

In addition to domestic financing, she said it was also possible to use multi-year financing through the state budget.

National banks, both state and privately-owned, said they needed guarantees from the government that it would buy weapons from the producers before the banks would channel funds to those companies.

Purnomo admitted there were two main issuse related to financing: How to finance the procurement of weapons and how to sustain the orders in the long term.

He also said a Defense Industry Policy Committee (KKIP) would be established to coordinate and harmonize various agencies and ministries to revitalize the defense industry.

With such a good start in the planning stage, Purnomo and his team are expected to succesfully execute their plans in revitalizing the domestic strategic industries.

- JP/Novan Iman Santosa