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Indonesia Defence and Security Report Q2 2011


Indonesia Defence and Security Report Q2 2011

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Additional Information
Price $530.00
Meta Description No
Publisher Business Monitor International
Date of Report Apr 15, 2011
Quick Overview
In 2004 and then again in 2009, Indonesia held fair and peaceful parliamentary and presidential elections. There is now finally evidence that democracy is taking hold. At the same time, however, there are several struggles for independence, or at least autonomy, within the country. There is also a risk of terrorist attacks.
The secessionist movements at either end of the archipelago, in Aceh and Papua, are the best known. Arguably the Aceh region provides the greatest risk to Indonesia. A compromise with the secessionist movement allowed the province the adopt part of the Shari'ah law, in contradiction of Indonesia's secular constitution. Since that time the members of Gerakan Aceh Merdeka (GAM), or the Free Aceh Movement, have not been mollified but have become more fundamentalist and actively supportive of other insurgent movements.
The situation in Papua is somewhat different. The indigenous people are ethnically Melanesians, who are largely Christian (or Animist). The province was not originally part of Indonesia and many of the locals want independence. The position is complicated by the internal migration of many people from Java and Madura that has fundamentally changed the ethnic makeup in Papua. The troubles in Papua gained renewed international exposure when evidence of torture by Indonesian troops came to light. Indonesia charged four soldiers over the incident and they were sentenced in November 2010 to between five and seven months in prison for ‘disciplinary breaches’. There was widespread anger in Papua over the lenient sentences and the failure of the authorities to address an even more extreme torture case at all. In January 2011, soldiers killed two Papuan men who tried to attack an army base in Kabupaten Merauke.
The emerging issue though is one of ‘Christianisation’. Some evangelical protestant groups, some from the US but others are locally based, have been quite aggressive in their efforts to convert Muslims to Christianity. This causes resentment within the dominantly Muslim population. Most of the parties are pressing the case for ‘religious tolerance’ but always on their own terms. Generally, protests are peaceful but some Muslim groups are threatening violent reprisals. There is concern at the lack of government action and the tendency to leave the matter to be addressed at the local level.
Both President Yudhoyono in 2004 and defence minister Yusgiantoro in 2010 have spoken of their determination to reduce the level of dependence on imported defence equipment by supporting the development of the local industry. The government has held meetings were held with representatives of the domestic defence industry regarding the needs of the military and the police. Capabilities and opportunities for domestic funding have been discussed. However, little progress has been made since the programme was introduced in 2007.
Economically, Indonesia is on a sound footing. Its economy is one of those more isolated from global trade and it was therefore relatively unaffected by the GFC. Domestic consumption and investment growth with continue to power the economy. Government spending on defence is, however, significantly lower than many countries in the Asean region. The 2009 defence budget of IDR33bn (US$3.2bn) remained below the minimum required for the military’s operational needs, according to the minister of defence.
Table of Contents
Executive Summary ........................................................................................................................................ 5
SWOT Analysis ................................................................................................................................................ 7
Indonesia Security SWOT ..................................................................................................................................................................................... 7
Indonesia Defence Industry SWOT ....................................................................................................................................................................... 8
Indonesia Political SWOT ..................................................................................................................................................................................... 9
Indonesia Economic SWOT ................................................................................................................................................................................ 10
Indonesia Business Environment SWOT ............................................................................................................................................................. 11
Global Political Outlook ................................................................................................................................ 12
The United States ................................................................................................................................................................................................ 12
China .................................................................................................................................................................................................................. 14
Japan And The Koreas ........................................................................................................................................................................................ 15
Russia ................................................................................................................................................................................................................. 16
Europe ................................................................................................................................................................................................................ 17
India ................................................................................................................................................................................................................... 17
Brazil .................................................................................................................................................................................................................. 18
Turkey ................................................................................................................................................................................................................. 19
Iran ..................................................................................................................................................................................................................... 19
Egypt, Saudi Arabia And Pakistan ...................................................................................................................................................................... 20
Terrorism ............................................................................................................................................................................................................ 21
Africa .................................................................................................................................................................................................................. 22
Space .................................................................................................................................................................................................................. 23
Competition ........................................................................................................................................................................................................ 23
Wild Card In Global Politics .............................................................................................................................................................................. 24
Conclusion .......................................................................................................................................................................................................... 27
South East Asia Security Overview .............................................................................................................. 29
The Strategic Outlook For The 2010s ................................................................................................................................................................. 29
South East Asia In A Global Context .................................................................................................................................................................. 29
Challenges And Threats To Stability And Security.............................................................................................................................................. 30
Main Islamist Militant Groups In South East Asia .............................................................................................................................................. 32
Piracy In The Malacca Strait .............................................................................................................................................................................. 35
The South China Sea/Spratly Islands .................................................................................................................................................................. 36
Other Regional Threats....................................................................................................................................................................................... 36
The Outlook For South East Asia ........................................................................................................................................................................ 39
Security Risk Ratings ................................................................................................................................... 41
BMI’s Security Ratings ....................................................................................................................................................................................... 41
Table: Asia Pacific Regional Security Ratings .................................................................................................................................................... 41
Table: Asia Pacific State Vulnerability To Terrorism Index ............................................................................................................................... 42
Indonesia’s Security Risks .................................................................................................................................................................................. 42
City Terrorism Rating ......................................................................................................................................................................................... 43
Table: BMI’s Asia City Terrorism Index ............................................................................................................................................................. 44
Political Overview .......................................................................................................................................... 45
Foreign Policy .................................................................................................................................................................................................... 47
Long-Term Political Outlook .............................................................................................................................................................................. 50
Security Overview ......................................................................................................................................... 54
Internal Security Situation .................................................................................................................................................................................. 54
Table: Indonesia’s Insurgent Groups ................................................................................................................................................................. 57
External Security Situation ................................................................................................................................................................................. 58
Latest Developments ........................................................................................................................................................................................... 60
Armed Forces And Government Spending ................................................................................................. 62
Armed Forces ..................................................................................................................................................................................................... 62
Defence Budget ................................................................................................................................................................................................... 64
Army ................................................................................................................................................................................................................... 65
Navy .................................................................................................................................................................................................................... 65
Air Force ............................................................................................................................................................................................................ 66
International Deployments .................................................................................................................................................................................. 66
Weapons Of Mass Destruction ............................................................................................................................................................................ 66
Market Overview ............................................................................................................................................ 68
Industry Trends And Developments .................................................................................................................................................................... 68
Competitive Landscape ....................................................................................................................................................................................... 69
Table: Key Players In Indonesia’s Defence Sector ............................................................................................................................................. 69
Arms Trade Overview ......................................................................................................................................................................................... 69
Procurement Trends And Developments ............................................................................................................................................................. 70
Industry Forecast Scenario ........................................................................................................................... 72
Armed Forces ..................................................................................................................................................................................................... 72
Table: Indonesia’s Manpower Available For Military Services, 2008-2015 (aged 16-49, unless otherwise stated) ............................................ 72
Defence Expenditure ........................................................................................................................................................................................... 72
Table: Indonesia’s Total Government Defence Expenditure And Employment, 2008-2015 ................................................................................. 73
Table: Defence Expenditure Scenario – Changing % Of GDP, 2008-2015 (US$mn) .......................................................................................... 74
Defence Trade ..................................................................................................................................................................................................... 74
Table: Indonesia’s Defence Exports, 2008-2015 (US$ mn) ................................................................................................................................ 74
Table: Indonesia’s Defence Imports, 2008-2015 (US$mn) ................................................................................................................................. 75
Table: Indonesia’s Defence Trade Balance, 2008-2015 (US$ mn) ...................................................................................................................... 75
Key Risks To BMI’s Forecast Scenario ............................................................................................................................................................... 76
Macroeconomic Forecast ................................................................................................................................................................................... 76
Table: Indonesia – Economic Activity, 2009-2015 .............................................................................................................................................. 78
Company Profiles .......................................................................................................................................... 79
PT Dirgantara Indonesia (IAe) ........................................................................................................................................................................... 79
PT Pindad ........................................................................................................................................................................................................... 81
PT Penataran Angkatan Laut (PAL) ................................................................................................................................................................... 82
BMI Methodology .......................................................................................................................................... 84
How We Generate Our Industry Forecasts ......................................................................................................................................................... 84
Defence Industry ................................................................................................................................................................................................. 84
City Terrorism Rating ......................................................................................................................................................................................... 85
Table: Methodology ............................................................................................................................................................................................ 87
Sources ............................................................................................................................................................................................................... 88




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