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Indonesia A&d Industry
Indonesia A&d Industry
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Segment Aerospace - Manufacturing - MRO -- Airframe and Modification -- Engine Maintenance -- Line Maintenance -- Component Maintenance Defence - Land System - Naval System - Airborne System - C4ISR - Others
SOE/SoE Subsidiary
Private
Aerospace
Manufacturing
Civilian Aerospace Military Aerospace
GMF NusantaraTurbin & Propulsion (NTP) GMF NusantaraTurbin & Propulsion (NTP)
MRO
Airframe and Modification Engine Maintenance Line Maintenance Component Maintenance
Defence
SSE, Hoverindo Palindo Marine, Lundin (see Aerospace Manufacturing) Global Asia Teknologi Fajar Indah
Parties Ministry of Industry (MOI) Ministry of Research & Technology (MORT) National Aerospace Research Agency (LAPAN) Agency for Assessment and Application of Technology (BPPT) Indonesian Science Agency (LIPI) Ministry of Defence (MOD) Indonesian Armed Forces (TNI) House of Representatives (DPR) Ministry of Finance (MOF) Ministry of SoE (MSOE) National Development Planning Agency (Bappenas) Technical Universities (Bandung Institute of Tech, Surabaya Institute of Tech, UI, UGM, etc)
Relevance Develop policy to grow industrial capacity and capability Develop policy to foster building research capability of defence industry Research and development of satellites, remote sensing and delivery systems Provide research and development service for government projects and SoE Basic science research Defence policy and procurement of defence systems User requirement of defence systems Budget approval for defence systems Budget approval for defence systems Develop synergy between SoE Budget approval for defence systems (major projects) worth more than 50 Billion Rp Provides ad-hoc research cooperation & expertise pool for strategic defense industry
Companies
Supply Chain
Industrial Activity
Complete, integrated weapons systems and direct customer interface
PAL, Pindad, Dirgantara, Lundin, Palindo Prime Marine, UAVindo, GTIS, Aviator, Contractors Hoverindo, SSE Texmaco
Systems (engines & transmission) Subsystems : operational management systems, combat management systems, radar, weapons and electronics systems Special components and services
Krakatau Steel, Barata, Pupuk Kaltim Workshop, Boma Bisma IndraRaw Material
Metals, composites, metal work, castings, forgings, electrical/electronic components Paints, sealants, bolts, wire & cabling Upgrade, conversions, overhaul and maintenance
Generic
Aerospace MRO Workshops in Indonesia, Life Cycle Support PAL, Pindad, Dirgantara Companies
auspices of MoD, MoSOE, MoI, MoRT : PAL, Pindad, Dirgantara Indonesia These companies comes as a result of gov defence industrial policy that prioritized on building prime contractor tier first with substantial investment and protection from the state
Some private companies later emerged in early 2000s as prime contractors, providing supplementary products The lower tiers in Indonesia is still very limited in terms of technology and industrial capacity, that majority of subsystems and components for prime contractors acquired from foreign supply chain
Many of local lower tiers started as companies serving commercial market
and then later began serving defence prime contractors Lower tiers companies is under auspice of the MoI
Companies Pindad PAL Dirgantara Indonesia Dahana LEN Industri INTI Krakatau Steel INKA Barata Boma Bisma Indra
Products/Activities Small arms, munition, land systems Commercial ship and Naval ships Civilian and Military Aircraft Commercial and military explosives Electronics and telecom , Combat Mgmt Systems Manufacturing of telecom systems Steel products Manufacture train-related products Manufacture Diesel Engines Steel works
Remarks Designated as SOE Main Strategic Industry Designated as SOE Main Strategic Industry Designated as SOE Main Strategic Industry Designated as SOE Main Strategic Industry Designated as SoE Strategic Industry Designated as SoE Strategic Industry Designated as SoE Strategic Industry Designated as SoE Strategic Industry Designated as SoE Strategic Industry Designated as SoE Strategic Industry
Pre-1970 Era
Gov taking over A&D industry legacy from the Dutch (1949), with strong vision but lack of resource allocated to A&D industry
defence procurement
Presidential Decree No. 80/2003 on Government Procurement of Goods and Services Presidential Decree No.2/2009 on Increased Use of Domestic Products
processes
Multiyears budgeting allowed since 2009
Establishment of Defence Industrial Policy Board (KKIP) in early 2010 Strategic partnerships initiatives by MoD (2010)
companies related to Aerospace MRO activity in Indonesia The market for Aero MRO for Indonesia is expected to grow from $700 M in 2009 to $2 Billion in 2014 Due to limited capability and capacity, only 35% of this market will be served by Indonesian Aerospace MRO shops
Source: Media
Defence Market
Weathering the 2008 economic crisis,
Trillion Rupiah
the defence of budget has been slashed into just below 1% of GDP Indonesian Gov has plans to reincrease the defence budget into 1% of GDP in 2011. This translates into 5 Billion USD for 2011 A total of 78.265 Trillion Rupiah (8.7 Billion USD) is allocated for upgrades and purchase of new systems between 2010-2014 Share of Indonesia s Defence Industry is estimated not more than Rp 1 Trillion (111 Million USD) annually (less than 10%)
Source : SIPRI.org, National Development Plan (RPJMN) 20102014
Indonesia exported at least 525.5 Million USD of A&D products since first export in 1995
Mostly DI s products: CN-235 NC-212 Other products: 6x6 APC (Pindad)
Environment
Weak commitment from user (MoD and TNI) to use products and services from indigenous defense industry
Agency-driven procurement (Comission-driven procurement) began to diminish
High dependence on foreign supply chain, due to immature lower tiers Stagnant and eroded R&D capability in A&D industry
Years of poor financial standing and disincentive to invest in R&D capability
A&D industry partnership in with foreign companies, aimed at tech transfer & increased local content while fulfilling national needs
components) Foster synergy among SoEs, and synergize R&D capability distributed among gov bodies, military and A&D industry Protection of Indonesia A&D industry
Negative list on military system imports Enforce offset /local content policy to avoid free fight competition
A&D industry
Enhance their marketing ability Go faster at the learning curve by partnerships and R&D investment Change their culture : meritocracy, risk management, openness to advice and
SoE have been and will continue to be the backbone of Indonesia A&D industry Private A&D industry role begin to grow and assume supplementary roles in prime contracting/system integration
Most are small and medium company Still limited to non-lethal products: C4ISR, UAV, transport platforms,
etc
military procurement
Pindad
Small arms License production of SS-1 Assault Rifle (1984) SS-2 (own design) in 2005 Design & Production of 6x6 APC (2006) 150 units order for Indonesian army
PAL
Landing Platform Dock 125 meter KCR-40 Fast Missile Boat, with Tacoma,
South Korea Fast Patrol Boat-57 with Lurssen, Germany Sigma Corvette with Damen, Netherlands
CN-235 (1986) Co-design and co-production with CASA Market success with 28 international customer Military Transport version Maritime Patrol version Civil Transport version