Indonesia commits to increased local content levels in defence

Indonesia is planning to increase the “domestic content level” of defence products and technologies in operation within the Indonesian Armed Forces (TNI), the Ministry of Defence (MoD) in Jakarta has stated.

The intention is aligned with recently enacted national legislation that encourages the country's private sector to play a deeper role in defence research, development, and production activities. The sector has traditionally been dominated by state-run enterprises.

The MoD said on 8 June that the Omnibus Law on Job Creation, which was enacted in late 2020, will encourage greater investment and competition in the national defence industry, with the aim to spur capability advancement and reduce imports.

At an MoD event to explain the new law to local companies, Deputy Defence Minister Muhammad Herindra said, “The national defence industry must have a vision regarding its plan to increase the domestic content level so that Indonesia does not rely on imports of defence and security equipment.”

Herindra said the Omnibus Law will support such efforts. “Under the law,” he said, “state-owned and private-sector enterprises are designated as lead producers and integrators of military equipment. The law therefore provides wide opportunities to demonstrate the capabilities of the private sector.”

He added that the Omnibus Law represents an “improvement in the competitive climate of Indonesia's defence industry in terms of securing technologies and human resources”.