Indonesia proposes receiving foreign credit for defense acquisitions worth $20 billion

The Lockheed Martin F-16V Block 70 is the most advanced F-16 ever built. The US will supply 66 F-16V Block 70 to Taiwan.

Indonesia’s Minister of Defence, Prabowo Subianto, has forwarded a proposal for the country to receive up to $20 billion in defence-related foreign credit and assistance schemes for the period spanning 2020–24, British magazine Janes reported.

The foreign credit will be used to fund acquisition programmes for all three branches of the Indonesian Armed Forces between 2020–24. Among possible acquisitions that may be funded with the foreign credit include 24 Lockheed Martin F-16V Viper fighter aircraft and two follow-on warships to the Indonesian Navy’s Martadinata (SIGMA 10514)-class guided missile frigates.

SIGMA Class Frigates of Indonesian Navy.

The request was made against the backdrop of a nearly $588 million cut to the country’s defence budget for 2020.

In the Asia-Pacific region Indonesia is one of the nations that are expected to show a significant growth in the defence budget.

Even before COVID-19, the Indonesian government is already trying to find ways to allow funds to be provided to the TNI’s modernization program, considering the high funding requirement of the incoming projects. 

An analysis by Janes states that Indonesia will have the fastest growing defence budget in the Asia-Pacific region over the next five years. Indonesia’s defence budget would increase about 17 percent in 2015, according to Janes, from IDR 83.3 trillion ($6.3 billion) to IDR 97.4 trillion ($7.4 billion), and is expected to grow at 14 percent a year until the end of the decade (average annual growth).

Tension is warming in the region due to increasing military activities of China and the United States in the South China Sea, but an open conflict between the world’s two powerhouses is unlikely to happen anytime soon. Indonesia has indeed anticipated any impacts of the rivalry by strengthening its naval and air bases near the South China Sea.

With China’s South China Sea expansion butting up to Indonesian territory in the shape of the Natuna Islands, Indonesia has been quick to open up a military base in Selat Lampa on Natuna Besar Island. Skirmishes to date have been focused on illegal fishing in Indonesian waters by Chinese fishing boats – with several having been sunk by the Indonesian Navy.

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