AEROSPACE & DEFENSE INDUSTRIES
Indonesia launches new state holding entity for defense sector
Defend ID signs joint development agreements with French and Turkish companies
Indonesian President Joko Widodo, center with arms crossed, wants his country to "build a strong and modern defense industry." (Photo courtesy of Indonesia's presidential office)
ERWIDA MAULIA, Nikkei staff writer
April 20, 2022 22:06 JST
JAKARTA -- Indonesian President Joko Widodo on Wednesday launched a new state-owned holding entity for the defense sector as Jakarta aims to reduce its level of foreign dependence in the procurement of weapons and equipment.
State-owned electronics equipment manufacturer LEN Industri has been appointed as Indonesia's new defense industry holding entity with a new name: Defense Industry Indonesia, or Defend ID. It oversees four other state-owned companies in related sectors. They are shipbuilder PAL Indonesia, aircraft maker Dirgantara Indonesia, explosives producer Dahana and tank and weaponry manufacturer Pindad.
"We have to use the state defense holding and its strategic programs as a steppingstone to transform, to build a strong and modern defense industry," Widodo said during the inauguration ceremony for Defend ID at PAL Indonesia's shipyard in Surabaya, East Java Province.
The president added he wants Indonesia to cut its heavy reliance on imported armaments and military equipment, as well as materials used in their production, through the development of the domestic defense industry.
Eventually, he also wants Indonesia to compete with foreign weaponry makers and "gain recognition" in the global market. The president told the new holding to develop "as many global partnerships as possible with anyone willing to do technology transfers."
Wednesday's launch ceremony also included the signing of several agreements, including a $1.1 billion contract for PAL to modernize 41 Indonesian navy ships.
There was also the signing of a preliminary agreement on defense electronics technology cooperation between LEN and French electrical system developer Thales International. A memorandum of understanding on the joint production of armored amphibious assault vehicles between Pindad and Turkish defense manufacturer FNSS Savunma Sistemleri was signed as well.
Indonesian Defense Minister Prabowo Subianto said Defend ID is also tasked with developing local components used in the manufacturing of "key technologies" to raise their level to 50% from around 41% currently.
"Defend ID is expected ... to join the world's top 50 defense companies by 2024," he added. Indonesia is set to hold its next presidential election that year and Subianto, who lost twice to Widodo in the 2014 and 2019 votes, is considered a strong contender.
Defend ID President Director Bobby Rasyidin said he was optimistic the company will be able to draw significant investment to finance its projects, citing significant jumps in many countries' defense budgets amid conflicts including the Russia-Ukraine war.
"This industry has become very attractive for investment," Rasyidin said. "So we're hoping that investment will come in -- from inside and outside the country."
Defend ID signs joint development agreements with French and Turkish companies
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