Indonesia earns place in aerospace industry

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.