JAKARTA: Indonesia is considering purchasing billions of dollars’ worth of US-made defence equipment, including fighter jets and munitions, to help ease trade strains and possibly ward off Donald Trump’s tariff plans.
Defence Minister Sjafrie Sjamsoeddin held a closed-door meeting of senior officials on April 8 to deliver a directive from President Prabowo Subianto instructing them to identify US weapons that could be imported or fast-tracked for purchase, people with knowledge of the gathering said. They asked not to be identified as the details of the discussion remain private.
Among the options under review is the revival of plans to acquire F-15EX fighter jets (pic) from Boeing Co., the people said. Prabowo oversaw a preliminary deal for 24 of the jets in 2023 when he was defence minister, but a contract for the deal hasn’t yet materialised.
An order for US fighter jets could be problematic due to budget constraints and the president’s ongoing push for cost savings across the government.
One industry insider estimated an order for the F-15s could cost more than US$8 billion. Indonesia also has a contract with Dassault Aviation SA for 42 Rafale fighters, a deal valued at its signing in 2022 at US$8.1 billion.
The arms purchase proposals are still under discussion and could form part of a broader package presented by Indonesian officials visiting Washington this week, one of the people familiar with the meeting said.
The ministries of defence and economic affairs didn’t respond immediately to requests for comment.
Indonesia budgeted about $8.2 billion for its military last year, with more than quarter of that amount earmarked for modernizing defense equipment and infrastructure. The country also has a separate foreign loans programs for acquisitions of big-ticket items such as fighter jets, last budgeted at $25 billion for five years through 2024.
"The procurement process for the F-15 has proven to be quite complex,” said Khairul Fahmi, co-founder of the Institute for Security and Strategic Studies, an independent Indonesian think tank focusing on security and strategic issues.
"Politically, we need it as part of our defence diplomacy, especially now as we face tariffs,” he said, adding caution is needed since there are concerns about belt-tightening.
The pressure is on Prabowo to lessen the blow to South-East Asia’s largest economy from the 32% levy on its exports to the US unveiled by Trump earlier this month and subsequently postponed until July. Indonesia’s surplus with the US, its second-biggest trading partner, stood at $18 billion last year, with key exports being textiles, footwear and palm oil.
Prabowo’s policy shifts since taking office in October have fuelled investor concern about the economy’s outlook and the government’s ability to keep its budget deficit under control. Investors dumped Indonesian stocks last month even before Trump announced his tariff plan, while the rupiah is Asia’s worst-performing currency against the dollar this year.
Jakarta is also weighing the purchase of US-made munitions and missiles, the people with knowledge of the defence ministry meeting said. One of them added the procurements could both help modernise ageing military equipment and prod Washington to walk back planned tariffs.
The directive by Prabowo was conveyed on the same day the president sought to reassure business leaders and investors of his policies and plans.
In public remarks, he outlined ideas for tariff negotiations with Washington broadly focused on buying more US goods and easing non-tariff measures such as requirements for companies to include locally made content in their products sold in Indonesia.
Coordinating Minister Airlangga Hartarto, leading the delegation, said Thursday in Washington that Indonesia expects to win lower tariffs on 20 of its main exports. The two sides expect to complete talks within 60 days, he said, adding Indonesia is offering cooperation in critical minerals and simplified procedures on imports of horticultural product from the US.
Boeing officials this week told reporters in Jakarta that the company was "getting closer” to securing an Indonesian commitment for the purchase of F-15EX fighter jets.
Prabowo, a former general, played a key role in negotiating arms deals during his tenure as defence minister under President Joko Widodo.
He signed multiple deals for the Rafale jets. During Trump’s first term in office, he and other Indonesian cabinet members opted to scrap arms deals with China and Russia to avoid falling out of favor with the US administration.
Prabowo has sought to maintain Indonesia’s long-standing non-aligned stance while expanding partnerships with defense suppliers to avoid over-reliance on any single partner. He recently expressed interest in joining Turkey’s fighter jet and submarine development programmes. - Bloomberg
