MELBOURNE, Australia — The Indonesian Navy’s modernization efforts are at risk from budget shortfalls and industrial inexperience, according to experts.

The Southeast Asian nation, made up of a vast archipelago with more than 6,000 inhabited islands and a population of about 275 million, has territory stretching from the eastern Indian Ocean to Papua New Guinea from east to west, and from Borneo island south of the Philippines to the Timor and Arafura seas north to south.

The country has maritime interests in the disputed South China Sea as well as overlapping maritime boundary claims with several regional states, although it is not a claimant to the disputed islands and features of the contested waters.

Nevertheless, these maritime boundary claims affect Indonesia’s natural resources sector, including fisheries as well as oil and gas extraction. To better protect its maritime interests and territory, Indonesia is upgrading its naval capabilities.

Indonesia’s Minimum Essential Force plan calls for a 274-ship green-water fleet, 10 fighter squadrons for its air combat capability and 12 new diesel-electric submarines.

Euan Graham, an Asia-Pacific maritime security expert at the International Institute of Strategic Studies’ office in Singapore, said the Indonesian Navy’s expansion plans are broadly welcome by local actors as a contribution to regional security.

However, he told Defense News, any approval from neighboring countries comes from the fact the Navy is seeking “more capacity and capability simply to defend Indonesia’s maritime rights” rather than assert itself across the region.

Indonesia’s Navy is currently made up of “a hodgepodge of technologies acquired from various sources — West, Chinese, Russian — and this constitutes a logistical nightmare, besides the obvious challenges of interoperability,” said Collin Koh, a research fellow specializing in maritime security and naval affairs at the S. Rajaratnam School of International Studies in Singapore.

He forecasts a general trend “predicated on twin pillars of pursuing indigenization while focusing more on obtaining Western technologies” for naval modernization.

What is Indonesia buying for its fleet?

Indonesia is halfway into the last of three five-year planning stages. Its defense budget for the upcoming year is $13.6 billion. Although this is a record high for the government, it is less than half of the defense minister’s request, leaving the country far short of what is required under the Minimum Essential Force plan.

The Defense Ministry did not respond to a request for comment.

Koh said this continues a trend of underspending on defense, adding that the local defense industry is highly dependent on the Indonesian military for revenue. A lack of defense funding doesn’t only impact capital investments for acquisition projects, he explained, but also has a debilitating affect on industrial development.

The twin-pillared modernization strategy pursued by Indonesia is also costly to enact, according to Koh, and leaves it “at best able to obtain only a handful of sophisticated designs [such] as the Arrowhead 140 and FREMM, even if license production was factored in.”

A hand-over ceremony for a new FREMM frigate takes place April 16, 2021. (Naval Group)

He further noted that while the introduction of modern designs would enhance the fleet’s capability on a ship-for-ship basis, “they don’t serve in numbers significant enough for the overall force structure,” particularly when the ongoing block obsolescence of more than 40 warships, which the Navy says need upgraded and refurbished, is taken into consideration.

Local state-owned shipbuilder PT PAL recently cut steel for the first of two frigates on order by the Navy. The ships are based on the Danish Iver Huitfeldt class, which is marketed by U.K. company Babcock International as the Arrowhead 140.

In 2021, Indonesia signed a contract with Babcock for the ships and earmarked $720 million for the program. The Arrowhead 140 design is 138 meters (453 feet) long, with a displacement of roughly 6,000 tons.

Indonesia also signed a contract that year with Italy’s Fincantieri for six larger FREMM frigates. The ships will be built in conjunction with PT PAL. However, the program was not included on the list of projects published by the government that are slated to receive foreign development loans over the next fiscal year.

There are also plans to refresh the Indonesian Navy’s submarine fleet. The service currently operates four diesel-electric attack submarines: a Cakra-class boat completed in 1981, and three Nagapasa-class subs commissioned between 2017 and 2021.

The latter are an improved variant of the Jang Bogo class, which were themselves an upgraded South Korean version of the Type 209 submarines built by Germany’s ThyssenKrupp Marine Systems.

Indonesia has ordered a second batch of three more submarines, which PT PAL will build. The shipyard already built the third boat from the first batch.

However, the country is still shopping for a new submarine as part of its fleet expansion — a requirement made more urgent following the loss of the KRI Nanggala, a Cakra-class submarine, in April 2021 during a torpedo-firing exercise.

The new submarine will likely be of the Scorpene class, made by France’s Naval Group. A contract signed between France and Indonesia for the first six of what is planned to be 42 Dassault Rafale fighter jets also included a memorandum of understanding for two Scorpenes.

Indonesia likely wants PT PAL to build the boats locally, Graham said, but questions remain over the shipyard’s ability to perform the work at the level required for submarines.

Media reports have cited the KRI Nanggala’s commander, who died when the submarine sank, as saying PT PAL’s sustainment work on the submarine was substandard, as was its work assembling the third Jang Bogo-class sub for the Navy.

While the domestic defense industry is capable of building modern surface vessels, “submarines are significantly more challenging in engineering terms, as is the complexity of integrating systems across different ship designs,” Graham told Defense News.

Koh agreed, pointing out “the Indonesian shipbuilding industry has had a steep curve in picking up the know-how” to locally manufacture submarines.

“The sudden influx of these new projects with different vendors can be overwhelming, especially if there are not many adequately capable players within the domestic industry,” he said.

Mike Yeo is the Asia correspondent for Defense News.

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