Dian Firmansyah (dian.firmansyah@yahoo.

com)

Component Maintenance Defence .MRO -. GTSI Aerospace ± Manufacturing ‡ Civilian Aerospace ‡ Military Aerospace GMF NusantaraTurbin & Propulsion (NTP) GMF NusantaraTurbin & Propulsion (NTP) Aero Nusantara Indonesia (ANI) ± MRO ‡ ‡ ‡ ‡ Airframe and Modification Engine Maintenance Line Maintenance Component Maintenance Aero Nusantara Indonesia (ANI) ‡ Defence ± ± ± ± ± Pindad PAL (see Aerospace Manufacturing) LEN Industri Pindad SSE.Naval System .Airborne System .Engine Maintenance -.Segment Aerospace .Line Maintenance -. Lundin (see Aerospace Manufacturing) Global Asia Teknologi Fajar Indah Land Systems Naval Systems Air Systems C4ISR Others .Others SOE/SoE Subsidiary Private ‡ Dirgantara Indonesia UAVindo.Manufacturing .Airframe and Modification -.Land System . Hoverindo Palindo Marine.C4ISR .

UGM. etc) Relevance Develop policy to grow industrial capacity and capability Develop policy to foster building research capability of defence industry Research and development of satellites. remote sensing and delivery systems Provide research and development service for government projects and SoE Basic science research Defence policy and procurement of defence systems User requirement of defence systems Budget approval for defence systems Budget approval for defence systems Develop synergy between SoE Budget approval for defence systems (major projects) worth more than 50 Billion Rp Provides ad-hoc research cooperation & expertise pool for strategic defense industry .Parties Ministry of Industry (MOI) Ministry of Research & Technology (MORT) National Aerospace Research Agency (LAPAN) Agency for Assessment and Application of Technology (BPPT) Indonesian Science Agency (LIPI) Ministry of Defence (MOD) Indonesian Armed Forces (TNI) House of Representatives (DPR) Ministry of Finance (MOF) Ministry of SoE (MSOE) National Development Planning Agency (Bappenas) Technical Universities (Bandung Institute of Tech. UI. Surabaya Institute of Tech.

Lundin. GTIS. combat management systems. Life Cycle Support PAL. metal work. Pindad. overhaul and maintenance µGeneric¶ Aerospace MRO Workshops in Indonesia. forgings. bolts. INKA. Palindo Prime Marine. SSE Texmaco Principal First Tier Suppliers Second Tier Suppliers Systems (engines & transmission) Subsystems : operational management systems. wire & cabling Upgrade. Contractors Hoverindo. electrical/electronic components Paints. Asiatek Dahana. weapons and electronics systems Special components and services LEN Industri. Dirgantara. Dirgantara Companies . UAVindo. Boma Bisma IndraRaw Material Metals. composites. Sari Bahari Krakatau Steel. conversions. Pupuk Kaltim Workshop. integrated weapons systems and direct customer interface PAL. Barata. radar. PGASI. Pindad. sealants.Companies Supply Chain Industrial Activity Complete. Aviator. castings.

MoRT : PAL. providing supplementary products The lower tiers in Indonesia is still very limited in terms of technology and industrial capacity.ƒ The Indonesian A&D value chain is more visible in the top  Most of Prime Contractors are Strategic SoE (BUMN Strategis) under auspices of MoD. Pindad. Dirgantara Indonesia  These companies comes as a result of gov defence industrial policy that prioritized on building prime contractor tier first with substantial investment and protection from the state ƒ ƒ Some private companies later emerged in early 2000s as prime contractors. MoI. that majority of subsystems and components for prime contractors acquired from foreign supply chain  Many of local lower tiers started as companies serving commercial market and then later began serving defence prime contractors  Lower tiers companies is under auspice of the MoI . MoSOE.

munition. land systems Commercial ship and Naval ships Civilian and Military Aircraft Commercial and military explosives Electronics and telecom . Combat Mgmt Systems Manufacturing of telecom systems Steel products Manufacture train-related products Manufacture Diesel Engines Steel works Remarks Designated as SOE Main Strategic Industry Designated as SOE Main Strategic Industry Designated as SOE Main Strategic Industry Designated as SOE Main Strategic Industry Designated as SoE Strategic Industry Designated as SoE Strategic Industry Designated as SoE Strategic Industry Designated as SoE Strategic Industry Designated as SoE Strategic Industry Designated as SoE Strategic Industry .Companies Pindad PAL Dirgantara Indonesia Dahana LEN Industri INTI Krakatau Steel INKA Barata Boma Bisma Indra Products/Activities Small arms.

production infrastructure. Gov heavy investment in subsidy.ƒ Pre-1970 Era  Gov taking over A&D industry legacy from the Dutch (1949). with task to produce profit A&D barely survives. Fast Patrol Boat 57m)  Private companies began to grow as subcontractor for A&D industries  ƒ Post-Asian economic crisis (1998-2003) Gov stopped subsidy to A&D and placed them under MoSoE. with massive lay off and restructurization of A&D industry. R&D capability & brainware  Start with the end. with strong vision but lack of resource allocated to A&D industry ƒ BPIS Era (1970s-1998) A&D industry consolidated under Badan Pengelola Industri Strategis (BPIS/Strategic Industries Governing Agency) who assume central role in A&D industries. End with the start philosophy (begin by doing system integration and later moving down the value chain)  A&D industry successfully engaged in a number of license production projects and acquire needed technology (Example: CN-235. Erosion in manufacturing and R&D capability  US and West bloc military embargo 1991-2005   .

including defence procurement Presidential Decree No. License production.2/2009 on Increased Use of Domestic Products  Gradual improvement in defence planning and procurement and gov related processes Multiyears budgeting allowed since 2009  Foreign procurement more inclined to avoid Western technology Preference to Countries with Transfer of Technology (TOT) scheme (Co-production. Co-design) Russia become biggest weapons supplier to Indonesia . 80/2003 on Government Procurement of Goods and Services Presidential Decree No.ƒ Resurgency Era (2003-present)  Nation-wide consensus to achieve self-reliance in defence  Reaffirm domestic preference in gov procurement practice.

ƒ Resurgency Era (2003-present)  A&D conducting reverse engineering on low and medium technology. a number of tech transfer project scored success SS2 Assault Rifles (Pindad). Hovercraft. Radar & C4ISR System Some companies exported to international customer : SSE. CN-235 MPA & Nc-212 MPA (DI). Fast Missile Boat (KCR-40) (PAL)  Private system integrator in A&D industry began to emerge: UAV. Lundin  Establishment of Defence Industrial Policy Board (KKIP) in early 2010  Strategic partnerships initiatives by MoD (2010) . Recon Vehicles.

only 35% of this market will be served by Indonesian Aerospace MRO shops Source: Media .ƒ Aerospace MRO Market  Currently there are 55 companies related to Aerospace MRO activity in Indonesia  The market for Aero MRO for Indonesia is expected to grow from $700 M in 2009 to $2 Billion in 2014  Due to limited capability and capacity.

101 17.132 32.06 1.41 .2 1 0.8 0.98 0. SIPRI) 1.4 1.6 0. Trillion Rupiah the defence of budget has been slashed into just below 1% of GDP  Indonesian Gov has plans to reincrease the defence budget into 1% of GDP in 2011.4 1. National Development Plan (RPJMN) 20102014 MILEX % of GDP (Source : World Bank.6 1.ƒ Defence Market  Weathering the 2008 economic crisis.25 1.25 1.91 Planned Expenditure for Upgrades and New Systems (2010-2014) 35 30 25 20 15 10 5 0 TNI HQ Army Navy Air Force 7.2 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 1 1.265 Trillion Rupiah (8.22 0. This translates into 5 Billion USD for 2011  A total of 78.632 21.36 1.7 Billion USD) is allocated for upgrades and purchase of new systems between 2010-2014  Share of Indonesia s Defence Industry is estimated not more than Rp 1 Trillion (111 Million USD) annually (less than 10%) Source : SIPRI.org.4 0.

ƒ Indonesia exported at least 525.5 Million USD of A&D products since first export in 1995  Mostly DI s products: CN-235 NC-212  Other products: 6x6 APC (Pindad) Indonesia A&D Industry Export 250 200 150 100 50 0 1990-1994 1995-1999 2000-2004 2005-2009 Million USD Source: SIPRI Database .

the lack of Gov ability to ensure decisions are implemented down to the lowest level  Poor governance practice Late disbursement of payments toA&D industry Multiyears projects not allowed until recently  Weak commitment from user (MoD and TNI) to use products and services from indigenous defense industry Agency-driven procurement (Comission-driven procurement) began to diminish ƒ Internal A&D industry   High dependence on foreign supply chain. Crash Projects without long-term. consistent capability planning Confusion in A&D industry to invest in technology and brainware Non existence of Defence Industrial policy and Defence Procurement Policy  Lack of leadership and commitment in Gov Gov affirmative policy and action The devil is in the details. leads to: Haphazard planning.ƒ Environment  Absence of National Defence Blue Print. due to immature lower tiers Stagnant and eroded R&D capability in A&D industry Years of poor financial standing and disincentive to invest in R&D capability  Synergy with other SoE .

production of 4 vessels by PAL Program worth 700 Million Dollars. aimed at tech transfer & increased local content while fulfilling national needs  4.2 Billion (20% of the development cost) Production to start in 2020.5 G fighter jet (KF-X) project with South Korea (2010) Joint development : Indonesia to contribute US$1.ƒ A&D industry partnership in with foreign companies. 15% by State Budget First Unit operational by 2014 Local content target of 40%  Light Tank project : Pindad FNSS Turkey Co-design . co production of 13-14 tonnes tank by 2014 . Dirgantara will manufacture 50 units  PKR-105 Frigate project (2010-2014) Co-design with Damen Schelde (DSNS).

ƒ Government affirmative action  Certainty of procurement order. availability and timely disbursement of fund  Removing restricting regulation (example : tax & duty on imported components)  Foster synergy among SoEs. risk management. and synergize R&D capability distributed among gov bodies. openness to advice and being more responsive to customer feedback . military and A&D industry  Protection of Indonesia A&D industry Negative list on military system imports Enforce offset /local content policy to avoid free fight competition ƒ A&D industry  Enhance their marketing ability  Go faster at the learning curve by partnerships and R&D investment  Change their culture : meritocracy.

UAV. transport platforms.SoE have been and will continue to be the backbone of Indonesia A&D industry ƒ Private A&D industry role begin to grow and assume supplementary roles in prime contracting/system integration ƒ  Most are small and medium company  Still limited to non-lethal products: C4ISR. etc ƒ Strong drive towards self sufficiency  low share (but growing) of local A&D industry products in Indonesia s military procurement ƒ Era of Strategic partnerships ahead .

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ƒ Pindad  Small arms License production of SS-1 Assault Rifle (1984) SS-2 (own design) in 2005  Design & Production of 6x6 APC (2006) 150 units order for Indonesian army ƒ PAL  Landing Platform Dock 125 meter  KCR-40 Fast Missile Boat. with Tacoma. Germany  Sigma Corvette with Damen. Netherlands . South Korea  Fast Patrol Boat-57 with Lurssen.

ƒ Dirgantara Indonesia (DI)  Rotary Wing: NBell 412. NBO-105  NC-212 (1976) License production Over 100 units delivered to national and int l customers  CN-235 (1986) Co-design and co-production with CASA Market success with 28 international customer Military Transport version Maritime Patrol version Civil Transport version . NAS-332 Super Puma.

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