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IMDEX 2023: Indonesia cleared to buy submarines with USD2.16 billion in foreign loans

A Royal Malaysian Navy Scorpène-class submarine. Indonesia is believed to be eyeing a similar boat, but with air independent propulsion capabilities. (Royal Malaysian Navy)

The Ministry of Finance of Republic of Indonesia has approved a request for the country to take on up to USD2.16 billion in foreign loans to procure air independent propulsion (AIP)-capable submarines.

The matter was confirmed in a letter sent by the country's Minister of Finance Sri Mulyani Indrawati to her counterpart in the Ministry of Defense, Prabowo Subianto, on 15 March. A copy of the recently declassified letter was provided to Janes at the IMDEX 2023 naval exhibitionby a government source.

In the letter, the finance minister referenced a request from Prabowo that was forwarded via the Ministry of National Development Planning on 14 February. In his request, the defence minister laid out a list of 25 Indonesian National Armed Forces procurement programmes for which foreign loans have been proposed as the funding source in 2023.

The source of these foreign loans can either be a foreign private lender or an export credit guarantee corporation, according to details in the letter.

Included in this list of 25 programmes is a USD2.16 billion loan request, the proceeds of which will be deployed to fund the acquisition of two naval submarines. The boats should each displace between 1,800 and 2,800 tonnes when dived and be equipped with AIP-capable propulsion systems.

Besides the two submarines, the funding request would also cover logistics and maintenance packages, training, and shipbuilding transfer-of-technology-related costs.

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