Indonesian Aero News

[Sandhi Yudha]

I'd rather they don't, they have plans on equipping company or platoon level unit with standardized anti tank launcher like the new Carl Gustav, what about that plan?

I have no idea, but TNI-AD already has the NLAW and FGM-148 Javelin, hopefully they will not choose another anti-tank missile.... or order another MANPADS for low and slow flying targets at short range.

Anyway, here a Jakartapost article about the discussion of the "Long-Term TNI Modernization Plan ".

https://twitter.com/x/status/1407585480166711297

 

[Ananda]

$20,7 billion for all three branches, that means $6,9 billion spread evenly, $1,38 for each year.

The talk that circulate so far, the procurement credit line will be divided 40:40:20 so not evenly. The Army will got the smallest portion on foreign credit line allocation. Mind you that this USD 20.7 bio is Foreign Credit line for overseas procurement. Not related to operational defense budget (The Army usually still get the largest portion on that considering the amount of personel and network of operation).

So TNI-AL and TNI-AU will got more or less similar portion on foreign credit line for overseas procurement. As the Army if the allocation like that, I'm bit sceptical they will get MV-22. However perhaps they will get S-70i or perhaps few additional AH-64E as compensation. Again this is just my own prediction base on potential credit line alotment.

 

[Arji]

I have no idea, but TNI-AD already has the NLAW and FGM-148 Javelin, hopefully they will not choose another anti-tank missile.... or order another MANPADS for low and slow flying targets at short range.

Probably shouldn't discuss it here, but I think it's different from those ATGM-types. The Carl Gustav is more or less supposed to fill the same role as the C-90 or something. As for MANPADS, I hear there's also plan for that in company composition, but it's just hearsay... not really reliable.

 

[Ananda]

https://twitter.com/x/status/1407786787611807752

Well, I expect this guy will tweet like this. Afterall if only USD 20 bio being agreed by the 'finance' guys, his 'Rafale' projects or other his bread and butter projects from French can face problem. Face it, French projects are more expensive to attain compare to some of other Euro sources, let alone to US or Asian Sources.

However, will the 'finance' guys willing to risk sovereign book ratios during this critical stages of economic recovery on this next couple of years ? I highly doubt that. So if there are more credit line going to be agreed for MinDef, is either other ministries giving up their projects or the credit line some how being packages as part of Joint Venture Investment projects.

The latter one in fact the scheme that Japan try to offer. The scheme from my understanding will work as part of JV share work with Indonesian Partners. It will be 'actually' still credit line, but some of them can be 'book' as part of Investment.

Well, again will see how far those Defense Consultant/Agents can work to get more line, for saving their bread and butter projects.

 

[Ananda]

The F-16 Block 72 for Indonesia: The Ideal Bridge to 5th Gen Capabilities

The F-16 Block 72 is the latest version of the F-16 and delivers cutting-edge technology to the Indonesian Air Force (IDAF) in the most advanced F-16 configuration on the market today.

www.lockheedmartin.com

From LM page, shown LM smell opening. Well they're going to campaign on value of money packages. No wonder French and their agent got nervous, and try to lobby for more budget.

The photo seems coming from latest exercise of USAF and TNI-AU in Riau Pekanbaru AB. However seems this's USAF ones. They should put photo of TNI-AU latest upgrade Projects.

 

[Ananda]

Seems when I take a peak to Indonesian forums, blogs whether in Web, Twitter or FB, there's still confusion on the difference between annual budget and procurement using foreign credit line. So, I'll try to put it again (eventough it's already been posted several times). Hopefully it can be useful for anyone who read, including Indonesian silent readers.

Whether you're Government agencies or Commercial business, the concept still the same. Each year you make your own budget for your operation. Including in that budget is expenses that you're going to pay that year for capital expenditure (asset procurement included). Your asset procurement can be bought either by cash or using credit line. However when you're buying your assets using credit line, then the post will not going to put the name of the assets. They will put as part of annual installment for loan payment.

At least that's what will be seen on the public report. Those assets that bought by cash, will be shown on procurement assets post, while the assets that bought by credit line will be post under annual loan installment. Thus if you buy something using loan, there will be the cost on annual installment that going to post in your Income Statement report. However in your balance sheet, it will stated the whole credit balance toward your overall assets.

This is where I see some debate on loan burden. Many think only from Income Statement perspective. They think as long as the annual installment still can be paid covered by annual budget, then it's alright. In sense if you buy USD 100K car being installed by 10 years, the annual cost burden more or less will be similar to buying USD 40K car being installed by 4 years (+/- difference in interest). Well it's not complete picture.

If you buy 100K car (with credit) while you only have 150k assets, then your Debt Ratio burden already reach 66%. For many creditors and Investors means it's already highly leverage. While if you buy 40K car (with credit also), then your Debt Burden ratio only 26%. An healthy leverage ratio. As a Banker (for example) off course I will be more comfortable to lend you more money or Invest in your projects, if you have more healthy leverage ratio.

That's what the government 'finance' people calculate. If MinDef (rumours) ask for USD 120+bio foreign credit line to be disburse this term, then it will jump Indonesia sovereign book debt ratio. Regardless the annual installment still can be service by annual budget. That's why the 'finance' people will calculate how much foreign credit line ceiling that they can give MinDef for this term. If 'finance' people only agree on USD 20+bio, then it's the ceiling limit they're comfortable to give (considering the whole book situation I mentioned above).

What 'finance' people need to scrutinized (by law) is the level of credit line especially Foreign Currency ones. Why ? Because Indonesian government income mostly come from Tax income (just like most Government in the world). Thus as Tax, those income are in the form of local currency (IDR). Any government 'finance' people job has to control their Sovereign Book exposure toward foreign currency exposure. Thus any non IDR loan, will have to get their permission as it can raise Indonesian sovereign book exposure toward foreign currency.

So there are two things why 'finance' people are the ones that give permission for MinDef plan on using Foreign Credit Line:
1. Controlling Debt Burden Ratio,
2. Controlling Foreign Currency Exposure.

MinDef or any other government ministries/agencies, can have direct control for any expenses that already allocated for them from State Budget, especially if it is IDR expenses. However on getting new loan or getting foreign currency exposure, they have to go through the 'finance' people.

Any loan disbursement will become burden for next state budget for years to come. That happens for any government and any commercial organization. That's why every loan in any organization need clearance from 'finance' people. Minister of Finance is the nation Chief Financial Officer, Bapenas Head is the nation Chief Planning Officer. Both are 'finance' guys that need to give their judgement toward nation CEO (President) on any loan exposure planning. This's how government work, and good CEO will take their CFO and Chief Planning consideration more important on matter concerning Finance including Loan Financing.

That's why so many times I said, if Defense Procurement will using Credit line for financing, then 'finance' people decision will matter more then the technical people (in this case MinDef) or any 'consultant' they have.

 

[Sandhi Yudha]

https://twitter.com/x/status/1407786787611807752

Well, I expect this guy will tweet like this. Afterall if only USD 20 bio being agreed by the 'finance' guys, his 'Rafale' projects or other his bread and butter projects from French can face problem. Face it, French projects are more expensive to attain compare to some of other Euro sources, let alone to US or Asian Sources.

However, will the 'finance' guys willing to risk sovereign book ratios during this critical stages of economic recovery on this next couple of years ? I highly doubt that. So if there are more credit line going to be agreed for MinDef, is either other ministries giving up their projects or the credit line some how being packages as part of Joint Venture Investment projects.

The latter one in fact the scheme that Japan try to offer. The scheme from my understanding will work as part of JV share work with Indonesian Partners. It will be 'actually' still credit line, but some of them can be 'book' as part of Investment.

Well, again will see how far those Defense Consultant/Agents can work to get more line, for saving their bread and butter projects.

1. You are giving too much attention to that amateur wannabee journalist.
2. Thank you so much for your explanation in post #2086. Even you have maybe already told before in other words, for normal people without a financial/economic background like me, we are still struggling with such things.

The talk that circulate so far, the procurement credit line will be divided 40:40:20 so not evenly. The Army will got the smallest portion on foreign credit line allocation. Mind you that this USD 20.7 bio is Foreign Credit line for overseas procurement.

3. If TNI-AU really will get 40% of $20,7, then they can spend $8,28 billion. This can be enough for example, for 2 A330 MRTTs, 36 Rafales or 36 F-16Vs and 5 C-130Js. Maybe even for an additional squadron of second hand F-16s, to be upgraded later. But after this there is nothing left over, and that (sorry Ahmad) will be a good reason for the current administration to spend nothing on the KF-X while pretending Indonesia hasn't stepped out of the project.

 

[ChestnutTree]

1. You are giving too much attention to that amateur wannabee journalist.

To be fair, I enjoy @Ananda 's posts about him

In light of the recent budget allocation I hope it will force the MinDef's hand when it comes to the fighter program. Instead of the Rafale they can order more F-16's + Tankers/AWACS; Replace the Flankers years down the line with whatever nonsense that the MinDef insist on.

3. If TNI-AU really will get 40% of $20,7, then they can spend $8,28 billion. This can be enough for example, for 2 A330 MRTTs, 36 Rafales or 36 F-16Vs and 5 C-130Js. Maybe even for an additional squadron of second hand F-16s, to be upgraded later. But after this there is nothing left over, and that (sorry Ahmad) will be a good reason for the current administration to spend nothing on the KF-X while pretending Indonesia hasn't stepped out of the project.

I think considering how cheaper it is to procure the F-16V over the Rafale you can squeeze in either the AWACS program or the GCI program. I don't know how they are going to procure more MRADs however.

 

[Ananda]

You are giving too much attention to that amateur wannabee journalist.

Well that twitter guy simply too obvious in my opinion on his Agenda .

TNI-AU really will get 40% of $20,7, then they can spend $8,28 billion. This can be enough for example, for 2 A330 MRTTs, 36 Rafales or 36 F-16Vs and 5 C-130Js.

considering how cheaper it is to procure the F-16V over the Rafale you can squeeze in either the AWACS program or the GCI program.

That's what will be interesting to see. Whether logical and efficient move on fleet readiness development or political 'deterence' thinking that prevail. Fleet efficient logics will put TNI-AU to leverage LM assets supply chain. We can call this as the efficient value of money on building fleet readiness (considering what TNI-AU already build).

However historically pure efficient and economicals logic never been high within Indonesia Bureacracy. We are lucky if in the end middle ground bein taken. Hopefully it will not turn out like Qatari or even Egypt move. Creating extreme 'diversification' which (as @OPSSG implied) in turn creating stupidity of efficiency with costly endevour.

 

[Ananda]

Pusat Kelaikan Kemhan RI

www.kemhan.go.id

This is couple days old news, from MinDef official sites. This talk on certification of Camcopter S-100 VTOL UAV, given toward Schiebel Agents Bhineka. Certification usually related to an assets that being source through local company for TNI operation.

I remember few years ago during one of Indo Defense, local media talk about this UAV as local manufacturing when the company is only an agent from Schiebel. I don't know if this company then creating assembly facilities, and call it made in Indonesia

 

[Sandhi Yudha]

Pusat Kelaikan Kemhan RI

www.kemhan.go.id

This is couple days old news, from MinDef official sites. This talk on certification of Camcopter S-100 VTOL UAV, given toward Schiebel Agents Bhineka. Certification usually related to an assets that being source through local company for TNI operation.

I remember few years ago during one of Indo Defense, local media talk about this UAV as local manufacturing when the company is only an agent from Schiebel. I don't know if this company then creating assembly facilities, and call it made in Indonesia

"Kegiatan berjalan lancar dengan selalu memperhatikan Protokol Kesehatan dan Pencegahan Covid-19."
I really become sick of the obsessive use of such unnecessary sentences.

Anyway, ive never heard about any contracts signed for the Camcopter S-100. I also never see this item on any shopping/wish list of TNI-AU.

 

[Arji]

Maybe its procurement from years prior?

 

[Sandhi Yudha]

Maybe its procurement from a years prior?

Ive checked Schiebel's press releases all the way back to 2014, but i found nothing about any contracts with Indonesia...
Maybe ive to check other sources too.

 

[Ananda]

Anyway, ive never heard about any contracts signed for the Camcopter S-100. I also never see this item on any shopping/wish list of TNI-AU.

That MinDef site article talk about TNI-AU that's going to use. However I remember few years back the ones that shown interest are the Navy/TNI-AL.

TNI AL Lirik Schiebel (Rajawali) S-100, Apa Saja Keunggulan Naval Drone Asal Austria Ini?

Jagad drone helikopter di Indonesia mulai ramai sejak setahun belakangan, persisnya setelah Badan SAR Nasional (BASARNAS) mengoperasikan drone copter SDO 50V2 buatan Swiss, ditambah kedatangan drone copter Saab Skeldar V-200 untuk misi intai maritim pesanan Kementerian Pertahanan (Kemhan) RI...

www.indomiliter.com

So why suddenly being talk for TNI-AU ? Perhaps mistaken quotes ? Anyway if this Bhineka going to assemble and put their name on the UAV, they can take 'loop hole' on procurement policy as domestic sourcing. I guess they are still on pitching stages now.

Anyway

UK government reports export credit arrangements for 2020

The UK's export credit agency, UK Export Financing (UKEF), revealed in its annual report on 22 June that it had underwritten a record GBP12.3 billion (USD17.1 billion)...

www.janes.com

I put this as bit odd (at least for me) on why UK Export Financing provide credit line for C-130J procurement. This financial institution usually financing UK defense export. Kind like US EXIM Bank that provide financing line for US Defense export.

Are this related to procurement plan for 5 C-130J from LM ? If yes, why not through US EXIM Bank? Both financial institution are government owned, and their financing line usually related to their own export.

Or perhaps this is another deal ? Could they are for ex UK C-130J ? Just like recent Bangladesh deal for ex RAF C-130J ?

Defence news and analysis | Shephard

The latest defence news and analysis across air, land and naval domains.

www.shephardmedia.com

Again that's just my own speculation, so nothing solid to base on. Just bit unusual for UK Export Finance providing credit line for non UK export.

UK Export Finance

We advance prosperity by ensuring no viable UK export fails for lack of finance or insurance, doing that sustainably and at no net cost to the taxpayer. UKEF is a ministerial department, supported by 1 public body .

www.gov.uk

I put this, as UKEF clearly being constructed by British government to support UK export. So why financing C-130J to Indonesia ?

 

[Arji]

The Janes article also mentioned financing some Thales system, for KCR perhaps?

 

[Ananda]

The Janes article also mentioned financing some Thales system, for KCR perhaps?

It's air defense system from Thales UK, my guess is for more Starsteak missile system. That part is make sense being finance by UKEF, as that's part of UK military complex export items.

 

[Sandhi Yudha]

That MinDef site article talk about TNI-AU that's going to use. However I remember few years back the ones that shown interest are the Navy/TNI-AL.

TNI AL Lirik Schiebel (Rajawali) S-100, Apa Saja Keunggulan Naval Drone Asal Austria Ini?

Jagad drone helikopter di Indonesia mulai ramai sejak setahun belakangan, persisnya setelah Badan SAR Nasional (BASARNAS) mengoperasikan drone copter SDO 50V2 buatan Swiss, ditambah kedatangan drone copter Saab Skeldar V-200 untuk misi intai maritim pesanan Kementerian Pertahanan (Kemhan) RI...

www.indomiliter.com

So why suddenly being talk for TNI-AU ? Perhaps mistaken quotes ? Anyway if this Bhineka going to assemble and put their name on the UAV, they can take 'loop hole' on procurement policy as domestic sourcing. I guess they are still on pitching stages now.

Anyway

UK government reports export credit arrangements for 2020

The UK's export credit agency, UK Export Financing (UKEF), revealed in its annual report on 22 June that it had underwritten a record GBP12.3 billion (USD17.1 billion)...

www.janes.com

I put this as bit odd (at least for me) on why UK Export Financing provide credit line for C-130J procurement. This financial institution usually financing UK defense export. Kind like US EXIM Bank that provide financing line for US Defense export.

Are this related to procurement plan for 5 C-130J from LM ? If yes, why not through US EXIM Bank? Both financial institution are government owned, and their financing line usually related to their own export.

Or perhaps this is another deal ? Could they are for ex UK C-130J ? Just like recent Bangladesh deal for ex RAF C-130J ?

Defence news and analysis | Shephard

The latest defence news and analysis across air, land and naval domains.

www.shephardmedia.com

Again that's just my own speculation, so nothing solid to base on. Just bit unusual for UK Export Finance providing credit line for non UK export.

UK Export Finance

We advance prosperity by ensuring no viable UK export fails for lack of finance or insurance, doing that sustainably and at no net cost to the taxpayer. UKEF is a ministerial department, supported by 1 public body .

www.gov.uk

I put this, as UKEF clearly being constructed by British government to support UK export. So why financing C-130J to Indonesia ?

1. It is absolutely possible that the UK Export Finance provides a credit line for the export of 5 ex-RAF C-130J to Indonesia. More than that, i think your prediction is correctly. After all, in the Defence Command Paper of 2021, its written that "The Royal Air Force will retire the BAe146 as planned by 2022 and take the C130 Hercules out of service by 2023. The A400M Atlas force will increase its capacity and capability, operating alongside C-17 Globemaster and Voyager transport aircraft and tankers. "

2. That also means that the acquisition of these 5 C-130J aircrafts is not part of the $20,7 billion budget for 2021-2024.

3. Ive read somewhere here at Defencetalk, that the RAF's C-130Js made many flighthours, but i can not believe that these flighthours exceeding TNI-AU's C-130Hs, let alone the flighthours of the C-130Bs.

 

[Arji]

How does LM factor into this? Cause I thought the contract was signed between LM and MinDef.

 

[Ananda]

is absolutely possible that the UK Export Finance provides a credit line for the export of 5 ex-RAF C-130J to Indonesia

If this UKEF financing line related to surplus RAF C-130J, then looking to the amount of line of GBP 75 Mio or USD 105 Mio, it's smaller toward Bangladesh deal of USD 150 Mio for 5 C-130J. Unless Indonesia top up the deal with their own money. It's plausible since sometimes Indonesian MoF also add their own financing on top foreign credit line.

I read somewhere (forgot the article) that Bangladesh deal is also got financing line from UK. If it's true then the financing most likely come from UKEF, just like when buying Americans usually being finance by US EXIM Bank.

How does LM factor into this? Cause I thought the contract was signed between LM and MinDef.

That's good question. We heard on media that there's a deal in making for C-130J direct from LM. That deals if direct from LM should be finance by US EXIM Bank. Just like F-16 deals in late 80's-early 90's. Similar thing with AH-64E deals during end of SBY era or refurbished F-16.

Indonesian defense procurement despite all the public questioning on using Credit Line for defense procurement lately, is already use Credit Line from Soeharto era. In fact this also happen to most other ministries procurement, especially big items. I already put lengthy explanation before why most big items export globally always use Credit Line.

So back to this UKEF financing, that's my question is. Why UKEF and not US EXIM. That's why I speculate the UKEF C-130J deal is separate with MinDef and LM talk on C-130J.

Could that be they (MinDef) want to make a squadron of C-130J with combination of new ones (direct from LM) and used ones (ex RAF surplus) ? For one thing they plan to have 3 full squadron of C-130, while the inventory now of C-130H (including ex RAAF surplus) only can make 2 full squadron. That also includes four to five C-130B that has been refurbished to H standard.

Marshall expects strong demand for surplus UK Hercules

Set to be retired from Royal Air Force use in 2023, the service’s Lockheed Martin C-130J-30 tactical transports will represent an attractive proposition for secondhand buyers, according to support provider Marshall Aerospace and Defence Group.

www.flightglobal.com

For one thing UK is looking and try to provide good package to sell/export RAF surplus C-130J fleet.

 

[Ananda]

Few days ago, there's a meeting between ROK Foreign Minister and his counterpart from Indonesia. There're several items that being talk and sign for further cooperation. However my point is the difference perspective from each nation media reporting base on each minister perspective.

Indonesia dan Korea Selatan Bekerja Sama Kembangkan Vaksin COVID-19

Menteri Luar Negeri Retno Marsudi, Jumat (25/6) menerima mitranya, Menteri Luar Negeri Korea Selatan Chung Eui-yong, di kantornya di Jakarta. Keduanya membahas kerja sama bilateral, termasuk soal penanganan pandemi COVID-19.

www.voaindonesia.com

Top diplomats of S. Korea, Indonesia agree on close cooperation for joint fighter project | Yonhap News Agency

SEOUL, June 25 (Yonhap) -- The top diplomats of South Korea and Indonesia agreed Friday to...

m-en.yna.co.kr

So ROK media talk more on defense cooperation while from Indonesia talk more on Vacinne development perpective. Doesn't mean both cooperation has not been in the agenda. However this shown in my opinion the difference perpective agenda.

Korsel Berharap Bisa Kembangkan Kapal Selam dengan Indonesia

Menteri Luar Negeri Korsel, Chung Eui-yong menuturkan, kerjasama pertahanan Indonesia-Korsel cukup baik, tapi dia ingin kerjasma kedua negara terus diperluas. Korea...

international.sindonews.com

This is the only Indonesian media outlet that mentioning defense cooperation during the visit. According to this, it's ROK Foreign Minister that shown the hope on continues defense cooperation.

RI Dorong Peningkatan Perlindungan Pekerja Migran dan ABK Indonesia di Korea Selatan - Tribunnews.com

(Menlu RI) Retno Marsudi menerima kunjungan Menteri Luar Negeri Korea Selatan (Korsel) Chung Eui Yong di kantor Kemlu RI, Jakarta, Jumat (25/6/2021)

www.tribunnews.com

While Indonesian Foreign Minister talk more on protection of Indonesian workers in South Korea.

Thus the way I see it. Both ROK and Indonesia foreign minister sign further agreement on development Vaccine Covid cooperation. However they emphasise different agenda asside Health/Covid, with Indonesian side emphasises workers/economic cooperation and ROK side emphasis more on defense cooperation.

As this is Defense forum, It will be interesting how the ROK agenda on Submarine and Fighter development will further receive from Indonesian side.