Prabowo’s Military Modernization Plan Faces Economic Reality Check
Jakarta. Indonesia has long prided itself on buying weapons the same way it conducts diplomacy: from everyone, but never too much from anyone.
For decades, Southeast Asia’s largest economy balanced arms purchases among the United States, Russia, South Korea, and Europe as part of its “free and active” foreign policy aimed at avoiding overdependence on any single power. But under President Prabowo Subianto, that balancing act is beginning to tilt toward France and Turkey.
Indonesia wants a military capable of defending the world’s largest archipelago as tensions rise from the South China Sea to the Middle East. Yet it must modernize while grappling with a weakening rupiah, narrowing fiscal space, and the awkward reality that operating too many weapons systems can create logistical chaos.
France has emerged as Jakarta’s preferred supplier for high-end military hardware. Indonesia has agreed to buy 42 Dassault Aviation Rafale fighter jets in a deal worth more than $8 billion (Rp 141.5 trillion), while French firms are also involved in submarine and radar projects. Turkey, meanwhile, has become an increasingly important partner in defense manufacturing. Last year, Jakarta signed a deal for 48 KAAN fifth-generation fighter jets from Turkish Aerospace
Industries, alongside cooperation in missile and warship production. The diversification strategy may look geopolitically elegant, but operating weapons from multiple platforms increases interoperability risks, according to Aditya Batara Gunawan, a defense policy analyst at Bakrie University. Still, the Defense Ministry appears to be anticipating those challenges through procurements such as the Rafale fighter jets and GM403 radar systems, which are aimed at improving interoperability across Indonesia’s defense network.
“But we still need to see how the new fighter jets and radar systems will integrate with existing aircraft and, more importantly, with weapons systems operated by the Navy and the Army,” he said.
Indonesia already operates aging American-made F-16s and Russian Sukhoi jets. Aditya pointed to India as an example of a country managing multiple fighter ecosystems, though he warned that such an approach increases operational costs and complicates logistics, maintenance, and pilot training.
“I believe Indonesia’s current defense priority should be improving the interoperability of its existing weapons systems rather than buying new platforms,” he said. “That means the Defense Ministry and the Indonesian Military (TNI) need to build a more modern and integrated command structure along with the supporting infrastructure.”
Buying Weapons in a Weak Currency Era
Replacing Indonesia’s aging military fleet has long been on Prabowo’s wishlist, with the former army general insisting that Jakarta must continue “to build its strength.”
The government has allocated Rp 337 trillion for defense this year. The Defense Ministry’s spending is capped at Rp 187.1 trillion; some Rp 83 trillion of that cash will go to arms upgrades. Finance Minister Purbaya Yudhi Sadewa has pledged a “quite significant defense budget” for 2027 while maintaining the fiscal deficit below the legal ceiling of 3% of GDP.
Indonesia currently spends just 0.7-0.8% of GDP on defense, far below the informal 2% benchmark favored by many strategists and well behind Singapore, which consistently allocates around 3%. Prabowo wants to raise the ratio to 1.5%, but room for expansion is narrowing as the rupiah weakens to an all-time low and debt-servicing costs rise.
Yet offers from arms suppliers continue to pour in. Japan – which recently eased its lethal weapons export restrictions – has offered Mogami-class frigates, while France has been lobbying Jakarta to purchase additional Rafale jets.
Adrianus Prima, a defense analyst at Lembaga KERIS, welcomed major military purchases, describing them as “long-term investments, not wasteful spending.” He argued that procurement programs tied to local production and technology transfer could generate economic benefits through job creation and reduced import dependence.
“We must continue defense spending while maintaining fiscal discipline. Military modernization takes time, and deliveries can take up to five years after contracts are signed,” Adrianus said.
Rahma Gafmi, an economics professor at Airlangga University, warned that defense procurement remains highly vulnerable to currency fluctuations because it relies heavily on imports and foreign financing.
She argued that Indonesia should preserve routine maintenance budgets to prevent existing military equipment from deteriorating, while cutting 20-30% of planned spending on new contracts until the rupiah stabilizes.
Beni Sukadis, a consultant at Marapi Consulting, said Indonesia would be better off focusing on existing contracts under current economic conditions.
“Without adjustments to priorities, our military spending risks becoming symbolic and lacking sufficient deterrent effect,” Beni said.
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