24 June 2020

Covid-19: Indonesia signals potential major increase in defence spending

by Andrew MacDonald

Indonesia could be in line for a record-high expenditure of nearly IDR150 trillion (USD10.6 billion) for fiscal year 2021 if recently submitted budgetary proposals are approved by parliament later this year.

The proposed expenditure suggests the Southeast Asian country might be in a more robust position to respond to the Covid-19 pandemic than was previously thought.

Indonesia has proposed a strong increase in defence spending for 2021, with procurement identified as a priority. The country’s modernisation targets include the acquisition of the Harimau medium tank (pictured) developed by PT Pindad and FNSS. (FNSS)

The Ministry of Finance (MoF) said in a fiscal policy report recently presented to parliament that the Ministry of Defence (MoD) has indicated a ceiling requirement of IDR129.3 trillion for 2021.

The MoD also said in information presented in a meeting with the House of Representative’s defence commission that additional funding of IDR19 trillion is required to support a range of initiatives including military procurement.

If approved, the proposals would provide the MoD with IDR148.3 trillion for 2021. This would represent an increase of IDR25.9 trillion – or 21% – over the revised allocation of IDR122.4 trillion for 2020. The original 2020 appropriation was IDR131.2 trillion but this was cut through a presidential regulation issued in April in response to the impact of Covid-19.

According to the MoF fiscal policy report, funding priorities for the MoD in 2021 include the procurement of munitions, armoured vehicles, and naval vessels, and the support and replacement of military aircraft. In addition, funding is required to complete “projects and activity” that were postponed due to budgetary restrictions imposed in the wake of Covid-19, it said.

Indonesia could be in line for a record-high expenditure of nearly IDR150 trillion (USD10.6 billion)...

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