Saturday, July 11, 2009

Indonesia to increase defense budget by Rp 7 trillion

The Indonesia government is planning to increase its defense budget by 20 percent next year to Rp 40.6 trillion (US$4 billion), part of which will be used to replace aging weaponry in the military.

Meanwhile, the State aircraft manufacturer PT Dirgantara Indonesia (DI) is still not hitting its potential, with sales of planes to the military valued at only Rp 254 billion (US$25 million) between 2005 and 2009, while arms manufacturer PT Pindad, which received an order for 154 armored personnel carriers, is still seeking a solution on stalled payments.

DI aircraft purchases from the Defense Ministry over the past five years were relatively small, compared to orders from South Korea for six CN235 planes, worth $94 million, based on a contract period of three years. South Korea had earlier bought six military and two VIP transport planes of the CN235 type from DI, while the TNI has only used seven CN235s and a maritime patrol aircraft, modified from a similar type.

The Turkish government has also assembled six CN235 anti-submarine planes - built, designed and modified by 40 DI employees in that country over the last four years.
From the aircraft service and product support sector, the TNI has only contributed 20 percent of around $13 million in earnings from both businesses to DI. DI's total income in 2008 stood at $80 million. It is expected to earn $110 million this year thanks to new purchase contracts for aircraft from South Korea, the Philippines and the Indonesian Navy.

DI's dependability in the eyes of other countries has further improved. It is currently involved in talks over eight CN235 anti-submarine planes for the Malaysian government, and the planned purchase of planes by the Philippines and Qatar.
The firm is currently trying to complete orders for 150 APS 6x6 armored cars and four 4x4 armored scout cars worth Rp 1.2 trillion for the Defense Ministry.

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