Indonesia Defence and Security Report 2017
With a tense regional geopolitical landscape and a high-alert domestic security setting,Indonesia's need for a better equipped and more efficient armed forces remains. The domestic sector'scapabilities are improving - especially in the naval and armoured vehicle manufacturing sectors - and thisbodes well for the country's future defence export capacity. Nonetheless, the industry is still in a nascentstage and the majority of domestic demand is met by foreign imports that are more technologicallyadvanced. Owing to a long-standing strategy of multilateralisation, the country will be able to availcontracts with a multitude of foreign partners. Those foreign defence contractors able to offer lucrativetechnology transfer arrangements along with competitive pricing will be best placed to capture futureprocurement contracts.
In July, Indonesia's Finance Ministry approved a revised budget for 2017, including a marginal 1.2%increase in defence expenditure to IDR109.3trn (USD8.17bn). The additional funding is aimed atfinancing satellite lease payments and supporting the country's involvement in the United NationsMINUSCA peacekeeping operation in the Central African Republic.
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