Rabu, 03 April 2013

Indonesia Defence & Security Report Q2 2013 - New Market Research Report

BMI's Indonesia Defence & Security Report for Q2 2013 examines the country's strategic position in the South East Asian region and the wider world. It provides an overview of the contemporary geopolitical challenges facing the country, and the developments it may face in the future.

The report examines the trends occurring in Indonesia's current and future defence procurement, and the orderof battle across its armed forces. The report's general conclusion is that after many years of strategic isolation, Indonesia is emerging as an important player in the Asia-Pacific region. In keeping with this development, the Indonesian military, after years of underinvestment and foreign vilification over its activities in East Timor, is starting to reap the rewards of an increasing defence budget and also of the country's improving international reputation.

First, this means that the Indonesian armed forces are beginning to procure advanced new equipment to replace an inventory that is generally nearing obsolescence. New materiel on order includes Apache Longbow attack helicopters from the United States, Sukhoi fighters from Russian, light combat aircraft from Brazil, tactical transport planes from Spain, and advanced trainer aircraft and diesel-electric submarines from South Korea. A fast-growing defence budget has of course enabled these acquisitions. In late 2012, Indonesia announced still more procurements, including Javelin anti-tank guided missiles from US contractor Raytheon, and the potential acquisition of three offshore patrol vessels from BAE Systems.

Secondly, thanks to its much-improved international reputation, Jakarta is now in a position to obtain used military equipment on relatively favourable terms. Among the second-hand items that Indonesia has acquired relatively cheaply are armoured vehicles, including main battle tanks, from Germany, F-16C/D fighters from the US, and C-130 transport aircraft from Australia.

Thirdly, Indonesia is beginning to revamp its underperforming domestic defence industry, with a view to achieving self-reliance in key equipment areas in the future. In Asia, key defence industry partners now include China, India and South Korea, with Japan also opening discussions on increasing military cooperation in early 2013. Further afield Australia and the UK have recently signed deals with Jakarta aimed at assisting the development of local industry while boosting market access for British and Australian companies. UK Defence Minister Philip Hammond visited Jakarta in January 2013 to push for British participation in Indonesian defence programmes. The US is also ready to support Indonesia's industrial modernisation, with Lockheed Martin expressing a desire to work with local companies in Indonesia in upgrading the air force's existing fleet of F-16A/Bs.

Finally, Indonesia's stature has risen considerably within its own region. As the host nation of ASEAN, Indonesia has come to be seen as something of an honest broker by others in the region, and Jakarta has played an active role in attempting to mediate disputes between China and ASEAN members over territories in the South China Sea, for example. Meanwhile, other countries, such as Australia, now see closer ties with Indonesia as a cornerstone of their foreign policy.

The only serious clouds on the horizon for Indonesia are domestic, and the government of Susilo Bambang Yudhoyono has struggled to make headway with its internal security agenda. Having seen his efforts to establish a new National Security Council frustrated in parliament, Yudhoyono issued a Presidential Instruction in early 2013 which sought to achieve much the same ends, namely to facilitate agency collaboration and military intervention in the event of domestic crises, such as social conflicts (which are a growing problem in Indonesia). However, the president's critics have said that he is undermining human rights, while NGOs point out that the government already had the power to intervene and prevent social conflicts, and in particular violence against religious minorities.

Over the last quarter BMI has revised the following forecasts/views:

* The implications of President Yudhoyono's Instruction 2/2013 on national security are discussed in detail, as are Indonesia's latest internal security developments.

* Indonesia's latest military procurements are also reviewed in detail. In addition to the deals described above, Russia confirmed that it was providing U$400mn in credit to Jakarta for military procurements; Japan is attempting to sell its U-2 seaplane to Indonesia; and South Korea is targeting Indonesia, now one of its key export markets, as a possible first customer for its Surion utility helicopter.

* Jakarta is to provide a U$144mn cash injection to the country's main state-run defence firms, while pressing overseas partners to put Indonesian defence industry development at the heart of any proposed military sales.

Bill Thompson

  ● Live.pr  

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