Indonesia is facing a challenge to ensure that foreign contractors meet defence offset obligations in the country, particularly with regards to technology transfers, Indonesian government officials have said.
Speaking to Jane's at the Indo Defence 2018 show in Jakarta on 7 November, officials from the Defence Industry Policy Committee (KKIP) - an agency under the Ministry of Defence that administers industrial collaboration programmes - said that local ability to absorb incoming technologies has become a major barrier.
Indonesia's offset regulations are framed by the Defence Industry Law 2012 (or 'Law 16'). This outlines a requirement for contractors to return 85% of the value of the main contract back to Indonesia through a mix of countertrade and offsets, 35% of which must be directed to the local defence industry through technology transfer in support of localised production or MRO.
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