Indonesian Aero News

[Ananda]

That Twitter Oracle guy yesterday raise question (again) on Indonesia commitment to stay in KFX. Today talk about Rafale procurement. There's rumours in Indonesian enthusiasts forums that French will offer similar 10 years soft financing for Rafale procurement that Egypt got to Indonesia.

With the amount that Indonesia willing to commit in defense, I still stand my opinion there's no way Indonesia can afford Rafale (let alone this 36 contracts) while still committed to KFX. It's either one and not both of them.

However Indonesia perhaps still can afford to stay with KFX if MinDef goes with refurbished F-16 or even 16-24 F-16V (base on similar support infrastructure and training regime costs). Unless Jokowi's willing to sacrifice some of his treasure infrastructure projects, like his new capital.

Could this Oracle heard rumours in MinDef cafeteria on Indonesia breaking out from KFX (again) ? While at same time in the video interview I put above, the 'Madam' President Advisor stated Jokowi's position for continuing defense co-op with South Korea.

Honestly this administration decision making process is getting tiresome. Jokowi's has to take final decision now. He's the president after all.

 

[swerve]

https://www.facebook.com/107396107508066/posts/290559715858370

This's agreement seems related to the effort on keeping Hawk 200/100 in TNI-AU inventory to be operational for sometime around. Especially providing Indigenous support capabilities.

https://infoglobal.co.id/id/detailnews/125

The agreement being call for reverse engineering the Hawk Adour engine. Bit make me wonder on with the capabilities of both companies. This Infoglobal mostly has experience in Avionics, while Nusantara Turbin as DI subsidiary mostly work as Turbine MRO. Both doesn't have (so far) the capabilities to build an engine from ground up. Off course the idea of Habibie when IPTN then build Nusantara Turbine, was to be nucleus of Indonesia own indigenous Gas Turbine manufacturing.

However I don't see they (Nusantara Turbine) have the capability or more important given the Investment necessary to build supporting technology on manufacturing Gas Turbine. ...

The Adour is a 1960s designed engine, in service for 50 years. It first ran in 1968. Of course, it has been improved, but it's still an old design. I think there's a good chance that Rolls-Royce would be willing to license Indonesian firms to build it, or as much of as they can.

 

[Foodsoldier]

MoD has assembled a group of top notch consultant (foreign and WNI) for technical and financing deal structure.

However, MoF and Bappenas still being hesitant and overthink. They are too slow, can't keep up with the urgency of getting all the deal done before 2024. If they don't want to do it, let MoD team do it. Otherwise, I will stick to my opinion that SMI is too old school and can't think out of the box.

note: Head of Bappenas is doing better than SMI, but only because his son is somekind of an advisor for ex deputy MoD.

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This video is been circulate for 2-3 days already. Haven't put it before, since despite that 'madam' defense consultant claim, it's still in my opinion talking on rough concept.

However the other 'madam' presidential advisor put what I've been heard for sometime from my colleagues in Bapenas and Ministry of Finance. The need for details calculation of Life time sustainment costs on defense procurement. This again shown how both agencies already demand the Maintenance and Sustainment has to be calculated from beginning by MinDef, as this is the problem for TNI assets for long time.

She also confirm that planning (especially long term planning) always have risk on changing with the changing of regime/administration. Something that already known especially after Soeharto era. So the question that seems the present MinDef try to do is looking the long term plan more then SBY's MEF plan.

The 'consultant' talk about draft of USD 20+bio and USD 100+bio on defense procurement foreign financing budget try to be lock on this present term of 2020-24. The USD 20+bio has been talk for sometime, and I also heard from Bapenas source that confirm it's what MinDef ask for this term foreign financing budget line. This's still under discussion with Ministry of Finance and Bapenas which still calculate each Financing Term being offered, toward the whole sovereign foreign debt burden(DSR) scenario. They will decide which ones can be considered and which ones considered too heavy for sovereign DSR level.

While the USD 100+ bio is something that's quite new. I suspect since Prabowo's talk about 25 years defense planning before. He wants to look the next 20 years (after this term) financing from now. That'll tricky, as how to lock the financing can results to added financial strains on overall national fiscal budget. If the lock only in numbers, perhaps not. However if the locks on multiyears committed financing line, that's another matter. However I understand their logic to lock the financing plan. Problem with current MEF plan is only shown 'broad' plan on how to proceed. If somehow they can lock the numbers and financing line, it's become more 'structure' plan. This'll be back on how to lock it without becoming up front fiscal burden yet on long term DSR ratio calculation.

All of this shown how the way of planning need to be change, with detail calculation and sustainment plan from beginning. The sustainment if can be lock from beginning will be game changer, cause this is where "multiple" Projects behavior coming from. The side 'projects' mostly not on main procurements (as it's big and usually under scrutinized), however on 'many' smaller sustainment projects.

 

[Ananda]

However, MoF and Bappenas still being hesitant and overthink. They are too slow, can't keep up with the urgency of getting all the deal done before 2024.

It's their job to be conservative and overthinking all aspects. Their job to safe guard Sovereign Economics situation. Their Job is too safe guard the Investors (local and foreign) confidences to the economics situations. If that means they will not giving in to MinDef proposed schemes, and it is MinDef job to find better financing deals.

Their are not slow, they are being cautious and calculate all the financing schemes impact toward the overall sovereign debt ratio. It's their job to do that. The only thing that theoritically can over rule both Finance and Bapenas is executive orders from President. I don't think even Jokowi's wiling to do that without consent from his economics team. Jokowi's so far trust his economics team more than many of his own cabinet.

If the scheme can still meet their safe guard ratio, then they will pass it. If not, then they will not pass it, no matter what some lobbyist with MinDef try to do. The confidence of overall economics machines (local and foreign) is much more important, then some financing scheme cook up by lobbyist in MinDef.

 

[Foodsoldier]

Being cautious is different with being slow/not helpful. One can be cautious but fast at the same time.

According to my assessment, those people in MoF don't even try to open their mind on the proposed financing deal structure by the MoD and its counterpart. They have somekind of a mental block when it comes to defense procurement. They see it as a sunk cost, rather than an investment. This obsolete mindset can be traced back since the era of Widjojo Nitisastro and Habibie, both the most powerful ministers within Soeharto cabinet but follow different approach in developing strategic industries. Widjojo believed in market mechanism, while Habibie encourage govt intervention.

If we're thinking out of the box, 100 billion dollar defense procurement should offer us the opportunity to advance our defense industry more quickly. We can't achieve it with existing 'buy small batch' mindset. $100 billion dollar stretched into 25 years wont make a dent in our debt repayment ability. In return, we can build a more sustainable/integrated defense industry ecosystem.

We need to understand that SMI by training is a regional economics scholar. She's not qualify in the elite monetary economics scholar in FEUI. Agus Martowardoyo performed better as MoF compared to her. Agus managed to secure lower interest rates for govt bonds using his market knowledge and out of the box approach. Agus knows how the market work, SMI not so.

Nevertheless, current MoF shouldn't hide behind 'cautionary or risk calculation', since they did an awful job calculating the risk for infra projects during Jokowi's first term. Not to mention the 'expensive' govt bond interest rates that we need to bare due to their incompetence in dealing with the market. MoF achievement in managing our economy also can be considered very poor compared to regional counterpart. Tax ratio is going down significantly, without sign to recover.

If SMI still doesn't want to cooperate with Jokowi's vision to speed up TNI modernization, I must say he needs to replace her with a more 'politically willing' individual who has better understanding toward the market. Muliaman Hadad, Budi G Sadikin or Rizal Ramli will be a potential replacement.

It's their job to be conservative and overthinking all aspects. Their job to safe guard Sovereign Economics situation. Their Job is too safe guard the Investors (local and foreign) confidences to the economics situations. If that means they will not giving in to MinDef proposed schemes, and it is MinDef job to find better financing deals.

Their are not slow, they are being cautious and calculate all the financing schemes impact toward the overall sovereign debt ratio. It's their job to do that. The only thing that theoritically can over rule both Finance and Bapenas is executive orders from President. I don't think even Jokowi's wiling to do that without consent from his economics team. Jokowi's so far trust his economics team more than many of his own cabinet.

If the scheme can still meet their safe guard ratio, then they will pass it. If not, then they will not pass it, no matter what some lobbyist with MinDef try to do. The confidence of overall economics machines (local and foreign) is much more important, then some financing scheme cook up by lobbyist in MinDef.

@Foodsoldier

You should be careful before you go off on a purely unsubstantiated rant. For your information Ananda knows exactly what he is talking about and whilst he does not wear the blue tag of a Defence Professional , he is a highly qualified professional in the Indonesian Finance field and well respected internationally. As such those of us who are Moderators and / or Defence Professionals hold him in the highest regard and with the highest respect.

This is a professionally run defence forum and as such we have standards that we expect to be kept by all posters regardless of who you are and where you come from. We have a set of rules that everyone is expected to know and follow. A link to them is in my signature. Ignore them at your peril.

Ngatimozart.

 

[Ananda]

They have somekind of a mental block when it comes to defense procurement. They see it as a sunk cost, rather than an investment.

100 billion dollar defense procurement should offer us the opportunity to advance our defense industry more quickly. We can't achieve it with existing 'buy small batch' mindset. $100 billion dollar stretched into 25 years wont make a dent in our debt repayment ability. In return, we can build a more sustainable/integrated defense ind

Again, it will back to how the financing being structure. If those 120+ bio (20bio for that term and 100bio for next 4 term) being structure from beginning to be book on this term, then off course the Finance people will object on that. If those amount being book right away up front, it will make Indonesia sovereign book overlaverage big time. It will put Indonesia Sovereign rating busted, and take away Investors confidences. You will have economic melt down rivaling 1998.

Habibie talk about Investment in strategic Industry, however he can't convince the economics team how to build sustainable ecosystem. This considering the Economics team knows well relaying only to Indonesia domestic order will not be enough. While Indonesia Economics at that time (even in present) doesn't have enough size yet to provide enough export financing line. Look to China now on how they're provide their own export financing for their defense and high tech products. They can do it, after their Economics size able to provide the supporting base for that. There's good Investment and there's bad Investment. All depends on how it's going to be structure financially and how the business prospect on that.

You can't put all the huge Investment up front, when your base in not ready, when your Industry is not ready, when your financial institution are not big enough to support that. That's finance 101.

Muliaman Hadad, Budi G Sadikin or Rizal Ramli will be a potential replacement.

Agus Martowardoyo performed better as MoF compared to her. Agus managed to secure lower interest rates for govt bonds using his market knowledge and out of the box approach. Agus knows how the market work, SMI not so.

If that USD 120 bio foreign financing line is being book up front right away, I can assure you Agus Marto or Budi Sadikin will not taking that also. I know it because both of them are my Bosses in my previous job. Muliaman Hadad also like Agus and Budi are very conservative on committing foreign financial credit line structure. He shown that when he was OJK head. None of them even Rizal Ramli wants to commit themselves on agreeing something that going to busted foreign debt ratio. Again it's finance 101.

You seems doesn't understand that basic things. If you understand that, then you will not got going over and over talking of Ministry of Finance people does not understand and not thinking out off the box. They understand very well, but again it is their job to make sure Indonesian Sovereign Possition is not over leverage toward foreign financing position. Over leverage toward Foreign line, create over valuation toward Indonesian economics based. This can resulted toward over value in IDR against Forex buckets. That's one of the reasons on Asian Financial crises in 1998. All Asian Financial Industry and regulators are very sensitive after that, including Indonesian Financial regulators.

Then again if Jokowi's want to replace Sri Mulyani as current Finance Minister, well he can do it. However I don't think he will do it, only due to SM didn't agree with MinDef Financing scheme.

Again, MinDef is the one that has to come out with foreign financing scheme that will not over burden Indonesian Sovereign book. Multiyears budgeting is come out from Finance Ministry teams. They're the ones that asking the other ministries to come out with long term budgeting in the beginning.

The question from Ministry of Finance is simple actually, how's that going to burden the book. I'm not going to comment more, because I'm not in the liberty to talk on how the proposed line from MinDef are going to calculate toward overall Foreign Credit ratio calculation.

What I understand is that they still calculate overall financing line from all ministries including the projected COVID cost towards overall National budget. How much they can commit to each project depends on that. Simply say, theoriticaly they can commit for MinDef asking USD 120+ bio up front for next 25 years, if other projects being cut including some of Jokowi's precious Projects. Will Jokowi's wants to do that ??

Ministry of Finance can only commit of overall financing that will not make foreign credit line more than 30-40% in ratio. They have to calculate not only from MinDef, but also from other ministries. They also has to calculate toward the total burden including commercial line will be. Even Jokowi's will not going to authorize more than that. He will have problem politically if he's doing that.

 

[tonnyc]

I trust Ms. Sri Mulyani. She helped put a check on Ryamizard's pipe dream of a 100 million strong "bela negara" (defend the country) militia. I trust her to put a check on any crazy plans by the military. The brass needs to make a proposal that makes sense, not just go on an unchecked spending spree.

I share the belief that the defense budget should be doubled, but that's not the Finance Ministry's job. The budget is determined by the parliament. The brass should try convincing the parliament to give them the money instead of trying to take on what would be unauthorized debt in order to finance defense system procurement. If they try anyways then it is the Finance Ministry's job to quash those unauthorized attempts to go into debt. If the brass fails to convince the parliament, that's TNI's failure, not the Finance Ministry's.

The Indonesian military has a long history of being little kings whose spending must not be questioned nor checked in any way. They resent having to give up this privilege, but if we want to have a professional military, we have to. We can no longer just hand the military X billion dollars and rubber stamp everything. The military must be able to pesent a solid plan and then purchases made according to that plan. So far I am not seeing such a plan. Perhaps it's still being written and if so I look forward to it.

 

[Ananda]

I would to add something in here. I have seen some arguments on how Indonesia should increase it's Investment with Foreign Credit line (not only in this forum, but also in other forums), as Indonesian GDP can still manage that.

Indonesia’s External Debt Recorded at USD416.6 billion

www.bi.go.id

.

I put this BI statistics on shown that Debt to GDP ratio is creeping up. From 30+% in 2019, to close to 40% in 2020, and projected toward 41%-42% in 2021. I can tell you that ratio makes us in Financial Industry and those in Financial regulators institution very nervous. Imagine if MinDef proposed USD 120+ bio foreign financing scheme being book all up front in this term (eventough stretch 25 years as some claim as the structure not clear yet), it will shoot up the external debt above 52% ratio.

Granted now Global Debt is increasing due to COVID situation. We in the Industry predicted that the debt situation can only back to normalised after 2022 or 23. However this make everyone that going to take up new credit limit whether in Government or Commercial institutions, has to calculate very carefully. Committing on credit line for long term project will be especially need to calculate carefully, on the viability of cash flow coverage years ahead.

Some argue that after COVID crisis, Global economy will have high growth for at least a decade. This arguments come from situation after great depression in 30's. However the truth is we don't know how the Global economy with still many Geopolitical challenge will work after COVID.

For that with 40+% Debt to GDP ratio, it's very understandable that people in Ministry of Finance, or Bapenas, or BI/Central Bank will be very cautious on committing to any credit schemes (whether domestic one, and especially foreign originated ones). Long term credit line has to be seen on how far this will increase the debt ratio and more importantly how far the annual installment will take up budget room. More links showing how debt ratio is creeping up.

Indonesia Government Debt to GDP

Indonesia recorded a Government Debt to GDP of 39.30 percent of the country's Gross Domestic Product in 2023. This page provides - Indonesia Government Debt To GDP - actual values, historical data, forecast, chart, statistics, economic calendar and news.

tradingeconomics.com

Indonesia Government Debt: % of GDP, 2015 – 2022 | CEIC Data

Indonesia Government debt accounted for 39.0 % of the country's Nominal GDP in Sep 2022, compared with the ratio of 39.0 % in the previous quarter.

www.ceicdata.com

Some in local forums or even local media argue whether the debt ratio can be increase from 40% toward 60%+. Their arguments that with Indonesia GDP already USD 1.0 Trillion + and already in #15-16 globally, we can take more. They're taking example on some countries that already has 60% even close to 100% debt to GDP ratio.

However they're forgot to see those countries have Sovereign Rating much higher than Indonesia. Indonesia sovereign rating only BBB just a notch above Investment grade, while those countries with higher Debt to GDP ratio mostly either A,AA, or even AAA rating. Your credit rating whether you're individual, commercial business or Sovereign Government will tell you how much market confidence toward you on taking debt. It's not seems fair, but that's what real world working.Typical BBB nation usually maintain their debt to GDP ratio around 30%-40%. As those links above shown, we already on that threshold.

The make up of the debt also reflect the economics situation of their population wealth. Wealthy nation's will have more domestic debt sources, cause their population have more wealth on providing domestic credit line source. As Indonesia only a middle income country, our population are not wealthy enough providing most of debt sources. Also the more wealthy your population are, the larger your Tax pool. This will come back to how much your government can provide services, including defense.

Thus for Indonesia possition, we can't provide too much Investment on defense Industry yet. They have to be build gradually reflected on how much their own government can take up the domestic defense Industry products. Because the defense Industry products customer take up will be their own government.

That's why when Habibie's in 90's ask for more Investment in strategic Industry, most of Soeharto's economics team try to pull a break on that. Because they now, Indonesian economy is not big enough to absorb all the products. Sell them abroad as new player need support from local financial institution, just like China do right now (as example). If your financial Industry is not big enough to do that, and how you're going to provide credit line?
Selling strategic Industry products like defense need credit line support.

Even with USD 1.0+ trillion economy, we are not structurally in good position yet. Our financing still much depend toward foreign Investors and Financiers. Singapore for example even with smaller economy size, but financially more independent than Indonesia, as their population tax pool and savings (as sources on domestic credit) proportionally healthier. That's why Financial regulators in Indonesia is working hard to maintain the Debt Ratio on manageable level, in order to maintain global market confidence. Because Indonesia still relatively depends on Global Investors and Financiers more.

 

[Foodsoldier]

After discussion with MoD and Jokowi, apparently SMI has just agreed to allow MoD to get $50++ billion financing.

Congrats to TNI. It will be the biggest defense procurement in our modern history.

Thanks to everyone that make our concern be heard.

Again, it will back to how the financing being structure. If those 120+ bio (20bio for that term and 100bio for next 4 term) being structure from beginning to be book on this term, then off course the Finance people will object on that. If those amount being book right away up front, it will make Indonesia sovereign book overlaverage big time. It will put Indonesia Sovereign rating busted, and take away Investors confidences. You will have economic melt down rivaling 1998.

Habibie talk about Investment in strategic Industry, however he can't convince the economics team how to build sustainable ecosystem. This considering the Economics team knows well relaying only to Indonesia domestic order will not be enough. While Indonesia Economics at that time (even in present) doesn't have enough size yet to provide enough export financing line. Look to China now on how they're provide their own export financing for their defense and high tech products. They can do it, after their Economics size able to provide the supporting base for that. There's good Investment and there's bad Investment. All depends on how it's going to be structure financially and how the business prospect on that.

You can't put all the huge Investment up front, when your base in not ready, when your Industry is not ready, when your financial institution are not big enough to support that. That's finance 101.





If that USD 120 bio foreign financing line is being book up front right away, I can assure you Agus Marto or Budi Sadikin will not taking that also. I know it because both of them are my Bosses in my previous job. Muliaman Hadad also like Agus and Budi are very conservative on committing foreign financial credit line structure. He shown that when he was OJK head. None of them even Rizal Ramli wants to commit themselves on agreeing something that going to busted foreign debt ratio. Again it's finance 101.

You seems doesn't understand that basic things. If you understand that, then you will not got going over and over talking of Ministry of Finance people does not understand and not thinking out off the box. They understand very well, but again it is their job to make sure Indonesian Sovereign Possition is not over leverage toward foreign financing position. Over leverage toward Foreign line, create over valuation toward Indonesian economics based. This can resulted toward over value in IDR against Forex buckets. That's one of the reasons on Asian Financial crises in 1998. All Asian Financial Industry and regulators are very sensitive after that, including Indonesian Financial regulators.

Then again if Jokowi's want to replace Sri Mulyani as current Finance Minister, well he can do it. However I don't think he will do it, only due to SM didn't agree with MinDef Financing scheme.

Again, MinDef is the one that has to come out with foreign financing scheme that will not over burden Indonesian Sovereign book. Multiyears budgeting is come out from Finance Ministry teams. They're the ones that asking the other ministries to come out with long term budgeting in the beginning.

The question from Ministry of Finance is simple actually, how's that going to burden the book. I'm not going to comment more, because I'm not in the liberty to talk on how the proposed line from MinDef are going to calculate toward overall Foreign Credit ratio calculation.

What I understand is that they still calculate overall financing line from all ministries including the projected COVID cost towards overall National budget. How much they can commit to each project depends on that. Simply say, theoriticaly they can commit for MinDef asking USD 120+ bio up front for next 25 years, if other projects being cut including some of Jokowi's precious Projects. Will Jokowi's wants to do that ??

Ministry of Finance can only commit of overall financing that will not make foreign credit line more than 30-40% in ratio. They have to calculate not only from MinDef, but also from other ministries. They also has to calculate toward the total burden including commercial line will be. Even Jokowi's will not going to authorize more than that. He will have problem politically if he's doing that.

 

[Foodsoldier]

Maybe on his field in general, @Ananda is an expert. But, in the matter of recent Indonesia defense procurement, I don't think he know exactly what he's talking about. @Ananda is an outsider, he gathered every small bits of information to analyze the problem. There are many members here who are an insider, but they just keep silent and watch.

If you want to improve the quality of information in this forum, you need to start encouraging those insiders to share their thoughts.


@Foodsoldier

You should be careful before you go off on a purely unsubstantiated rant. For your information Ananda knows exactly what he is talking about and whilst he does not wear the blue tag of a Defence Professional , he is a highly qualified professional in the Indonesian Finance field and well respected internationally. As such those of us who are Moderators and / or Defence Professionals hold him in the highest regard and with the highest respect.

This is a professionally run defence forum and as such we have standards that we expect to be kept by all posters regardless of who you are and where you come from. We have a set of rules that everyone is expected to know and follow. A link to them is in my signature. Ignore them at your peril.

Ngatimozart.

 

[Ananda]

But, in the matter of recent Indonesia defense procurement, I don't think he know exactly what he's talking about. @Ananda is an outsider, he gathered every small bits of information to analyze the problem

I never say I'm a defense profesional. This forums is open if there's Indonesian "insiders" on defense industry and procurement wants to share their thought. However this forums also very strict on whose the person claim to be (as Ngati already mention).

However what you are ranting on Ministry of Finance is matter of budgeting and Finance. Something that I'm very familiar about. You claim on Ministry of Finance people and their Minister does not understand on latest trend in the market, then I shown you the otherwise. If you have problem with me telling you don't understand the very basic of Financial Market work and what is the basic duty of Ministry of Finance, well because your post shown that.

I already told time to time in this forum, many of bits information that I got outside media on Indonesian Defense procurement comes from my contact/colleagues in Government Financial Institutions. Off course they don't provide details on what's MinDef projects outside that already in Media. They are proffesional enough. However what ever that MinDef plan, will not be implement without their consents. They are talking to us in the market and industry as part of their job. Not only on defense matter, but all matter that come out in media. Their job to keep confidence that they are in controls on financing scheme of whatever plan this administrations do.

So despite all "Insiders" talk in the social media, forums and media, it will not going to happen without those "Finance" people consents.

For me that's more information that needed. You seems not like that the defense procurement has to pass the "Finance" people. Guess what, that happen in most "proper" government procedures in the world.

Still if you or other "Insiders" want to contribute, please do. However please take a look on the rules of this forums. The rules set by the administrators and moderators in this forums to make sure, whatever being talked is something that have "Substantial" in source, realistics and achievable. One of the reasons I joint this forums, asside to learn defense matter from some of the best in the world, also to make help making sure that what ever discussion on Indonesian defense stay realistics. Not turn into nationalist bravado and wishy washy that happen in most Indonesian defense enthusiast forums.

There's a lot defense projects and "planing" cook up in MinDef by the "Insiders". However many of them also turned back and does not meet cut in Bapenas and more importantly with Ministry of Finance. So far Jokowi's still trust Sri Mulyani judgement. He will not going to commit some financial move (including defense projects) without his economics team consents.

If as you claim SM approved USD 50 bio (instead USD 120+bio or more as originally asked by MinDef), then it is already based on Finance Team assesment on the Foreign Line structures and it's impact on Indonesian Sovereign book. Because it's their job and duty to make sure Indonesian book is properly manage and can provide confidence to the Market, Investors, and Finance Industry (which I'm also part of it). Thus this USD 50bio as you claim (don't heard it yet from Finance people), I also believe it will still structure to make Indonesian Book Leverage within manageable and acceptable level. Market confidence is very important. Their forces can bring down a Dictactor like Soeharto let alone 'elected' President on the era after him.

Add:

O well, seems you already tick Moderators too much. However if any Indonesian members (especially the silence ones) want to contributes. Please do, just stay in the rules and provide substantial topics. Don't talk much on something that still in 'rumours' area as something fix. This is not that kind of forum.

 

[ngatimozart]

Maybe on his field in general, @Ananda is an expert. But, in the matter of recent Indonesia defense procurement, I don't think he know exactly what he's talking about. @Ananda is an outsider, he gathered every small bits of information to analyze the problem. There are many members here who are an insider, but they just keep silent and watch.

If you want to improve the quality of information in this forum, you need to start encouraging those insiders to share their thoughts.


@Foodsoldier

You should be careful before you go off on a purely unsubstantiated rant. For your information Ananda knows exactly what he is talking about and whilst he does not wear the blue tag of a Defence Professional , he is a highly qualified professional in the Indonesian Finance field and well respected internationally. As such those of us who are Moderators and / or Defence Professionals hold him in the highest regard and with the highest respect.

This is a professionally run defence forum and as such we have standards that we expect to be kept by all posters regardless of who you are and where you come from. We have a set of rules that everyone is expected to know and follow. A link to them is in my signature. Ignore them at your peril.

Ngatimozart.

You appear to be keen on picking a fight with a Moderator which is never a good idea, and your answer contains the attributes of a troll so you are banned forthwith for trolling. Bye.

 

[Ananda]

This's already become talks in Indonesian defense enthusiasts for couple of days, since Lockheed Martin update their sites as May position. In here they put Indonesia as users for C-130J-30.

I'm very careful to read this, in one hand when LM update their C-130J lists operators, seems shown they already got definitive contracts from Indonesia. At same time there's rumours process of contract for "Heavy Transport" (which in TNI-AU C-130 being catagorise as one), talk being processed using excess fund from 2019 budget.

I got info from "finance" people that the process for Transport aircraft 'usually' can got more priority rather then Fighters. This as during present situation, transport aircraft dual usage is more preferable to be push toward implementation. Like I said before, I value 'rumours' from Finance people much more then 'rumours' of so call 'insiders' that circulate in Indonesian social media or forums.

Defense budget even before Prabowo's asking for more bigger portion, already is one of big post in overall Government budget. It also one of ministries that consistently provide 'poor' planning. Prabowo's vow to rectify that, something that many in Bapenas and Ministry of Finance wait with hope but still with scepticism. Making TNI and MinDef change their planning behavior can be historical if they can change.

Anyway even this already come from LM official sites, as always 'rules' on Indonesian procurement; "Nothing is certain until the assets being build and deliver".

 

[OPSSG]

@Ananda and @Sandhi Yudha,

Are these replacements for C-130Bs or C-130Hs? IIRC in 2008, ST Aerospace was awarded a 4 C-130B Retrofit Contract. These should be approaching end of life, if their centre wing box is not replaced soon.

If they are C-130B replacements, new transport aircraft are badly needed. In Dec 2016, the TNI AU lost a 5th C-130H (since 2000). This aircraft crashed in the country's Papua region; and I think the current priority is correct.

 

[Sandhi Yudha]

@Ananda and @Sandhi Yudha,

Are these replacements for C-130Bs or C-130Hs? IIRC in 2008, ST Aerospace was awarded a 4 C-130B Retrofit Contract. These should be approaching end of life, if their centre wing box is not replaced soon.

If they are C-130B replacements, new transport aircraft are badly needed. In Dec 2016, the TNI AU lost a 5th C-130H (since 2000). This aircraft crashed in the country's Papua region; and I think the current priority is correct.

SkU 31 and SkU 32 fly with a mixture of C-130B, C-130H and C-130H-30 aeroplanes. Those half century old C-130Bs really need to be replaced soon, but i am afraid TNI-AU will fly with them for many more years, because the new created SkU 33 also need a squadron of Herculeses.

Also the single KC-130B needs to be replaced. It shouldn't be a problem to have 1-3 KC-130J besides some A330-200 MRTTs.

 

[Ananda]

This aircraft crashed in the country's Papua region; and I think the current priority is correct.

Yes the current priority for Transport is already correct. However there's also bit 'sinister' reasons on that. The Transport contract usually have more clear cut condition. The type of Aircraft and planning based is relatively more define well.

While Fighters have more, well 'complication'. More 'factions' wants to involved, more 'politics' try to play in, more 'interest' try to weight in. That's I suspect why the planning for Fighters or even other combat assets like Submarine have longer process to weight in.

 

[Ananda]

I got this 2019 study from TNI-AU site sometimes ago. Just for a reading on shown TNI-AU effort for standardizing their assets. The studies talk more on how to modified all L-100 civilian grade engine into C-130H military specs engine.

This for me shown TNI-AU technically knows well how important to standardizing and reduction of logistical foot prints. They already learn that from many studies they got from other Air Force, and Industry consultants. At the time of this study publish in 2019, the C-130 inventory in TNI-AU are 16 C-130H/HS (including ex RAAF), 7 C-130B (including one Tanker), and 4 L-100. There're 5 C-130B being upgrade to H standard, and this study talk about upgrading 3 L-100 to H standard including modified TNI-AU substantial L-100 engine block to H engine standard.

I put this on the threads just to shown, the TNI-AU multiple diversified inventory is due to Political decision from various Administration so far (especially after Soeharto). Left alone, the present TNI-AU technical teams seems know well the importance of standardize their inventory.

Perhaps this's why LM still shown some confidence that F-16V will get the order. Seems they know the support for more F-16 within TNI-AU still there. For me this's shown that if MinDef got the budget for their 'fancier' fighters. Then choose just either one of Rafale, F-15EX, or KF-21. Choose one of that, and let the backbone of TNI-AU fleet handle by F-16 family. Sell the Flankers if necessary. It's not the matters of getting deterrence factor (like many TNI brass talking), but getting efficient and effective Air Force.

Perhaps because the Transport fleet high utilisation, that TNI brass agree for the standardizing move. However why they still want to entertain this 'diversified' strategy for the Fighters fleet is beyond me.

Hopefully with the 'Finance' people now demand them to make more detail planning including life time sustainment cycle cost, more effort for standardizing can be achieve.

Whether you have commercial fleet or military fleet, the idea still the same. It's inefficient to have multiple types in your fleet. Multiple types only benefit the 'insiders' for multiple jobs they can get.

 

[Sandhi Yudha]

"L'Indonésie très, très proche de monter à bord du Rafale"

L'Indonésie très, très proche de monter à bord du Rafale

Le contrat portant sur l'acquisition de Rafale attend un décret présidentiel, qui permettra d'abonder des lignes budgétaires du ministère de la Défense pour financer cet achat.

www.latribune.fr

So from which i understand (according to La Tribune!), Indonesia is very close to have a deal with France to order the Rafale. The contract for the acquisition of Rafale awaits a presidential decree, which will make it possible to supplement budget lines from the Ministry of Defense to finance this purchase. ...or something.

They dont give any details, like amount, value and delivery time, but as always we just have to wait and see how this develops.

 

[Ananda]

They dont give any details, like amount, value and delivery time, but as always we just have to wait and see how this develops.

There's a lot off things that this administration has to prepare the detail explanation not only to Parliament, but also to the public. This Rafale deals will be the biggest defense procurement to date (if we are talking either 24, 36, or 48 depends on the sources):

• How to Finance it: The talk if Prabowo's want to lock the financing line (both domestic and especially foreign ones) actually has been known for sometime. What ever the number is, it will be politically sensitive issue. Like I said so many times, whatever the number is, it will have to be shown by Finance team as within manageable threshold ratio for our Sovereign book.
• What Local Industry Involvement: That kind of amounts off course going to be asked politically for substantial local Industry involvement. We have been shown tid bits of French looking to work with Nusantara Turbine. However I don't think it will be enough on the amount, if only with Nusantara Turbine alone. It can be with local Industry not related to Aero, or even defense. However has to be in substantial amount. With that kind of amounts, they have to make sure something has to be back to local economy. India can be an example how their Rafale program still getting political scrutinized.
• How to maintain them: The life cycle cost maintenance right now getting politically sensitive. With many accident involving aging assets (including Nanggala), there's going concern the TNI MRO activities has to get thorough audit and reassessment. It also means the 'Finance' people will going to ask more detail planning how to do it and what's going to be the costs and potential discrepancies toward life cycle contracts.
• How about standardisation: Even many younger generation of TNI officers already fully aware now, the importance of maintenance and standardizing equipment for better readiness. They have to shown what's the plan in future for Fighters aircraft. Is Frenchie Rafale going to be the next standard ? Which standard going to he maintained in future ? Can TNI-AU afford to maintain multiple origin aircraft from France, US, UK, ROK, and Russia ? Or Which one going to be cut and retire ? We see in Transport they are going to standardizing with Airbus/DI origin plus US LM and Boeing. Thus how about the Fighters ?
• Which Project going to be cut: There's no way with our condition at this moment, we can afford all MinDef plan. Let alone locking that kind of financing amount during present time. Even with USD 50 bio (that Foodsoldier claim and ranting about), mean there's has to be some non defense projects being sacrifice/cut. This off course on the assumption on locking the lines during this term. That's going to be potentially Political sensitive. There's still many people that think what Prabowo's wants is too much for defense.

In the end, getting more financing line for defense will reflect toward Political consensus of Indonesian Political circles and publics. Will this nation want to commit themselves for more defence budget ? Will this nation Military willing to submit more on external MinDef control on their procurement and maintenance practices ? Will this country sacrifice some of civilian projects for Military development ?

Again, many in Indonesia (especially with defense enthusiasts) only think the percentage of GDP. However what's more important is percentage of Government budget to GDP. For that GDP percapita also become more factor then total GDP for Government Tax income pool. In short, we are big economy relative only by number but not yet on wealth. This represent the limitations for Government capabilities to raise money domestically. Which in the end reflect how much the government can provide services including defense.

 

[Ananda]

Menhan Prabowo Pimpin Rapat Pleno KKIP Tahun 2021

Bisnismetro.id, Jakarta - Menteri Pertahanan Prabowo Subianto selaku Ketua Harian Komite Kebijakan Industri Pertahanan (KKIP) memimpin Rapat Pleno KKIP Tahun 2021, Kamis (20/5) di Kementerian Pertahanan, Jakarta. Agenda pada rapat tersebut di antaranya adalah pembahasan tindak lanjut arahan dari...

bisnismetro.id

This is actually nothing new. Just more reinstatement of Political Position of this administration on Defense Procurement Projects.

On Thursday meeting with Defense Industry Policy Committee (KKIP), Prabowo's reiterate that all foreign defense procurement has to involve either Tech Transfer, Offset or Local Industry work share. He doesn't stress it has to be related to that particular assets, so again it's means some value of the contracts has to return toward Indonesian defense Industry development.

This's what I believe going to be Political sticking point that can be used by opposition or even among coalition parties, if they found some procurement doesn't provide 'value added' toward local Industry. On the other hand if local Industry involvement also not being followed throughly, they can results the locals only play as agent without significant value added on their capabilities. In the end the defense Industry has to evolve as commercially viable and financially bankable industry. Not a stagnant financially depressed companies.

Well we can see how DI so far not evolve enough as Airbus Agent and Sub Contractor, compared to PAL or Pindad. Not PAL or Pindad already ideal, but at least they are developing more on business chain projects and have 'a bit' healthier bottom line .

Indonesia can either take example from India, Turkey or South Korea on how developing their defense Industry. The first one is not good example relative compared to later ones, thus can be an example on what not to be following.