Time to Develop The Domestic Defense Industry

Asian states lead a global increase in weapons imports, according to a study released by the Stockholm International Peace Research Institute (SIPRI). The report was published on 19th March 2012.  Over the past five years, Asia and Oceania accounted for 44 per cent in volume of conventional arms imports, according to the institute. That compared with 19 per cent for Europe, 17 per cent for the Middle East, 11 per cent for North and South America, and nine per cent for Africa, said the report.

For Southeast Asia nations, arms deliveries increased by 185 percent between 2002-2006 and 2007-2011. Indonesia it self, sitting on 26th largest importer of  conventional weapons in the world of a total of 152 countries. In 2012, Indonesia is spending USD 8 billion on defence, it is  up sharply from USD 2.6 billion in 2009. Much is going on new hardware and spare parts. Starting with cooperation to jointly make 3 German-made diesel-electric submarines, 2  unmanned aerial vehicles  (UAV) from the Philippines , 8  AH-64 Apache attack helicopters from the United States , and the most controversial procurements of this year, such as 100 Leopard Main Battle Tanks (MBT) from the Netherlands and 6 Sukhoi fighter jets from Russia. The whole procurement programs as the commitment of the government in strengthening the weapon systems of  the Indonesian Armed Force (TNI).

A number of procurement plans for TNI above are a reflections of the  role and strategic national responsibility of national defence manufacturing industry . In the middle of the whole procurements  of  weapon systems for TNI, a fundamental question that must be made is how the contributions of the national defence industry to provide armaments system needs within the country. This question becomes important considering based on two reasons.  On the one hand,  the lack of guidance on the development of national defense industry, but the other hand the availability of funds of USD 70 billion for purchasing armed weapon systems for the next five years.

Based on research conducted by Jane's Defence and the International Institute for Strategic Studies (IISS) in 2010, there are three global defense industry models, such as  autharchy techo-nationalist model, nitche production model, and global production networks  model.

First , autharchy techo-nationalist is a model of self-reliance defense.  This model refers to  the development of industry on the basis of national capabilities,thereby reducing the level of reliance weapon system from overseas . This model requires the strengthening of the role of state in protecting the development of domestic defense industry and strengthening national technology , especially in the field of research and development . This model also requires the importance of the existence of private companies which have a capacity of large-scale international capital and technology in order to support the development of national defense industry.  Countries that are doing development on the basis of this model are Russia, China, Brazil and South Korean.

Second , nitche production is a model of the competitive level for defence industry. The form of defense industry development that attempted to fill a vacancy market weapons , particularly on regional level . The main terms of the defense industry development based on this model is the level of a country's competitive products to produce armaments, such as an increase in high-tech research and technological innovation. Countries that have developed a model of the competitive level are Taiwan, Finland, Sweden, and Indonesia when produced commercial aircraft N520  CN235 at the 1990s.

Third, the model of global production network. This model  is a development of the defense industry by forming chains of production system of weaponry scattered around the world. This model requires the establishment of global consortium system weaponry . The global arms market trend nowdays is the merger of defense industry into a global consortium.  Countries that are doing development on the basis of this model are United States , some countries European Union and Australia .

Based on third model above , defense industry in Indonesia directed to achieve independence defense (autharchy techo-nationalist) .However , before reaching the stage of the independence of defense , so far in meeting the needs of national weapon systems , Indonesian government did  weaponry diversify. It was done , considering Indonesia did not yet have a strong technological base, so the easiest way executed is to buy conventional arms  from a several  weapons manufacturers globally.

Self-reliance on defense industry is  needed, because up to now 80 percent national armament systems still depend of the international arms market, dominated by global  weapon companies, such as Lockheed Martin, Boeing, Thales, BAE System, Daewoo , and several other global arms producers . Consequently, Indonesia became one of the largest importer in the world. To reduce the level of  arms interdependence, it is necessary to promote political regulation related with defense industry .

Until now,  the development of the defense industry does not have a legal basis of integrating the interests among stakeholders, namely the government, manufacturers and users. So, there is strong exhortation to make a regulation deals with defense industry.  The  Strategic Defense Industry Bill currently being delibareted at House of Representatives (The Jakarta Post, 3/22). The Strategic Defense Industry  must set three main things, such as the placement of defense industry as a strategic industry that requires large role of state in conducting protection (infant industry), the placement of the defense industry as the main parties in the procurement of weapon systems, and a strong commitment to buy local weapon systems from indigenous industry.

First , defense industry in Indonesia should be made nationally strategic industries that must be protected . As a strategic industry , the government must provide protection , such as financial support and tax reduction . Financial support can be used to conduct research and development of products for defense, which admittedly is still far from the expectations of the users.  In addition the support costs can be used to nourish the back a number of business entities of strategic Industries (BUMNIS) who suffered losses. Tax reduction attempted in marketing the products of domestic-made armaments abroad .

Second , the placement of the defense industry as the lead actors in procurement mechanisms of main weapon systems.  The current global trend is the ownership of weapon systems by multinational companies. Apart from it, the leading defense industry must be the main actor in weapon systems procurements , starting from the stage of negotiations to purchase stage. It aims to improve the bargaining position of national defense industry and also reduces the involvement weapon brokers in the process of procurements .
Third budget availability for purchasing main weapon systems is large enough. It is about USD 70 billion for the next five years. The budget must be prioritized for purchasing the indigenous products resulted by major defense manufacturing industries , such as arms and vehicle manufacturer Pindad, aircraft manufacturer Dirgantara Indonesia , and  shipbuilder PAL Indonesia . Those products must comply with a weapon systems request from TNI. Additional, it will increase public welfare with creating new job opportunities. (The Jakarta Globe 24/3).

In the end, the development of  defense industry is highly determined by Goverment’s commitment to strengthen the national defense in the middle of the level of dependency of global armament's products are so high. The strength of the defense of a country is highly determined by the national defense industry.


Hipolitus Wangge
Writter is a  Program Officer of civil society advocacy at Pacivis, University of Indonesia