Indonesia’s Minister of Defence, Prabowo Subianto, has forwarded a proposal for the country to receive up to USD20 billion in defence-related foreign credit and...
www.janes.com
I put this three months old article, just to show why personally I'm still very sceptical for this Rafale or even Eurofighters deal. Base on the foreign credit line allotment that MinDef can get for Fighters deal.
When I see USD 20 bio foreign Credit allotment, base on some talks that I got with colleagues in Bapenas and Ministry of Finance on how multi years budgeting will work, I say USD 20 bio still workable eventough in my opinion bit stretched.
As I have mentioned in this thread (or perhaps on other Indonesian Armed Forces thread), since the time of Soeharto, big Defense items procurement usually used Foreign Credit line. Which's actually quite common worldwide. Based on usual credit line that Indonesian Government used for Capital Goods procurement, the term usually similar with Sovereign MTN that Indonesian Government put in the Market.
Thus it's around 5 years to 10 years tenure period. Say this USD 20 bio credit line got 10 years tenure. Thus it means on the current Indonesian Sovereign debt rate by accumulated 10 years period, Indonesian government have to pay up to USD 24 bio on total installment and interest cost. That's mean for period of 10 years, there's USD 2.4 bio from annual defense budget will be used to pay the credit line.
The way I see, Bapenas and Ministry of Finance still doing budget even with multiyears budgeting on conservative ways. Thus if in USD term Indonesia Defence budget currently around USD 9.5 bio, then for next 10 years, they will calculate at most of USD 12-13 bio average (this's with conservative increase and calculate exchange rate fluctuations).
So USD 2.4 bio taking on from annual defense budget of USD 12 bio average for next 10 years already represents 20% of budget. So far that's percentage that being used each year for Foreign Procurement. That's why I say it's doable even bit stretched.
Thus at best Prabowo's MinDef can only doing Foreign Procurement at USD 20bio during this term. Which's why I think Jane's number still make sense.
Back to Rafale, they're talking 36 or even 48 Rafale. However that'll cost much higher then USD 3 Bio credit allotment for Fighters that I heard being allocated already. Again this USD 3bio is the calculation for 24 F-16V and 11-12 Su-35 that already being forwarded to Ministry of Finance. In such with that kind of allocation, MinDef can still expect to get 36 F-16V (if they drop Su-35 and considering TNI-AU already invest on F-16 support infrastructure), but not 36 Rafale.
Considering MinDef want to have MPA, AEWC, Heavy Lift Helicopters, Frigates, Corvettes, OPV, Area Defense Missile, etc, I'm very doubtful that they can allocate more for Fighters than USD 3 Bio that being calculate and prepare for F-16V and Su-35 before.
So unless they got more than USD 20 bio for Foreign Credit allotment, I don't think Indonesian MinDef simply can afford Rafale or Eurofighter in amount that needed. Again if looking with Bapenas and Ministry of Finance ways on preparing Multiyears budget calculation, I'm very doubtful they will allocated more Foreign Credit line to MinDef.
Jokowi's have a lot of infrastructure agenda that he's planning. I don't think he will agree for Defense budget of more than 1% of GDP during the rest of his term. Unless he drop his agenda for new capital, which I highly doubtful.