Indonesia looks to enhance enforcement of offsets

Indonesia has pledged to enhance the enforcement of defence-industrial co-operation guidelines, with the aim to strengthen local manufacturing and boost the country’s economic response to the Covid-19 pandemic.

The Ministry of Defence (MoD) in Jakarta said that the requirement is also aligned with President Joko Widodo’s stated intention to ensure that the country’s “defence budget supports investment” in Indonesia.

Indonesian Defence Minister Prabowo Subianto said in a meeting of the MoD’s Defence Industry Policy Committee (KKIP) on 21 May that the MoD is committed to ensuring that the country’s defence budget “is properly managed so that it can help improve the national economy”. This focus, he said, is aligned with Widodo’s “investment” requirement.

Subianto also stated that the management of the defence budget also includes the management and enforcement of industrial co-operation that supports defence procurements from foreign suppliers.

“We have to find out how to implement countertrade, local content, offsets, transfers of technology, and defence investment in every procurement of defence and security equipment from abroad,” said Subianto in comments published by the MoD’s public relations bureau.

According to the MoD, Subianto emphasised to the KKIP the requirement for defence-industrial co-operation “recommendations and evaluations in all purchases of defence equipment”. This, he said, is to “ensure that Indonesia benefits from all aspects of every purchase of defence equipment from abroad”.

In addition, the MoD said that it hopes to support further development of the national defence industry through the implementation of a new “long-term strategic plan”. This plan, the MoD indicated, would be closely linked to requirements to support defence-industrial co-operation in all procurements of foreign defence equipment.