Indonesia Defence and Security Report Q2 2008

Indonesia's chief internal security concerns stem from the pressures of attempting to forge a nation-state from a range of archipelagic islands consisting of distinct ethnic groups. Indonesia faces several security concerns from insurgencies including breakaway provinces, maritime and terrorist security threats, as well as general civil unrest. Indonesia's internal security situation is unlikely to improve in the immediate future, as demonstrated by the Indonesian Government's decision to deploy some 17,000 soldiers and police to prevent a terrorist attack in the capital Jakarta in Q108. The government was keen to avoid a repeat of the 2001 Christmas Eve attacks, where mainly Christian churches were bombed. There was no recent intelligence indicating that another wave of attacks was imminent: however, extra security was deployed to the larger churches. Also in Q108, Indonesia resumed maritime border talks with Palau and Vietnam. The talks have been ongoing on a periodic basis for some time. Indonesia is also engaged in border negotiations with Timor Leste.

Indonesia's armed forces have a long history of being under-funded, which has compromised the country's ability to purchase affordable defence systems. In Q108 the country's financial military assistance was reduced when the US withheld some of its Foreign Military Funding (FMF) due to concerns over human rights. Indonesia was set to receive US$15.7mn in 2008 but some US$2.7mn was withheld. In 2006, the US resumed non-lethal Foreign Military Sales as well as International Military Education and Training.

Indonesia's arms trade composition remains unchanged. The indigenous defence industry is unable to support the scale of the upgrade programme. The country's defence industry is relatively small, and can only meet 5% of the armament needs of the Indonesian military. However, this has not stopped the industry from enhancing its profile regionally and internationally. 'Indo Defence 2006' was held in November 2006, showcasing products from international and Indonesian defence firms. Companies that showcased defence items included Pindad, Air Launch, Sukhoi PAL, Lurssen Rosoboronexport, Dirgantana Indonesia, Daewoo, Ferrostal and Kazan Helicopter.