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Indonesia outlines details of Su-35 offset programme

23 August 2017
The Sukhoi Su-35 'Flanker-E'. Source: IHS Markit/Patrick Allen

The Indonesian Ministry of Defence (MoD) has disclosed further details regarding its countertrade and offset programmes with Russia to support its planned purchase of 11 Sukhoi Su-35 'Flanker-E' multirole combat aircraft.

In a press release on 22 August, the MoD confirmed that the Su-35 procurement programme is worth USD1.14 billion, and that half of the contract's value – about USD570 million – will be financed through a counter-trade programme.

The MoD added that a further 35% of the value, about USD400 million, will be sourced through an offset programme. The Indonesian government will pay the remainder of approximately USD170 million in cash.

The details of the offset programme were not revealed, although Jane's understands that this will be centred on facilitating Russian technology transfers to support localised maintenance, repair, and overhaul (MRO) of the aircraft. The work will be undertaken by state-owned aerospace company PT Dirgantara Indonesia.

The MoD additionally provided details on the expected commodities it will export to Russia as part of the countertrade obligation. According to the ministry, these include palm oil, rubber, machinery, coffee, cocoa, textiles, tea, footwear, processed fish, furniture, copra, paper, and spices. A number of unidentified defence products will additionally be exported to Russia, said the MoD.

The statement added that details related to offset and countertrade are expected to be finalised in the near future, through an agreement signed earlier in August between Rostec, the holding group for Russia's defence industry, and Indonesia's state trading company PT Perusahaan Perdagangan Indonesia. The contract for procurement of the Su-35s is expected to be signed by the two countries subsequent to this agreement.

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