Newfound buying power courtesy of Russian government loans has given Indonesia’s military reason to anticipate a significant upgrade in fighting capability. Its wish list now includes 20 Su-30MK2 fighters, an unspecified number of Yak-130 jet trainers, four Project 636 Kilo-class and two Project Amur-1650 submarines, 10 Mi-17 military transport helicopters, five Mi-35M attack helicopters, 20 BMP-3F infantry fighting vehicles, several corvettes and boats, and air defense systems worth around $3 billion.
In December, Russia supplied the Indonesian air force with weapon systems to arm two Su-27SK fighters. They included R-27 air-to-air medium-range and R-73 short-range missiles, Kh-31P anti-radar missiles, Kh-31A anti-ship missiles and aerial bombs weighing up to 1,100 pounds.
Indonesia bought the Su-27SKs in 2003 along with two Su-30MK fighters and
a pair of Mi-35 combat helicopters under a $192.9 million contract ($108 million of which was paid in palm oil). Later that year, under a $12 million deal, the Indonesian defense ministry received eight Mi-2 and two Mi-171 helicopters.
The military leaders of Indonesia have repeatedly stated that they are determined to make large-scale acquisitions of Russian military hardware for all of its armed services. However, because of financial and economic difficulties, the country could implement these plans only in stages.
Given the Indonesian government’s limited funds, in 2006 Russia offered a $1 billion loan to cover the acquisition costs. Russian President Vladimir Putin signed the credit agreement during his state visit to Jakarta in September. The money–being made available in two tranches of $500 million each–has been loaned at an annual interest rate of 5.3 percent with repayment due within 10 years.
Indonesia does not want just to buy Russian military hardware, however. It wants the proposed deals to include technology transfer that will increase the production capability of its own industry.
Jakarta had decided that $250 to $300 million from the first tranche will go toward six new fighters (three Su-27SKMs and three Su-30MK2s). At the August 2007 MAKS airshow in Moscow, Russian military sales agency Rosoboronexport signed a contract for those aircraft, which Indonesia is to receive between 2008 and 2010 in addition to four used fighters (two Su-30MKs and two Su-27SKs). The deal is worth $335 million and is, to date, the biggest defense contract between the two countries. Russia is also hoping to sell Indonesia a dozen Ilyushin Il-76MF military transports powered by Perm’s PS-90A engines.
The Indonesian Air Force plans to form two squadrons of Russian-built aircraft (24 warplanes in total) by 2010, while in the medium term, the arms procurement program envisions increasing the Air Force’s total number of fighters to 48. While there are no allocations anticipated for acquiring new aircraft in the near future, the country is considering offering barter deals for equipment. Indonesia also wants to establish a maintenance center to work on its Russian-built jets.
Deliveries of civil aircraft and the implementation of a number of commercial offset programs could also be tied to future Russian arms sales. For instance, the Southeast Asian country has revealed that it intends to acquire eight Beriev Be-103 amphibious aircraft for monitoring fishing activity in its territorial waters and for maritime surveillance roles. Irkut Corp., the Russian manufacturer, is also in talks to supply the Beriev Be-200 as a platform for fighting forest fires.