Thursday, 11 October 2012


The Government was relying on domestic defense industry in the production of arms by involving some BUMN. The fund being provided for the procurement of arms came to Rp 100 trillion through 2010 – 2014. 75% of the amount was used for building new arms and the rest for maintenance of existing arms. The allocation of fund each year was adjusted the Government forces would have their supply of arms from domestic industry.

The Government also allocated on top fund amounting to Rp 57 trillion for arms expenditures which was adjusted to the state’s finance. But this fund would only be liquid when it was approved by the Government and house and would be used for the next 15 years ahead. The Government was expected to change the paradigm from being buyer to producer of arms in the spirit of independence. With the change of paradigm, the potential loss to be borne by the state could be avoided and the same time to promote strategic industry at home.

The development of arms itself was aimed at efforts to produce more sophisticated arms through  mastery of high technology. The effort was synchronous with the effort to use local components. So it was necessary to enhance the spirit to spur on advancement of Indonesia’s technology particularly in the development of arms. The development strategy was based on transfer of technology by inviting foreign investors to build arms manufacturing industry in Indonesia.

Budi Darmadi, the Director General of High Tech based Premium Industry of the Ministry of Industry in Jakarta of Friday (10/8-2012) the role of integrator industry of arms in Indonesia today depended on BUMN for strategic industry under the supervision of The Ministry of BUMN. Some of them were PT Dirgantara Indonesia which produced airplanes, PT PAL as producer of ships and PT pindad as producer of panzers and arms.

The Ministry would focus on industry of arm components like radar, arms parts and personnel trucks. According to Budi, in this modern world today arms did not have to be produced entirely and solely by a producer or nation. It was customary for one nation to complement each other in arms components. “We are striving to engage foreign investors to build arms component factory in Indonesia” Budi was quoted as saying.

The procurement of components was not necessarily in the form of arms alone. The industries of automotive components, ships, electronic parts and Information Technology (IT) could contribute to the production of arms. The Government sets target to establish stronger arms industry in Indonesia in the next five years. The sources of technology transfer could be industrial states like Holland, Italy, Germany, South Korea, Japan, China etc.

Meanwhile member of the Working Committee of the Bill of Law of Arms Industry Al Muzzamil Yusuf rated the industry of arms and security could serve as solution toward an independent national defense system. According to Yusuf, arms industry should be based on independence, so Indonesia did not have to be an eternal buyer country. For that matter, the Bill being discussed in Parliament was expected to empower domestic human and industry resources. Implementation of the Law could open employment opportunities for the people. Furthermore Yusuf remarked that the Government, in this case the Ministry of Defense served as determinant factor in policy making in arm industry, to encourage use of local made arms “The Ministry of Defense and TNT (the army) had their commitment to prioritize production of arms at home in Indonesia” Yusuf concluded.

Business News - August 15, 2012

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