Indonesia - Defense and Security: An emerging defense spender (Strategy, Performance and Risk Analysis)

Indonesia - Defense and Security: An emerging defense spender (Strategy, Performance and Risk Analysis)


The aircraft category remains one of the key growth drivers of Indonesia’s defense and security industry, accounting for 72.5% of capital expenditure in 2016; followed by the C4ISR electronics and IT category with 9.3%. The country’s defense budget recorded a CAGR of 1.0%, rising from US$6.7 billion in 2012 to US$6.96 billion in 2016, due to an increase in homeland security expenditure. However, CAPEX posted a CAGR of -6.2%, falling from US$2.6 billion in 2012 to US$1.99 billion in 2016 due to austerity measures.

MarketLine’s premium reports provide a comprehensive overview of each market within a country’s defense industry; benchmark key performance indicators against regional and global peers; review industry trends and drivers; evaluate the competitive landscape and innovation potential of singular markets; and conduct data-driven SWOT analysis to ascertain a structured assessment of the performance of each territory represented.Key Highlights

Indonesia to focus on developing indigenous defense capabilities:

A focus on indigenous defense capabilities will help Indonesia reduce its reliance on imports whilst enhancing its export base. As part of a strategy to develop the domestic defense sector, Indonesia invited the Association of Southeast Asian Nations (ASEAN) to buy stakes in the industry in 2016. The government is planning to achieve this goal through conducive industrial policies, joint collaborations and strategic partnerships; Indonesia collaborated with South Korea in 2015 to develop a 4.5th generation jet-fighter. Under the terms of the collaboration, Indonesia will contribute 20% of the overall project costs in return for technologies and licenses to procure the aircraft.

Homeland security expenditure to increase following a rise in illegal immigration and criminal activities:

Homeland security expenditure recorded a CAGR of 10.2%, rising from US$3.8 billion in 2012 to US$5.6 billion in 2016. Expenditure will post a forecast-period CAGR of 8.0% to reach US$7.2 billion in 2021. The increase is attributed to the growth of criminal activities and border conflicts; Indonesia shares its borders with Singapore, Malaysia, the Philippines, Palau, and Australia. Due to border sharing, illegal immigration, human trafficking, and drug smuggling is rife.

Strong ties with other countries:

Strategic military relationships with other countries have helped Indonesia to procure advanced weaponry and enhance its defense capabilities. It has relationships with Malaysia, Australia, the US, Russia, France and the UK. In 2016, it announced a joint exercise with the Malaysian Army to develop disaster mitigation strategies. It also entered into an agreement with Australia to cooperate on issues surrounding illegal migration from the Middle East, and strengthened its relationships with the US with regards to counter-terrorism efforts.


  • Industry Snapshot and Industry View - Key defense and security industry statistics including total expenditure, revenue expenditure, and capital expenditure are analysed to reveal the key issues and trends driving market performance in the Indonesian defense and security market.
  • Industry SWOT Analysis - Discover the Strengths, Weaknesses, Opportunities and Threats impacting market performance and investment in the Indonesian defense and security market.
  • Industry Benchmarking - Benchmark how the Indonesian defense and security market is performing compared to regional and global markets in terms of total expenditure, revenue expenditure, and capital expenditure to gauge potential for growth or market entry.
  • Competitive Landscape - Detailed overview and product offerings of the leading defense and security players in Indonesia.
Reasons to buy
  • How is the market performing in terms of: total expenditure, revenue expenditure, and capital expenditure?
  • How risky is it to invest in the Indonesian defense and security industry compared to Asian countries?
  • What is driving the performance of key industry segments such as aircraft, C4ISR Electronics & IT, naval ships, helicopters, military vehicles, and others?
  • Who are the leading players in the Indonesian defense and security industry and their overview and product portfolio?
  • What trends are being witnessed within the Indonesian defense and security industry?
  • What are the Indonesian defense and security industry’s Strengths and Weaknesses and what Opportunities and Threats does it face?
  • What are the recent developments and innovations in the Indonesian defense and security industry?

Conflict and Costs Index
Industry Snapshot
Industry View
Industry SWOT Analysis
Industry Benchmarking
Industry Performance
Competitive Landscape
Key Developments

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