• Hannah Phillips

Defence Exports to Indonesia

Australia’s Defence Export Strategy was launched in January 2018 with the aim of Australia becoming one of the top 10 defence exporters within the next 10 years.

As part of the Strategy the Government has established the Defence Exports Office and appointed a Defence Exports Advocate.

Australia’s main defence export markets since 2000 have been the US, Indonesia, New Zealand, India and Singapore. In recent years, Indonesia has been Australia’s second largest export market and in 2017 accounted for around 28 per cent of all Australian defence exports.

It was timely therefore that opportunities for defence exports to Indonesia were discussed at a Canberra briefing of over 90 defence exporters organised by the Australia Indonesia Business Council, the Australia Industry Defence Network and Australia Industry Group and sponsored by PwC.

The key stakeholders attending the briefing included the Hon David Johnston as the newly appointed Australian Government’s Defence Exports Advocate (key speaker), Rear Admirals Simon Cullen and Rayden Gates (Strategic Defence Adviser and Defence Advocate for Queensland and Western Australia) and Air Marshals John Harvey and Geoff Brown (Defence Advocate for New South Wales and Chair of the ACT Defence industry Board).

The Indonesian Ambassador His Excellency Kristiarto Legowo also attended along with his Defence Attache Commodore Teguh Isgunanto and senior defence staff. Australian Government agencies including the Defence Exports Office, Austrade, the Centre for Defence Industry Capability and EFIC also provided valuable information to exporters about how they could assist their businesses.

In the period 2009-2018, Indonesia imported defence equipment and support service from over 30 countries, of which South Korea (with its T-50 jet fighter and T209 submarines), Russia (Su-35 Flanker aircraft) and France account for around 53 per cent of market share.

A further 30 or more countries accounted for around 47 per cent of defence imports: US (8 per cent) Netherland and Spain (7 per cent each), China and UK (5 per cent each), Germany and Brazil (4 per cent each) and a number of other countries including Australia, Czech Republic, Israel and Turkey accounted for the rest (Source: HIS Markit).

In October 2017, Indonesia’s Ministry of Defence announced a review of its defence procurement procedures to introduce a consolidated policy inorder to simplify processes and enhance transparency.

After years of being a low priority, Indonesia will have the fifth fastest-growing defence budget in the world for the period 2016-2025, with the defence budget growing at a compound annual rate of around 4.7 percent.

It is claimed that Indonesia needs to spend more than US$20 billion on procurement to replace aging equipment over that period.

With over 17,000 islands spread around its archipelago and with the ongoing threat of terrorism, Indonesia’s defence needs are significant.

Tony Mitchener

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