THE country’s outgoing president has approved a 20% increase in defence spending through the end of next year, to upgrade the country’s military hardware in response to geopolitical developments, its finance minister said.
In a news conference on Wednesday, Sri Mulyani Indrawati said the approval came in a meeting she attended with President Joko “Jokowi” Widodo and Defence Minister Prabowo Subianto.
The defence budget will be increased from US$20.75bil (RM96.7bil) to US$25bil (RM116.5bil), Sri Mulyani said.
“The needs were put forward by the defence ministry. They considered them as a necessity given the condition of our military hardware as well as rising threats amid increasing geopolitical and geo-security dynamics,” she said.
Despite the “significant” increase, the defence budget for the three five-year periods from 2020 to 2034 will remain at US$55bil (RM256.4bil), she said, saying that means it is aligned with her medium- to long-term fiscal plans.
The source of the funds will be foreign loans, she said.
The South-East Asian country has sought to modernise its ageing fleet in recent years, spearheaded by Prabowo.
For the past decade, Indonesia’s defence spending per capita and as a percentage of gross domestic product has been the lowest among six of the region’s emerging-market economies, according to data from the Stockholm International Peace Research Institute (SIPRI) think tank.
Deals Prabowo has signed in recent years included the purchase of 42 Dassault Rafale fighter jets for US$8.1bil, 12 new drones from Turkish Aerospace worth US$300mil, and 12 Mirage 2000-5 fighter jets valued at US$800mil.
He also signed agreements to buy fighter jets and transport helicopters from US companies Boeing and Lockheed Martin in August 2023, as well as a deal to buy a US$100mil (RM465mil) submarine rescue vessel from Britain in September. — Reuters