Indo Defence

Protestors in the Norwegian capital Oslo recently demonstrated against Europe being collectively awarded the Nobel Peace Prize on the basis that the continent is the world’s second largest defence spender, after the United States.

14th Dec 2012


 Indo Defence

 Exhibition continues to expand.

Byline: Kym Bergmann / Jakarta


Protestors in the Norwegian capital Oslo recently demonstrated against Europe being collectively awarded the Nobel Peace Prize on the basis that the continent is the world’s second largest defence spender, after the United States. Well, they were wrong – not wrong to protest but wrong about the facts, because Asian defence expenditure has recently overtaken that of Europe. Against this background, it is hardly surprising that Indonesia’s premier defence exhibition – Indo Defence – continues to grow in size and importance.

In line with regional trends, the Indonesian defence budget continues to grow – admittedly from a low base – and now is at US $8 billion per annum. This is still about a modest 1% of GDP, but because the economy is growing at a rapid rate - and has just crossed the $1 trillion threshold - it means that increasingly large amounts of cash are available for equipment purchases. Furthermore, Indonesia has set itself the target of lifting defence expenditure to 1.5% of GDP by 2015 – an ambitious target given other demands on the budget.

Indonesia is an attractive country for suppliers because the Government and the military are open to selecting equipment from a variety of sources – unlike the reflexive pro-US bias of, say, Australia. The country is also trying to expand its own defence industry base and so looks with interest at those companies that offer technology transfer and local work share. Because of this approach, the show attracted more than 500 exhibitors from 40 countries – including Russia, China, India, South Korea, South Africa, Australia, Britain, France, Spain, the United States and Germany. Additionally, some companies came to the show that normally do not turn up elsewhere – such as those from Belarus and Azerbaijan.


One of the largest and most impressive displays at the show was as usual that of Russian military technology companies. In fact they had such a sizeable presence that they required two separate areas to showcase their products. This is hardly a surprise because Russia and Indonesia have a good relationship regarding the supply of hardware such as Sukhoi Su-27 and more recently Su-30MK2 multi-role combat aircraft of the ‘Flanker’ family (of which a further six are on order). These fighters come in addition to earlier orders for a considerable variety of equipment such as BMP-3 infantry fighting vehicles and AK-47 assault rifles.

Defence Review Asia had the opportunity to speak at length with Mr Viktor Komardin, Deputy Director of Rosoboronexport – the state-owned Russian arms export organization. Mr Komardin emphasized the importance of the Indonesian relationship and expressed confidence that Sukhoi would have further opportunities to sell combat aircraft to Jakarta. He explained that Russian companies were interested in a wide cross section of production methodologies: everything from co-development and co-production, as well as technology transfer to assist the development of Indonesian defence industry.

Turning specifically to recent events, he says he has received positive feedback about the performance of the four ‘Flankers’ that participated in the multinational Exercise ‘Pitch Black’ held in Northern Australia in August 2012. This major activity included combat aircraft from the United States, Australia, Singapore, Thailand and – for the first time – Indonesia. While performance details remain undisclosed, apparently the ‘Flankers’ impressed a large number of international observers.

Mr Komardin explained that one major difference between Russian combat aircraft and several Western types is the relative importance of the pilot. In his view, in Western aircraft it is the onboard computers that do the actual flying and that the pilot is more or less a passenger in an aircraft that is optimized for the safe delivery of weaponry at long ranges. However, he explained that Russian aircraft – such as the ‘Flanker’ family – are designed for intense combat operations, with a higher level of maneuverability than their Western counterparts and where the pilot make all of the critical decisions.

Asked about other areas of interest for Russian companies, he pointed out that around 200 of them were represented at the show – including many famous names such as KBP, Vympel, Izhmash, Almaz-Antey, Russian Technologies and United Aircraft Corporation (owner of Sukhoi, amongst others). As Indonesia expands its armed forces and strengthens its indigenous technology base, he felt that there are opportunities in a variety of areas such as small arms, ground-based air defence, naval vessels and armoured vehicles.

One of the more interesting dynamics of Indonesian defence procurement is the one that exists with South Korea. Not only has the RoK already supplied four amphibious support ships to the Indonesian Navy, but is in the process of supplying an initial batch of 16 high performance T-50 ‘Golden Eagle’ jet trainer and ground attack aircraft. These look like a smaller version of an F-16 – for precisely the reason that it has been developed on a 50/50 basis with Lockheed Martin and it is indeed a modified ‘Fighting Falcon’.

Two of the largest recent procurements have been with South Korean companies: the T-50 referred to above and also the purchase of three diesel electric submarines from Daewoo. The value of this contract seems to vary depending on the source of the information, but appears to be around the US $1.5 billion mark. The first two will be built in South Korea, with the final boat in the Indonesian naval port city and centre of shipbuilding – Surabaya. It is likely they will be based – curiously – on the somewhat remote island of Sulewesi.

Indonesia already operates two elderly German HDW Type 209 submarines. These have recently been upgraded by Daewoo, whose expertise comes from assembling under license Type 209s for South Korea. Having developed its skill base as a consequence of technology transfer, Daewoo is now in a position to export its own submarines. The ones for Indonesia bear a resemblance to the Type 209 – hardly a surprise – but a Daewoo spokesman explained to DRA that they were a new design and were somewhat larger than a 209 and had a substantially different internal layout.

South Korea and Indonesia also plan the joint development of an advanced combat aircraft on an 80/20 funding split – so it seems that Jakarta has been quick to realize the potential that exists in a close relationship with the RoK and its increasingly high quality and technologically advanced products. It is therefore not surprising that South Korean companies were present in considerable numbers: the wonderfully named LiG Nex1; Samsung Techwin; Hyundai; Daewoo; Doosan; Kia; SanCheong; Hanwha; Korea Aerospace Industries; and SanCheong. And unlike at other exhibitions where the South Koreans have a tendency towards secrecy, in the relaxed Jakarta environment company representatives were unusually open and helpful.

One of the major news announcements at the show was by Airbus Military – always professional and helpful, with the nicest people - and Indonesian Aerospace (the rebadged IPTN). This is that the two companies will develop an upgraded version of the venerable CN212 twin turboprop aircraft. The companies have a strong historical relationship and now will take the 212 to a new level with modernized avionics and a slightly more spacious cabin. The market for the new version of the aircraft is estimated to be more than 400 units during the next decade. Production will continue in the central Javanese city of Bandung.

Another large opportunity will be to upgrade Indonesia’s creaking air traffic management system with new radars and control centers. With this in mind the incumbent Thales had a considerable presence – and breathing down their neck is Lockheed Martin, which has already commenced the manufacture of some high tech components in Indonesia to support their marketing campaign.

It will be interesting to see just how much larger Indo Defence 2014 turns out to be – especially with shrinking defence budgets in other parts of the globe.

 


 

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