Behind Indonesia's Arms Spending: From Funding Sources to Neighbouring Crises

Indonesia has officially added to its list of primary weapon system (alutsista) purchases by approving the acquisition of BrahMos and Astra missiles from India. This move is part of the government’s effort to strengthen and modernise the national defence force.

The agreement was reached during Indian Prime Minister Narendra Modi’s official visit to Jakarta on Tuesday, where he met President Prabowo Subianto. During the meeting, India agreed to export the BrahMos supersonic cruise missile system and Astra air-to-air missiles to Indonesia, valued at approximately US$630 million or equivalent to Rp11.3 trillion (assuming an exchange rate of Rp17,980 per US dollar).

BrahMos is a supersonic cruise missile jointly developed by India and Russia, known for its capability to be launched from various platforms, including land, sea, and air. Meanwhile, Astra is an Indian-made air-to-air missile designed to enhance the combat capability of fighter aircraft.

The purchase of BrahMos and Astra further extends the list of Indonesia’s strategic arms procurements in recent years. Since 2019, when Prabowo was still serving as Minister of Defence, the government has aggressively modernised its weaponry by partnering with various countries, including the United States, France, Italy, Turkey, South Korea, and India.

This policy aligns with the defence modernisation agenda consistently pushed by Prabowo, both while leading the Ministry of Defence and after assuming the presidency. Strengthening has been carried out across all branches, encompassing transport aircraft, fighter jets, drones, radars, warships, submarines, and missile systems.

Among the weapon systems Indonesia has ordered are C-130J Super Hercules transport aircraft, Airbus A400M Atlas, Rafale fighter jets, and TAI Anka-S drones. There are also Thales Ground Master 403 air defence radars, Merah Putih frigates, and the Bung Karno Class presidential vessel.

In the strategic procurement sector, Indonesia has also ordered 42 Dassault Rafale F4 fighter jets from France worth around US$8.1 billion. Additionally, there are two Scorpène Evolved submarines with an estimated value of US$2 billion, and two Brawijaya Class warships from Italy’s Fincantieri worth approximately US$1.39 billion.

Beyond BrahMos and Astra, Indonesia is also strengthening its weapons system capabilities through the procurement of Khan short-range ballistic missiles, Hisar-O medium-range air defence missiles, and Roketsan Atmaca anti-ship missiles. This step demonstrates the government’s strategy to diversify its arms procurement sources while enhancing national defence capabilities amid increasingly complex regional security dynamics.

The desire to build a more modern defence system certainly requires substantial capital. Spending on weapon systems such as fighter jets, warships, radars, drones, and missiles is not a small expense. Most contracts are also denominated in foreign currencies, meaning budget requirements are influenced by the rupiah’s movement against the US dollar and the euro.

Within the Defence Ministry’s budget, particularly for the weapon systems modernisation programme, sources of defence spending financing come from the state budget’s Rupiah Murni, as well as from foreign loans, domestic loans, Sovereign Sharia Securities (SBSN), and Non-Tax State Revenue (PNBP). For 2026, the Defence Ministry’s budget has been set at Rp187.1 trillion. This provision is stipulated in Presidential Regulation Number 118 of 2025. The budget is divided into two main functions: the defence function and the education function. The defence function receives the largest portion with an allocation of Rp186.6 trillion, while the education function receives a budget of Rp490 billion.

Looking at the programmes, the largest item is the Programme for Modernisation of Weapon Systems, Non-Weapon Systems, and Defence Facilities and Infrastructure. Its value reaches Rp84.48 trillion, or approximately 45.1% of the total 2026 Defence Ministry budget. Interestingly, the largest source of funds for this modernisation programme actually comes from foreign loans. Out of the total Rp84.48 trillion, foreign loans account for Rp46.5 trillion, followed by Rupiah Murni at Rp33.44 trillion, domestic loans at Rp3.69 trillion, SBSN at Rp800 billion, and Non-Tax State Revenue at around Rp60 billion.

This composition shows that the modernisation of Indonesia’s weapon systems does not rely solely on direct spending from the state treasury. For large-scale procurements such as fighter jets, warships, radars, and missile systems, the government also utilises other financing schemes, particularly foreign loans.

In recent years, the Defence Ministry’s budget has been increasing. In the 2024 state budget, the ministry received an allocation of around Rp139.26 trillion. In the 2025 state budget, the figure rose to around Rp166.26 trillion. However, the 2025 figure later underwent a significant adjustment to Rp364.1 trillion. According to the ministry, the increase was directed towards weapon systems modernisation, improving soldier welfare, defence industry independence, and organisational validation.

The plan for 2027 is no less ambitious. Minister of Defence Sjafrie Sjamsoeddin proposed an additional budget of around Rp195 trillion for the 2027 fiscal year. The proposal arose because the national defence budget requirement is said to reach Rp667 trillion, while the indicative ceiling provided by the government was only around Rp139 trillion. If the additional Rp195 trillion is approved, the Defence Ministry’s 2027 budget could rise to around Rp334 trillion. The scale of these budget requirements illustrates that defence modernisation is not just about the list of weapon systems to be purchased, but also about the fiscal space to finance them.