Indonesia's Defence Industry Becomes New Investment Magnet in the Middle East
Indonesia is now at a historic turning point, with President Prabowo Subianto’s strategic steps to strengthen national resilience going beyond mere military enhancement, transforming the defence sector into a massive new engine of economic growth.
“This vision aligns national sovereignty with inclusive national economic growth through the development of an integrated technology ecosystem. The core of this transformation lies in optimising the Defence Industry Policy Committee (KKIP) and the increasingly solid synergy between the government, state-owned enterprises (SOEs), and the private sector,” stated Syahrir, a member of Commission I of the West Java Provincial Legislative Council (DPRD Jabar), on Tuesday (24/3).
According to Syahrir, as a non-structural institution directly under the control of the president and the Minister of Defence (Menhan), KKIP holds a crucial mandate as the conductor of the national defence ecosystem. Its main functions include synchronising needs, aligning the operational requirements of the Indonesian National Armed Forces (TNI) and National Police (Polri) with domestic industry production capacity to avoid imbalances between demand and availability.
Then, macro policies through formulating standards for Transfer of Technology (ToT) and ensuring compliance with the Domestic Component Level (TKDN) in accordance with Law No. 16 of 2012.
Thirdly, as a strategic evaluator by ensuring that every development of Defence and Security Equipment and Supplies (Alpalhankam) meets international quality standards and global competitiveness. “Self-reliance in defence equipment is an integral part of the macro-economic development strategy,” he explained.
Syahrir added that every investment in this sector provides tangible multiplier effects, such as job creation, contributions to GDP, and pillars of self-reliance through government-private sector synergy. He assessed that government support since Prabowo Subianto’s leadership as Minister of Defence until now as President provides market certainty through long-term contracts. This gives confidence to the industry to make major investments in research and development (R&D).
“In addition, national private companies now serve as main suppliers of key components, from radar electronic systems, unmanned aircraft (drones), to individual combat equipment. The synergy between SOEs (DEFEND ID) and the private sector creates a more efficient and price-competitive supply chain,” he clarified.
MILESTONES OF PROGRESS
Syahrir mentioned that the birth of the SOE defence industry holding, DEFEND ID (PT Len, PT Pindad, PT Dahana, PTDI, and PT PAL), is a milestone in national manufacturing progress. PT Pindad, as one of the main engines, has demonstrated brilliant achievements. Innovations in special vehicles through the successful production of the Anoa 6x6 Armoured Personnel Carrier, Harimau Medium Tank, to the Maung series (MV2, MV3, and Garuda), which have become symbols of military automotive self-reliance.
“The world is witnessing the phenomenon of massive investment shifts from Arab countries that are beginning to redirect their portfolios from the West to Asia. Geopolitical factors and Asia’s economic stability are the main attractions for Arab investors and conglomerates. Indonesia must seize this opportunity by positioning itself as a primary investment destination through legal certainty, competitive incentives, cultural and sharia approaches,” he added.
Although rapid progress has been evident, Syahrir said, Indonesia’s defence industry still requires consistent support and the entry of strategic investors to close gaps in import dependency on critical components. Public support for the use of domestic products also becomes additional energy for national innovators. The strength of the defence industry is the face of Indonesia’s sovereignty.
With full government support, active private sector involvement, and intelligence in capturing global investment opportunities, Indonesia is ready to transform into a defence industry power to be reckoned with on the world stage. Our conviction is that consistency in policy and openness to innovation are the keys to making this self-reliance vision an eternal foundation for the nation’s sovereignty.