Indonesia to buy 8 Italian frigates and hike defence spending as China tensions rise

Analysts say the deal highlights the Southeast Asian nation's concerns over violations of its territory by Chinese vessels and its ability to defend its interests with its current fleet of ageing vessels. 

According to a leaked document, the Indonesian defence ministry will propose a budget of US$124 billion, which will be split over five years, representing a massive increase in defence spending for Indonesia. Over the previous five years it spent around US$38.8 billion.

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According to the website of Italian shipbuilder Fincantieri, Indonesia has signed a contract to purchase six new FREMM multipurpose frigates and two used Maestrale-class frigates. The two Maestrale-class frigates will be available after they are retired by the Italian Navy.

The company said the deal was "of the utmost importance" to strengthen the collaboration between two countries in the "strategic area of the Pacific". It did not disclose the value of the contract.

Indonesia also "urgently" needed more patrol ships to monitor its 54,000km coastline and vast territorial waters, he said. 

The South China Sea issue could test the growing economic ties between Indonesia and China.

The Fincantieri deal was announced after a recently leaked document showed Indonesia's defence ministry planned to spend 1,700 trillion rupiah (US$124.9 billion) from 2020 to 2024 to modernise its military. The effort would be entirely funded by foreign debt, which needn't be repaid until 2044 and would only incur a small interest rate, the document said. 

Pressure on Indonesia to modernise its ageing naval forces grew when one of its five submarines, the KRI Nanggala, sank in April during a torpedo drill, killing all 53 crew in what is widely seen as one of the worst submarine catastrophes in history. 

"Increasing the budget to 1,700 trillion rupiah, amid the pandemic and economic crisis, will certainly put the burden on the public. The government is better off allocating the money, even if it comes from foreign debt, for public health and economic recovery," said Al Araf, director and military researcher at the Jakarta-based human rights watchdog Imparsial. 

"The number is excessive. Indonesia already has a massive foreign debt burden, if it continues to add it the burden will get heavier and it will affect the economy." 

The defence ministry said the budget had not been finalised. 

"We are still discussing and closely examining [the proposed budget]. It is not yet a final number. We regret that there are parties who leaked the document and made it a political tool to develop hatred fuelled by political jealousy," Dahnil Simanjutak, a spokesperson for Defence Minister Prabowo Subianto, said on June 1. 

"Sixty per cent of our defence equipment is really old, obsolete, and concerning. That is why the Ministry of Defence submitted a formula to modernise through a reorganisation of defence equipment purchasing and funding," Dahnil said. 

The defence ministry was granted the second-largest budget of any ministry this year, of 137.3 trillion rupiah, behind the Ministry of Public Works and Housing, which is in charge of infrastructure. The defence ministry had a budget of 150 trillion rupiah to modernise military equipment in 2014-2019, Widodo's first term, but only used 80 per cent of it, Al said. 

Al said the ministry should work on a white paper and strategic review which could be used as a "foundation" for its policies, doctrines, and budget. Without such a review the budget would be "vulnerable to misappropriation," Al said. A lack of transparency over spending within the ministry could exacerbate that risk, he added.

"The ministry typically hesitates to announce its spending, under the guise of it being state secret, which I think is irrelevant in a democracy, where transparency and accountability are important," Al said. 

The ministry also needed to prioritise its spending, he said. In 2008, Indonesia established the Minimum Essential Force [MEF] concept, which outlines the minimum level of force needed to attain immediate strategic defence interests. When it was first outlined, the MEF called for around 300 ships, of various classes, and 12 submarines.

Under the MEF, the government is supposed to allocate 150 trillion rupiah to modernising equipment over a five-year period.

However, Haripin from the Indonesian Institute For Sciences, said in reality only a small percentage of the ministry's budget went towards modernising equipment. 

"Most of the budget goes to labour-intensive necessities, such as hiring new employees. Meanwhile only around 16 to 17 per cent of the total budget is spent on procurement, innovation, research and development. Our goal to modernise defence equipment will not be met if we continue like this."

This article originally appeared on the South China Morning Post (SCMP).

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