Indonesia’s military is outdated. Is Prabowo the one to refresh it amid South China Sea tensions?

JAKARTA: Indonesia has gone on a spending spree to modernise its military as a self-imposed deadline for upgrading its defence forces looms large.
At the helm of this spree: The army general turned defence minister, and now new president, Prabowo Subianto, who has been inking deals to overhaul decades-old equipment.
Yet, the country is behind in meeting its modernisation targets, even with a 20 per cent rise in spending for military hardware — to US$25 billion (S$33 billion), funded by foreign loans — approved last November for the 2020 to 2024 period.
Lawmakers have also criticised Prabowo for a planned deal to procure used fighter jets from Qatar. He later had to walk away from the agreement owing to funding issues.
As he takes over the presidency of Southeast Asia’s largest economy, CNA’s Insight explores whether he can rejuvenate its defence forces amid fiscal constraints and geopolitical developments in the South China Sea.
Indonesia’s military modernisation known as the Minimum Essential Force (MEF) plan — 15 years in the making — has targeted a minimal defence capability to deal with threats to its sovereignty. And such a blueprint was much needed, experts agreed.
“Much of our defence equipment is obsolete,” said Khairul Fahmi, a military analyst at Jakarta-based Institute for Security and Strategic Studies.
Nearly half of Indonesia’s operational military equipment is not fit for modern warfare, posing security risks, he said in a separate Jakarta Globe report last December.
WATCH: Amid South China Sea tensions, is Indonesia’s navy lagging behind? (46:51)
The world’s largest archipelagic nation has even struggled for years to curb incursions into its waters, which form two-thirds of its territory.
Despite Indonesia holding naval exercises or seizing and blowing up intruding vessels, its fishermen have reported increasing numbers of foreign boats — namely from China but also Vietnam and the Philippines — harassing them in their traditional fishing areas.
“Our coastguard should’ve been there. We’re Indonesians who are making a living in our own backyard. We must be protected,” said Wahyudin, a fisherman who goes by one name.
China’s “nine-dash line” claim in the South China Sea overlaps with Indonesia’s exclusive economic zone near the oil and gas-rich Natuna Islands.
While China does not contest ownership of the islands, its maritime claims in the North Natuna Sea have sparked a diplomatic stand-off, deployments of Indonesian fighter jets and warships and visits to the islands from former President Joko “Jokowi” Widodo.
To shore up the military, Indonesia has increased its defence ministry’s annual budget by nearly 20 per cent, on average, in the last four years compared with 2019.
Last year, the ministry’s budget of 144 trillion rupiah (S$12.2 billion) was second only to Singapore’s defence expenditure (S$19.76 billion) in Southeast Asia.
But Indonesia’s defence budget has remained around 0.7 to 0.8 per cent of its gross domestic product (GDP) for the past decade — the lowest among the region’s six emerging market economies, based on data from the Stockholm International Peace Research Institute.
“It shouldn’t be that low,” said ISEAS – Yusof Ishak Institute senior fellow Julia Lau. “Any country that wants to have an effective functioning military should allot about 2 to 4 per cent of (spending as a percentage of GDP) to defence.”
Progress on the MEF, due for completion this year, has also been slow. The Indonesian military has met 65 per cent of its modernisation target as at last year.
Analysts told Insight that for the plan to have succeeded, military spending needed to be between 1.5 to 2.5 per cent of GDP.
In recent years, however, Prabowo made a series of major acquisitions.
These include 42 French-made Rafale fighter jets for US$8.1 billion, 12 new drones from Turkish Aerospace worth US$300 million, 24 fighter jets from Boeing and 24 transport helicopters from Lockheed Martin in the United States, both for undisclosed sums.
But not all went smoothly for him, for example when his plan to buy 12 second-hand Mirage 2000-5 fighter jets worth €733 million (S$1 billion) — which were criticised as too old by lawmakers last year — was scrapped this February.
“Prabowo was writing cheques that the government couldn’t cash,” said ISEAS – Yusof Ishak Institute senior fellow Ian Storey.
In July last year, Jokowi urged his Cabinet to maintain a “healthy state budget” and highlighted high spending by security agencies including the defence ministry.
Prabowo’s spending ambitions, however, do not seem to be dampened. His brother-cum-adviser Hashim Djojohadikusumo told the Financial Times in July that the then president-elect was willing to raise the country’s debt-to-GDP ratio to 50 per cent to fund his programmes.
At 39 per cent, Indonesia’s debt-to-GDP ratio is one of the lowest in Southeast Asia, which means it can take on more debt. “I don’t think it’ll be a problem,” said Indra Alverdian, an international relations lecturer at President University.
Ridzwan Rahmat, principal defence analyst at Jane’s, expects Prabowo to increase foreign loans to fund defence acquisitions, as with the procurement of the Rafale fighter aircraft, which is “being done with the assistance of foreign loans from the French government”.
Even as the MEF comes to an end, Prabowo has already embarked on the next phase of military modernisation.
Known as the Archipelagic Trident Shield, the 25-year plan is aimed at acquiring cutting-edge military equipment, with an emphasis on combining warfare capabilities across the navy, air force and army as well as investing in cybersecurity.
The project is projected to cost US$125 billion, and the finance ministry has already approved a fifth of its funding.
As the new president, however, Prabowo will have to juggle military modernisation with other obligations, such as his campaign promise to provide free meals to all pregnant women and schoolchildren in the world’s fourth-most populous nation.
The initiative, which will be targeted to as many as 83 million beneficiaries, is projected to cost taxpayers 460 trillion rupiah annually once in full swing.
On top of this, he must balance spending on Indonesia’s burgeoning needs, from infrastructure to education, plus other costly projects underway, such as the US$33 billion construction of Nusantara in East Kalimantan to replace Jakarta as the country’s capital.
Khairul noted that Prabowo has “emphasised his commitment to gradually increase the defence budget”, but the analyst will “wait and see” if the country’s politics will allow it.
“There’s concern that if defence spending is increased to more than 0.8 per cent or over the psychological number of 1 per cent of GDP, there’ll be issues with accountability. What if such a huge budget isn’t used efficiently?”
Under the Jokowi administration, the country also trod lightly to avoid provoking China while asserting its “legal maritime rights”. “This is what Jokowi has been doing. This is what Prabowo will have to do as well,” said Storey.
“China is a very important country in that, certainly, Jokowi has encouraged China to invest a lot of money in the country’s infrastructure.”
As of this year, Indonesia is promoting 81 projects to attract Chinese investors. The total investment needed for these projects in sectors from real estate to tourism is around 239 trillion rupiah.
Indonesia also seeks to export goods worth up to US$70 billion this year to China, its largest trading partner, up from US$64.9 billion last year.
The archipelagic nation is not alone in its geopolitical dilemma, especially as China and the Association of Southeast Asian Nations (Asean) remain unable to agree on a code of conduct in the South China Sea.
Then there is Aukus, the security partnership between Australia, the United Kingdom and the United States that is set to equip Australia with nuclear-powered submarines.
This trilateral construct is what Indonesian defence planners are “most worried about”, thinks Ridzwan, “because it’s opened up another front in this conflict between great powers in the Asia-Pacific region”.
Should a war break out between China and the US, he added, “some of the fighting, if not (the bulk) of the fighting, is going to happen within Indonesian waters because of how the positions of the hotspots are based”.
When Aukus was first announced in 2021, Indonesia was also concerned that it “might trigger an arms race in the region”, said Storey.
Some observers may think Indonesia’s own military build-up could be a cause, too, for such an arms race. “However, there are no signs among Indonesia’s current leaders that they’re adopting confrontational politics like in the past,” said Khairul.
Military co-operation between Asean member states is, in fact, increasing. Last year, the bloc held its first joint military exercise, a five-day drill in Indonesia’s South Natuna Sea, focused on humanitarian assistance and disaster relief.
“Asean was never established as a military alliance. … But there’s been a lot of external pressure on Southeast Asian countries,” said Ridzwan. “So I think they decided to start with slightly less politically sensitive military exercises such as humanitarian assistance.”
Ultimately, a stronger Indonesian military is “good for the region”, believes Indra.
Even if the country modernises its military, and neighbouring states follow suit, he said, the strengthening of their defence forces can help Asean “build a unity” so that the region remains “a zone of freedom, peace and neutrality”.
It is now left to Prabowo to forge ahead with Indonesia’s military and foreign policies. Given his strongman reputation, however, experts doubt he would back down easily if confrontation should arise.
“I can see him fully being a very nationalistic president when he has to be,” said Lau. “If anyone tries to ‘bully’ Indonesia, … then I fully expect him to come out very strong.”
Watch this episode of Insight here. The programme airs on Thursdays at 9 p.m.