The change in government in Indonesia on 20 October 2024 has given\nrise to various new policies that differ from the previous\nadministration, a natural occurrence that nonetheless poses challenges\nfor business actors in adapting.<\/p>\n
The same applies to the defence sector, particularly defence trade,\nwhere modernisation policies through procurement have taken on a new\ncharacter: uncertainty. This uncertainty is reflected in the nature of\nacquisition planning in the Special Medium-Term Foreign Loan Plan List\n(DRPLN-JM) for 2025-2029, which can change at any moment according to\nthe whims of decision-makers.<\/p>\n
This situation also mirrors the fact that thorough planning processes\ninvolving the aspirations of prospective end-users do not occur, meaning\nwhether the defence equipment purchased by the Ministry of Defence meets\nthe needs of the TNI branches is essentially a gamble.<\/p>\n
In the defence trade business, market uncertainty is one thing that\nentrepreneurs dislike because they must project revenues and profits\nwithin a predetermined timeframe. This is especially true for defence\ncompanies listed on the stock exchange, which must ensure they can\ndistribute dividends to shareholders each year to keep their shares as\ninvestor favourites on the stock market.<\/p>\n
Like it or not, wars such as those in Ukraine and Southwest Asia have\nattracted investors on the stock exchange to buy shares in defence\nsector businesses. This condition applies to foreign defence firms, but\nnot to Indonesian defence companies, as none are deemed worthy of\nlisting on the capital market.<\/p>\n
With a foreign loan quota of US$28 billion, Indonesia is actually an\nattractive market for global defence manufacturers. Several global\nplayers such as Dassault Aviation, Naval Group, Leonardo, Fincantieri,\nAirbus, MBDA, RTX, Lockheed Martin, and Boeing view Indonesia as a\npromising market among developing countries.<\/p>\n
Which manufacturer would not be tempted by the fortunes gained by\nDassault Aviation in this country, worth \u20ac8 billion? It is regrettable\nthat the great interest from these international manufacturers is not\nmatched by assurances from Indonesia.<\/p>\n
This includes openness regarding acquisition plans for weapon systems\nuntil the end of this decade. Thus, it is no surprise that some\nproducers of war equipment, whose products Indonesia must buy whether it\nlikes it or not, are adopting a passive stance and not actively\nconducting marketing campaigns.<\/p>\n
Airbus and Boeing, recorded as global giants in the defence and\naerospace industry, actually have market opportunities in Indonesia\nuntil 2030, given their highly specialised product portfolios. However,\nthe Indonesian defence market conditions until the end of this decade\nappear unfriendly to these producers from Europe and the United\nStates.<\/p>\n
Besides uncertainty in defence spending planning, why is the\nIndonesian defence market situation considered unfriendly for Airbus and\nBoeing? Is it because of Indonesia\u2019s fiscal conditions, which some\nparties assess as facing heavy pressure following the Iran war against\nthe United States and Israel?<\/p>\n
Observing closely what is happening in the Indonesian defence market\nat present, Airbus and Boeing face different challenges for their\ndefence and aerospace products. Airbus has opportunities to export the\nA330 MRTT tanker-cum-transport aircraft and secure follow-on orders for\nthe A400M transport aircraft.<\/p>\n
The F-15EX is Boeing\u2019s sole opportunity in the Indonesian defence\nmarket, as other portfolio items like the CH-47, P-8, and defence\nsatellites are still far from reality. So, what challenges do the makers\nof the A350 and B787 face in their efforts to gain profits from the\nUS$28 billion foreign loan allocation?<\/p>\n
The challenge faced by Airbus in supplying war equipment to Indonesia\nconcerns compliance in conducting business. The implementation of robust\ncompliance by this European multinational manufacturer in executing\ncontracts for two A400M aircraft is unpopular in Indonesia, even though\nIndonesia is one of the countries that formed the backdrop for why\nAirbus adopted such a policy from the mid-last decade.<\/p>\n
For those unfamiliar with the background of the robust compliance\npolicy, the procurement case of 55 A330 and A320 aircraft by the Garuda\nIndonesia Group involving Airbus and Rolls-Royce, which led to fines\nimposed on the two firms by the UK Serious Fraud Office and the US\nDepartment of Justice, was the trigger for Airbus to implement robust\ncompliance.<\/p>\n
The problem is that the defence business climate in Indonesia is\nunfriendly to the policy adopted by the manufacturer, which is the\nsuccessor to several aircraft factories from France, Germany, and Spain.\nIt is no surprise that plans for additional A400M remain unclear, while\nthe agenda to acquire the A330 MRTT, which has been anticipated by the\nIndonesian Air Force since 2019, appears to have evaporated.<\/p>\n
Instead of building air-to-air refuelling capabilities with the A330\nMRTT, which can apply hose-and-drogue and boom methods, the Ministry of\nDefence has instead awarded a contract to a broker company to bring in\nIlyushin Il-78 tanker aircraft from Russia, ironically named the MRTT\nprogramme by Indonesia.<\/p>\n
The Il-78 is not a tanker aircraft capable of air-to-air refuelling\nusing the boom method, besides the major technical challenges that the\nIndonesian Air Force would face if operating that aircraft. There is\nstrong suspicion as to why Indonesia is not acquiring the A330 MRTT\nduring the 2025-2029 period, as detailed in<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/airbus-boeing-and-the-implementation-of-robust-compliance-in-indonesia-1776142256", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }