18 August 2020

Indonesia announces strong increase in 2021 defence budget

by Jon Grevatt

Indonesia has announced a strong increase in its annual defence budget despite rising economic challenges related to Covid-19. The government has indicated that the increase is required to boost military modernisation objectives.

Documents recently published by the Ministry of Finance in Jakarta showed that the country’s defence budget for 2021 has been set at IDR136.99 trillion (USD9.2 billion). The documents also show that the 2021 expenditure is a 16.2% increase over the original 2020 defence budget of IDR117.9 trillion.

This 2020 allocation was latterly revised upwards to about IDR131 trillion but then cut down to about IDR122.4 trillion in April in response to fiscal pressure stemming from the Covid-19 crisis.

Indonesia has announced a strong increase in its 2021 defence budget. The funding will be aimed at supporting modernisation ambitions including the planned purchase of Lockheed Martin F-16V fighter aircraft (pictured here). (Lockheed Martin)

The 2021 documents show that funding for military modernisation will receive IDR42.6 trillion and that funds for military personnel expenses and welfare will receive IDR11.4 trillion. The remainder will be split across activities including operations and maintenance, infrastructure investment, research and development, and ‘defence resources’.

In announcing the plans, Finance Minister Sri Mulyani Indrawati said the Ministry of Defence (MoD) will be tasked with prioritising local sourcing in utilising its annual budget. She also said the increase in funding for defence is aimed at sustaining and modernising the capabilities of the Indonesian Armed Forces (TNI).

She said. “This funding will help [the MoD] to catch up and meet [military] requirements, so we do not see this as a very big deviation in [defence spending plans]… President [Joko Widodo] has asked that MoD spending can help increase [the capabilities] of Indonesia’s strategic industries.”

Indonesia has announced a strong increase in its annual defence budget despite rising economic chall...

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