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Transfer of wealth and capability to Indonesia

No commentary or analysis from me in this post, that will come later.  For now, just a few facts.

Australian Aid to Indonesia

Indo aid 1

The graph above shows the Australian Official Development Assistance to Indonesia, including AusAID funding and funding by other government departments (OGD).

Indo aid 2

Australia's relationship with Indonesia is described in full here.

The Australian Strategic Policy Institute blog carried this analysis of Indonesia's defence budget about one year ago.


The defence budget of the Republic of Indonesia has seen a significant increase in 2012, reaching US$8 billion—an increase of 29.5% from the previous year. The funding increase is intended to meet Indonesia’s minimum essential force (MEF) requirements. One purchase will be the main battle tank (MBT) Leopard 2A6 from Germany. The final purchase of 100 units is the result of tortuous negotiations after an earlier sale of the same type of tank was rejected by the Dutch parliament, leaving the vehicles available for sale elsewhere. Indonesia is determined to boost its armour to the equivalent of the forces of Malaysia and Singapore, who acquired MBTs some years ago.

But behind the purchase of Leopard tanks, there are is a crucial observation; the concept of procurement of military capability by Indonesia is not particularly well-planned. The Indonesian Ministry of Defense and the Indonesian military’s (TNI) headquarters have both expressed interest in buying the MBT, for different reasons. For TNI, it is a step up in capability, as their current armoured vehicles include only light tanks. From the government’s point of view, it’s a chance to implement a government purchase scheme which, by eliminating the role of broker, will reduce the occurrence of corrupt practices.

But as the impact of financial crisis that plagued Europe took hold, Indonesia was offered an opportunity not only in the form of an offer to buy the Dutch Leopards, but also AH-64 Apache helicopters and F-16 Block 52 fighter jets (which would mean TNI would at least have weapon systems comparable to Singapore’s and Malaysia’s). But on the other hand, Indonesia’s military procurement strategies seem to be emotionally driven; Indonesia wants to be seen to be keeping up militarily with neighbouring countries.

In September last year, the United States Government's Defense Security Co-Operation Agency announced the proposed sale to Indonesia of 8 Apache attack helicopters plus ancillary equipment with an envisaged sale price of $1.42 billion.  The notification is required under US law.


Indo aid 3

On 26 August, 2013 US Defense Secretary Chuck Hagel visited Indonesia to announce the sale of 8 Apache helicopters in a joint press conference with President Yudhoyono.

Hagel indo sale


On 3 September, 2013 The Strategist blog carried this analysis of the purchase.

Apache 2

Why does Indonesia need Apache gunships?

3 Sep 2013

The recent visit by the US Defense Secretary Chuck Hagel to Indonesia was concluded with a decision to sell eight Boeing AH-64 Apache Longbow gunship helicopters worth US$500 million to the Indonesian Army (TNI-AD). The package includes pilot training, radars, and maintenance. However, arguments surrounding the purchase echo concerns about Indonesia’s decision to buy 100 Leopard 2A6 main battle tanks. The Apache gunships are primarily designed to attack other gunships, slow low-flying aircraft, or are used for ground attack and as anti-tank strikes. It simply doesn’t make sense when Secretary Hagel says that they ‘will help Indonesia respond to a range of contingencies, including counterpiracy operations and maritime awareness’. So why did Indonesia buy them?

Similar to the Leopard purchase, there seems to be a sense of ‘catch-up’ with the region in Indonesia’s Apache decision. As one analyst notes, Indonesia’s military procurement strategies seem to be emotionally driven, with a desire to keep up with neighbouring countries. But there are other reasons too.

The Army has been eyeing gunships for some time under the so-called ‘Minimum Essential Force’ (MEF). As per President Yudhoyono’s decree, the MEF is a capability upgrade program for TNI to be achieved in three stages by 2024. Moreover, Indonesia’s Defence Minister said that the TNI should have more modern capability, which it has lacked for the last 20 years. In March 2007, the Army revealed its 25 year plan to acquire around 135 helicopters to form eight squadrons. The plan started with the purchase of Mi-35 gunships in 2003 and 2008. Other than the Apache, the Army also intends to procure Eurocopter AS 550 Fennec light military helicopters.

The article continues at The Strategist

But there’s another intriguing thing about the deal. For a full package, the DSCA estimated the cost of eight Apache for Indonesia at US$1.42 billion. Why then is the current deal only worth a third of that? It’s possible that the deal doesn’t include all of the armament and support systems. Such a scaled-down acquisition isn’t new in Indonesia’s arms purchases. For example, in 2004, Indonesia bought its first four Sukhoi jet fighters unarmed.

As such, it’s necessary to take Indonesia’s Apache purchase, and other arms purchases to come, with a pinch of salt. Buying platforms doesn’t equate to increased capabilities, let alone if those platforms are sourced from different countries with different weapon systems—precisely the way Indonesia does. Arguing that arms procurement should be diversified due to concerns over embargoes, or for any other reason, comes with an associated risk of platform incompatibility and hence, ineffectiveness. For this reason, Indonesia is still a long way off modernising the TNI, even after the MEF is achieved.

Just let all that sink in for now.   More on the world's most populous Muslim nation soon.