Indonesia Defence and Security Q4 2012

Date: September 19, 2012
Pages: 78
US$ 1,295.00
Report type: Strategic Report
Delivery: E-mail Delivery (PDF), Download

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Includes 3 FREE quarterly updates

BMI’s Indonesia Defence & Security Report for Q4 2012 examines the country’s strategic position in the South East Asian region and the wider world. It provides an overview of the contemporary geopolitical challenges facing the country, and the challenges it may face in the future.

The report examines the trends occurring in the country’s current and future defence procurement, and the order of battle across its armed forces. The report’s general conclusion is that after many years of strategic isolation, Indonesia is emerging as an important player in the Asia Pacific region. In keeping with this development, the Indonesian military, after years of underinvestment and foreign vilification over its activities in East Timor, is starting to reap the rewards of an increasing defence budget and also of the country’s improving international reputation.

Jakarta’s approach to instability in Papua threatens to undermine this progress: its answer so far has been to dispatch additional troops to the restive province, rather than to try to address local grievances. Foreign governments, though keen to work with Indonesia and encouraged by its progress on many other fronts, are keeping a watchful eye on events in Papua for fear that it might develop into another East Timor. But for now, a number of countries, including Australia, Germany, the Netherlands, Russia, South Korea, the UK and the US are queuing up to work with Indonesia as it attempts to rebuild its armed forces. Despite tensions with some of Indonesia’s Association of Southeast Asian Nations (ASEAN) partners, China has now emerged as the latest contender for a role in Indonesia’s defence modernisation; it is helping Jakarta to set up a missile production facility and has offered to provide assistance in a number of other areas.

They all perceive Indonesia to be increasingly important for two reasons. First, as Asia’s third mostpopulous country and the driving force behind ASEAN, many regard Indonesia as a sleeping giant that is gradually beginning to awaken and starting to assume greater strategic significance. Secondly, they see Indonesia as a lucrative emerging market for defence exports; its rapidly growing defence budget is matched by an urgent need for modern equipment. Thus, many countries are providing surplus defence equipment to Indonesia now on favourable terms in the hope of selling more advanced equipment to Jakarta further down the line.

Over the last quarter BMI has revised the following forecasts/views:
  • Jakarta has announced a US$8.1bn defence budget for 2013. On the one hand, this is a significant increase which underlines the government’s commitment to boosting its defence outlay. On the other hand, this figure is likely to remain below 1% of GDP, meaning that President BambangYudhoyono is now all but certain to fail to meet his target of spending 1.5% of GDP on defence by 2015.
  • BMI also reviews Indonesia’s most recent procurements. These include: Super Tucano light fighter aircraft from Brazil; a new naval frigate from the Netherlands; infantry fighting vehicles for the country’s Navy Marines from Russia; and the likely purchase of main battle tanks from Germany, after the Dutch parliament balked at selling Jakarta some of its surplus tanks.
  • Domestic security issues are also addressed, including the jailing of Bali bomber Umar Patek, the continuing persecution of the Ahmadiya sect and ongoing unrest in Papua.
  • The recent diplomatic efforts by a number of countries, notably Australia and China, to improve their strategic relations with Indonesia are also reviewed below.
Executive Summary
SWOT Analysis
Indonesia Security SWOT
Indonesia Defence Industry SWOT
Indonesia Political SWOT
Indonesia Economic SWOT
Indonesia Business Environment SWOT
Global Political Outlook
No Respite From Political Risks
Global Flashpoints: Eurozone, Iran, Syria, Afghanistan, Korea
  Table: Election Timetable
Wild Cards To Watch
South East Asia Security Overview
The Strategic Outlook For The 2010s
South East Asia In A Global Context
Challenges And Threats To Stability And Security
Main Islamist Militant Groups In South East Asia
Other Regional Threats
Sino-US Rivalry In South East Asia
The Outlook For South East Asia
Security Risk Analysis
  Table: Asia Pacific Regional Security Ratings
  Table: Asia Pacific State Vulnerability To Terrorism Index
Indonesia’s Security Risks
Political Overview
Domestic Politics
Long-Term Political Outlook
Indonesia Security Overview
Internal Security Situation
  Table: Indonesia’s Insurgent Groups
External Security Situation
Armed Forces And Government Spending
Defence Budget
Air Force
International Deployments
Weapons Of Mass Destruction
Market Overview
Industry Trends And Developments
Indonesia Defence & Security Report Q4 2012
© Business Monitor International Ltd Page
Competitive Landscape
  Table: Key Players In Indonesia’s Defence Sector
Arms Trade Overview
Procurement Trends And Developments
Industry Forecast Scenario
Armed Forces
  Table: Indonesia’s Armed Forces, 2001-2009 (’000 personnel, unless otherwise stated)
  Table: Indonesia’s Manpower Available For Military Services, 2009-2016 (aged 16-49)
Defence Expenditure
  Table: Indonesia’s Defence Expenditure, 2009-2016
  Table: Defence Expenditure Scenario – Changing % Of GDP, 2009-2016 (US$mn)
Defence Trade
  Table: Indonesia’s Defence Exports, 2009-2016 (US$mn)
  Table: Indonesia’s Defence Imports, 2009-2016 (US$mn)
  Table: Indonesia’s Defence Trade Balance, 2009-2016 (US$mn)
Key Risks To BMI’s Forecast Scenario
Macroeconomic Forecast
  Table: Indonesia - Economic Activity, 2011-2016
Company Profiles
PT Dirgantara Indonesia (IAe)
PT Pindad
PT Penataran Angkatan Laut (PAL)
BMI Methodology
How We Generate Our Industry Forecasts
Defence Industry
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