Indonesia proposes receiving foreign credit for defense acquisitions worth US$20 billion

Indonesia plans to purchase at least 24 new F-16 Viper fighter aircraft from the US. Photo c/o Lockheed Martin.

The Indonesian Ministry of Defence (MOD) has made a proposal to accept foreign credit and assistance programs for defense acquisitions between 2020 to 2024 that could be worth up to US$20 billion.

The said proposal was already forwarded by the MOD, as approved by Defense Minister Prabowo Subianto, to the Indonesian Ministry of National Development Planning as of July 2020.

 The proposal is set to boost the Indonesian Armed Forces’s (TNI) ability to fund projects in the 2020-2024 timeframe despite the Indonesian economy’s downturn due to the effects of COVID-19 pandemic. 

Defense budget for fiscal year 2020 was already reduced by IDR9 trillion (US$580 million), although the Indonesian government has approved a plan to increase the defense budget again in 2021.

Even before COVID-19, the Indonesian government is already trying to find ways to allow funds to be provided to the TNI’s modernization program, considering the high funding requirement of the incoming projects. 

Programs expected to be needing funding includes the acquisition of Iver Huitfeld-class frigates and possible additional Martadinata-class frigates for the Indonesian Navy (TNI-AL), around 24 new Lockheed Martin F-16 Viper fighter aircraft and other fighter aircraft and UAV programs for the Indonesian Air Force (TNI-AU), and for attack and transport helicopters for the Indonesian Army (TNi-AD).

Indonesia aims to build up its defense capability amidst China’s aggressive behaviour in the South China Sea, and its constant breach of Indonesian sovereignty over the Natuna Islands and its exclusive economic zone.


[1] Jane’s