Towering Budget for New Weapons
Budget for primary weapons systems is suspected only known to the defense ministry. The government is preparing a legal structure so that the budget is not disturbed until all debts will have been paid off.
DEFENSE Minister Prabowo Subianto, hounded by journalists about plans for the purchase of primary weapons system (alutsista), turned and accused reporters of knowing more about it. He refused to divulge budget details for the purchase of alutsista, which amounts to more than Rp1,700 trillion. “How do you know that? You know more (than I do),” said Prabowo after a meeting with the House of Representatives’ (DPR) Defense Commission on Wednesday, June 2.
Seven hours prior to that, Prabowo held a closed meeting with the Defense Commission. The meeting was scheduled after a draft document of a Presidential Decree regarding defense and security equipment needs fulfillment for the defense ministry and the armed forces started circulating in public. The draft showed that the defense ministry planned to spend up to US$124.995 billion. The majority of those funds would come from foreign debts with interest rates of up to Rp200 trillion.
Prabowo said that Indonesia’s primary weapons system is archaic and needs to be replaced. He claimed to have a defense planning concept ready, and has organized its funding budget. That draft must still be discussed with other institutions, such as the finance ministry and the National Development Planning Agency (Bappenas).
The plan to purchase weaponry has already been in the news in the past two months. Coordinating Minister for Politics, Justice, and Security Affairs Mohammad Mahfud Mahmodin said that he has had several discussions with Prabowo, Finance Minister Sri Mulyani, State-Owned Enterprises Minister Erick Thohir, and National Development Planning Minister Suharso Monoarfa. Without giving the exact timing, Mahfud said the final stages of the alutsista purchase will be done at the Presidential Palace.
Based on some data, the government concluded that the minimum level of armed forces weaponry has yet to be met. The defense ministry has also compared Indonesia’s military strength to that of other nations. “We have looked at Indonesia’s military strength and weaponry,” said Mahfud.
This former head of the Constitutional Court said the meeting did not discuss the alutsista budget, including the number of Rp1,700 trillion to be spent by the defense ministry. Rumors of Teknologi Militer Indonesia (TMI)—a company owned by the defense ministry and managed by several members of Prabowo’s Gerindra Party—of having received a procurement project for weaponries was also not mentioned in the meeting.
Mahfud further said that the meeting did not go smoothly during discussions of funding schemes, as ministers did not want the weapon purchase to drag down the state budget. In a number of discussions, the government has calculated the possibility of funding the alutsista purchase in installments for several years from the defense ministry, without increasing its budget. “We have managed paying off credits with the existing annual budget,” said Mahfud.
In the latest discussion, the government is in the process of completing a legal structure so that the credit scheme would not be changed until the debts are paid off. Meanwhile, the defense ministry will also review the feasibility of the alutsista that may be purchased.
Discussions surrounding rejuvenating the alutsista has continued to make the news since the Armed Forces’ Nanggala-402 submarine sank in the Bali waters in April killing all its crew. On April 28, a week after the incident, President Joko Widodo invited over several ministers and members of the Defense Industry Policy Committee. A Presidential Palace official familiar with the meeting said that during the 10-minute discussion, the President ordered the defense ministry to immediately evaluate conditions of all alutsistas. The President also pointed to Nanggala-402’s tragedy as a momentum to evaluate the weaponry’s feasibility.
Minister Suharso Monoarfa explained that the issue of technology transfer also came up in that limited meeting. President Jokowi wanted the alutsista modernization to also support the national defense industry’s development. “The government wants to buy those new equipments, and also absorb the producers’ technology,” said the chair of the United Development Party (PPP).
The giant alutsista budget has been a point of contention in the DPR’s Defense Commission. Commission member from the ruling Indonesian Democratic Party of Struggle (PDI-P), Effendi Simbolon, believes the foreign loans will be a burden to the state finance. The weaponry rejuvenation also has the potential to stall if the government does not continue the program. “Its legal foundation has to be strengthened, not just with a Presidential Regulation,” he said.
According to Effendi, during the meeting on June 2, Prabowo said that the alutsista purchase would not disrupt the state budget. This former Special Forces commander said the foreign credit scheme will be provided by weaponry-producing countries. However, Didik J. Rachbini, economist from the Institute for Development of Economics and Finance, estimated that the weapons purchase will burden the state budget. According to his calculations, the government current debt stands at Rp6,300 trillion. “The government will bequeath debts worth over Rp10,000 trillion,” he said.
Major Gen. Rodon Pedrason, Defense Ministry’s Director-General for Strategic Security, claimed that the alutsista credit scheme would not disturb the national budget. He explained that the government has received loan commitments of between US$5 billion and US$7 billion, or between Rp70 to 100 trillion, spanning 28 years with interest rates lower than one percent. “So, these are very soft loans. Payments can be made each year from the defense budget allowed by the government, with long installment periods,” he said.
The defense ministry, Rodon said, has already secured commitments from countries that have veto rights in the United Nations Security Council. Those countries are believed to be potential loan providers for Indonesia in the alutsista purchase. The five countries with veto rights in the Security Council are the United States, China, France, Russia, and the United Kingdom.
Prabowo has visited all the permanent members of the UN Security Council after becoming minister in October 2019. He has explored Indonesia’s opportunities to buy weaponries from those countries. Prabowo has also considered secondhand alutsistas. In a letter to Austrian Defense Minister Klaudia Tanner, he said he was interested in acquiring 15 Eurofighter Typhoon jets. Until now, however, no details have come out regarding this possible transaction.