By Felix K. Chang*
Until September, Indonesia seemed sure to increase its defense budget in the coming year. Rising concern over Chinese actions in the South China Sea had already prompted Indonesian leaders to pledge themselves to do more to safeguard Indonesia’s maritime claims in the region. Indonesian President Joko “Jokowi” Widodo promised to turn the Indonesian military into “a regional maritime force respected by countries in the East Asia region.” A senior Indonesian military official was more direct—putting China on notice that Indonesia would defend its maritime space around the Natuna Islands, including those parts that fall within China’s nine-dash claim line in the South China Sea.
But to properly defend Indonesia’s maritime interests, the Indonesian military has had to reorient itself onto what it calls a “maritime axis.” That process was formalized in its 2010 Strategic Defense Plan. It detailed what Indonesia would need to do to modernize its long-neglected navy and air force. Since 2011, both have begun to procure newer equipment. The navy ordered three Type 209/1400 diesel-electric attack submarines from South Korea, two Sigma-class corvettes from the Netherlands, and a number of fast attack craft from Indonesian shipyards. It also acquired three small British-built frigates. Meanwhile, the air force acquired the first of 24 retired American F-16C/D fighters, which will be refurbished and outfitted with new radar systems to give them better maritime and strike capabilities.
However, the momentum of Indonesia’s military procurement seemed to have faltered in September, when Joko’s government submitted its proposed 2016 state budget to the Indonesian People’s Representative Council (DPR). In that budget, the government cut the defense allocation by 6.3% from Rp 102.3 trillion ($7 billion) to Rp 95.8 trillion ($6.5 billion). A few weeks later, the government awarded a $5 billion high-speed railway contract to a giant Chinese state-owned enterprise. Some wondered whether Indonesia had chosen to take a softer line towards China.
More likely, though, Indonesia’s weakening economy drove both decisions, rather than any easing of its concerns over the South China Sea. Joko’s government has argued that it needed to shift resources away from military spending to fund a series of stimulus packages to revive the Indonesian economy, which has suffered as the country’s raw material exports have fallen, a problem deepened by the government’s ill-timed reforms of Indonesia’s mining industry. With respect to the contract award, the Chinese bid was sweetened at the last minute with a financial package for the proposed railway’s construction that did not require any loan guarantees from the Indonesian government, freeing it from any liabilities if the expensive project failed to meet expectations. That was something Japan’s competing offer could not match.
Whatever the reason for the lower defense allocation, it will hinder the modernization of Indonesia’s naval and air forces. During budgetary testimony in October, General Gatot Nurmantyo, the commander of Indonesian armed forces, told the DPR’s defense commission that the lower defense allocation would force him to delay or scrap a number of procurement programs. That prompted some on the DPR defense commission to worry whether the Indonesian military would have enough resources to achieve its “Minimum Essential Force,” the minimum requirements needed to defend Indonesia’s maritime interests. Hence, the commission adopted a new proposal to add Rp 37.1 trillion ($2.5 billion) to the defense budget. Ultimately, the DPR’s budget commission pared back that proposal, but still boosted the defense budget to Rp 99.5 trillion ($6.7 billion).
While the new budget still represents a decrease from a year earlier, the small increase over the government’s proposal will help to keep some procurement programs on track and offset the falling value of the Indonesian rupiah against the U.S. dollar, which has made purchases of foreign military equipment more expensive. In any case, Indonesia has also pursued other financing means to support its military procurement. In early September, the Indonesian Ministry of Finance arranged for PT Bank Negara Indonesia to provide credit worth Rp 980 billion ($666 million) to the military for a variety of acquisitions. Soon thereafter, the DPR’s defense commission revealed that Jakarta was seeking to secure a $3 billion loan from Moscow to fund major acquisitions. If the loan is finalized, Indonesia’s Ministry of Defense will most likely use it to acquire Russian Su-35 fighters and Kilo-class submarines, both of which the DPR’s defense commission has already endorsed. As the one commission member said of Indonesia: “[we are] a maritime country… so sea security must be prioritized.”
Yet, even with such support for new kit, the Indonesian military will have to stretch its resources to set up adequate defenses in the South China Sea. The military has already listed a number of infrastructure improvements on and around the Natuna Islands that need to be completed before it can station more forces there. The improvements include the construction of facilities for 2,000 additional troops; expansion of a naval base at Pontianak; and upgrade of Ranai air base with new hangars, radar, and a longer runway. In September, Minister of Defense Ryamizard Ryacudu visited Natuna Island to draw attention to Indonesia’s efforts to beef up defenses in the area. He noted plans to deploy three ships and four fighter aircraft on the island.
In the near future, Indonesia is expected to publish a new defense white paper. It will likely detail the growing maritime threats to Indonesian security. Along with Jakarta’s ongoing attempts to strengthen its navy and air force, it reflects the intent of Indonesian leaders to better protect their country’s interests in the South China Sea. But how quickly those leaders can do so is an open question. They have a long way to go before they can bring to fruition the robust force structure envisioned in the 2010 Strategic Defense Plan. Despite the progress made over the last five years, the defenses on the Natuna Islands are only just beginning to improve. For now, Ranai air base still has the air of a remote outpost, operating a single 1980s-era radar set. Perhaps in the coming years more military hardware will finally reach it.
About the author:
* Felix K. Chang is a senior fellow at the Foreign Policy Research Institute. He is also the Chief Strategy Officer of DecisionQ, a predictive analytics company in the national security and healthcare industries. He has worked with a number of digital, consumer services, and renewable energy entrepreneurs for years. He was previously a consultant in Booz Allen Hamilton’s Strategy and Organization practice; among his clients were the U.S. Department of Energy, U.S. Department of Homeland Security, U.S. Department of the Treasury, and other agencies. Earlier, he served as a senior planner and an intelligence officer in the U.S. Department of Defense and a business advisor at Mobil Oil Corporation, where he dealt with strategic planning for upstream and midstream investments throughout Asia and Africa.
This article was published by FPRI.
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