Indonesia earns place in aerospace industry

By Rita. A. Widiadana

JAKARTA (JP): Indonesia has proudly entered the era of advanced technology with its hi-tech aerospace industry.

State-owned PT Industri Pesawat Terbang Nusantara or IPTN, the only aircraft industry in Southeast Asia, has put the world on notice that Indonesia is now ready to compete in the field of aircraft manufacturing.

For the past 20 years, IPTN has been working hard to become a reliable aerospace company in an industry which has been long dominated by industrial giants like the United States, France and Britain.

IPTN is currently overseen by the Agency for the Supervision of Strategic Industry (DPIS), whose members are the minister for research and technology, the head of the Agency for the Assessment and Application of Technology (BPPT), the minister of industry, the minister of defense and security, the minister of transportation, the minister of post, telecommunication and tourism, the state secretary, and the chief commander of the armed forces, Soeharto.

Located in Bandung on 70 hectares, it has about 15,000 employees.

The idea to create a national aerospace industry came from Burhanuddin Jusuf (B.J.) Habibie, now Minister of Research and Technology and president of IPTN.

"In the past, Indonesia, like other developing countries, had no choice but to use various high-tech products from industrial countries. We never mastered the technology. We were only users," Habibie once said.

The only way to keep up with rapid technological development was to make a technological leap. "First we have to learn the most advanced technology, after that we can try master the lower- level technology," the minister said.

His idea was judged technically viable and on Aug. 23, l976, the government changed PT Industri Pesawat Terbang Nurtanio into a state-owned company, and started to provide funding for the company which was headed by Habibie.

IPTN grew out of the Indonesian Air Force's Research and Development and Production Depot, which was created in l953.

In l961, LAPIP, the agency for the preparation of the national aerospace industry, was established to replace the depot. LAPIP was chaired by Nurtanio, one of the pioneers of the nation's aircraft industry. When Nurtanio died in l966 -- in a plane-crash -- the agency was renamed Lembaga Industri Penerbangan Nurtanio (Lipnur), Nurtanio Aerospace Industrial Foundation. Ten years later, Lipnur's status was changed to PT Industri Pesawat Terbang Nurtanio.

President Soeharto changed the company's name to PT Industri Pesawat Terbang Nusantara on Feb. 4, l986.

The development of Indonesia's aerospace industry has been amazing. From designing very simple aircraft, the NU-200 Sikumbang (Bumblebee), in l953 and several monoplanes like the NU-225 Sikumbang and the Belalang Model 90 (Grasshopper) prototype, the company now produces advanced aircraft like the N- 250 turboprop.

The N-250 aircraft, developed by IPTN since l985 with support from Boeing, Allison and Collins of the United States, Messier Eram and Auxiler of France, German Liebber and British firm Dowty and Lucas, completed its maiden flight in August last year when Indonesia was celebrating its 50th independence day.

The N-250, the country's first domestically-designed medium- range commuter plane, whose commercial production is scheduled to start late next year, is expected to obtain air certificates from the directorate general of air transportation in July l997 and from the Federal Aviation Agency of the United States in December l997.

The N-250 is the centerpiece of Indonesia's aerospace program. It uses "fly-by-wire" technology, and will cost US$13.5 million apiece.

IPTN also produces a smaller, medium-haul, 70-seat commuter version of the N-250 plane, the CN-235, in cooperation with CASA of Spain.

The company manufactures maritime patrol aircraft, NC-212s, helicopters NBO-105, NBell-412 and NAS-323 Super Puma as well as components for the F-16, Boeing 737, Boeing 767 and the Rapier Missile. It also provides integrated logistics support, engineering services, customer training, maintenance, overhaul and repair for various aircraft and engines.

The company has two subsidiaries in the United States, IPTN North America (INA) in Seattle, and the American Regional Aircraft Industry (Amrai) based in Alabama, which will assemble the N-250 aircraft with kits shipped from Indonesia. IPTN plans to launch its N-250 passenger plane in the American market in l998, with the marketing to be handled by Amrai.

According to the ministry of finance, the total transaction value from the sales of aircraft and components, as well as other contracts, stands at $541.8 millions so far.

IPTN last year opened a permanent office in Abu Dhabi, the capital of the United Arab Emirates, to boost sales of its civilian and military jets and to provide services for customers who have already bought a number of its 130-seat CN-235 planes.

IPTN is also going ahead with plans to build the twin-jet, electronically-controlled N-2130, a 130-seat aircraft scheduled for completion in 2002 and ready for marketing in 2006.

The jet's development, from designing and engineering to the production of a prototype for testing, required huge investments. Since the state budget could not be tapped, funds will have to be raised from the private sector -- and by selling shares to the public.

In February this year, a group of politicians and 55 businessmen set up a company called PT Dua Satu Tiga Puluh (DSTP) to raise at least $2 billion to finance the development of the jetliner. The company brings together prominent figures such as Soeharto (in a private capacity), and two former vice presidents, Umar Wirahadikusumah and Sudharmono, as commissioners. Top businessmen Sudwikatmono, Muhammad (Bob) Hasan, Prajogo Pangestu, Eka Tjipta Wijaya and Henry Pribadi are among the company's shareholders, who have put up 25 percent of PT DSTP's paid-up capital of $100 million.

The development of the N-2130, which was announced after the successful maiden flight of the first IPTN-made N-250 turboprop airplane in Bandung last August, is needed to meet the high demand for such an airplane in both local and international markets between 2005 and 2025.

Viability

IPTN is now working on the project despite criticism from members of the House of Representatives as well as political and economic analysts who have different views on the economic and commercial viability of the project for Indonesia, a largely agricultural country with a per capita income of less than $900.

The analysts see IPTN operations in Bandung as a remote island in a sea of poverty. Despite its remarkable progress over the last l9 years of operation, the company has virtually no backward or forward linkages with other industries in the country.

In Europe and the United States, aircraft manufacturing involves hundreds of companies, both large and small.

Many other IPTN deals and activities have raised eyebrows. Recently the public was shocked by the announcement that Indonesia was swapping two-locally manufactured plans for glutinous rice from Thailand. The deal raises questions about the government's priorities.

Habibie argued that as a developing country, people could not judge the efficiency of its state-owned enterprises from a commercial point of view. "They should look at the problem from the long-term strategic standpoint."

The losses which so far have been incurred by IPTN, PT PAL and others could perhaps be offset by the value added in transfer of technology and human resource development, both of which Indonesia needs on its path toward industrialization.

Habibie explained that IPTN sends its employees off to study the latest aircraft technology and management techniques overseas. More than 2,000 of its 15,000 employees have already had this opportunity.

If such a transfer of technology can be achieved, a benefit will be gained that cannot be simply measured in terms of money, Habibie added.