Defense Industry Development Model

Defense Industry Development Model

By David Raja Marpaung

Defense transformation puts military technology as the main variable which shall be allowed Indonesia to conduct military technology revolution.  Capacity development of military technology adoption will depend on the ability of Indonesia to strengthen national defense industries . Development of the defense industry in the East Asian countries shows that there are three main models of the defense industry  (1) . The first model is the autarky model tends to be applied by Japan and China . The second model is a niche production model implemented by Taiwan and South Korea . The third model is a global supply chain models applied by Indonesia, Malaysia , and Singapore .

Autarky model is implemented by a country that has ambitions to gain independence defense . Independence is measured from the defense : (1 ) the capacity of countries to master the technology needed to make military weapons systems , (2 ) national financial capacity to finance the production of weapons systems , and ( 3 ) national industrial capacity to produce weapons systems in the country . Autarky This model will be achieved if a country is able to have a minimum of 70 % capacity of the technology , financial , and production of weapon systems . To achieve self-reliance defense , the state must develop a long-term strategic plan of defense associated with the country's ambitions to become a major military power in the world or regional level .

The long -term commitment , for example , appears from China plans to project themselves into the hegemonic power in 2050. Projections in 2050 , known as the LiuHuaqing plan , has three main targets . In 2000 , China planned to have a capacity Quanli Duoqu ( sea control ) , capacity Quanyu Kongzhi ( sea denial ) in 2020, and capacity Quanzhi Baochi ( global projection ) in 2050.

The operational plan in the defense industry revitalization pass through several methods , namely first , standardization and centralization of procurement adopted since 2002 . Second, the consolidation of the defense industry , particularly by establishing China Aviation Industry Cooperation , and China State Shipbuilding Corporation . Third , the launch of several mega projects like Project 085 to build a nuclear-powered aircraft carrier weighs 93,000 tons . The project is scheduled for completion in 2020 was done by the China State Shipbuilding Corporation in Jiangman , Shanghai . Another project is the 089 project undertaken by Dalian Shipbuilding Industry to build non - nuclear aircraft carrier weighs 48,000 tons, is equipped with fighter aircraft J - 10 -made domestic . Autarky This model is an ideal model for building national defense industry . However , this model can only be achieved by the countries that have the status or ambitions to become a major world power ( great power ) which is supported by a large military posture

Niche - Production Model applied by countries that seek to reduce dependence weapon against foreign manufacturers with developing national capacity to master the main military technology . Mastery of military technology is primarily aimed at helping the country to develop eight types of conventional weapons , namely ( 1 ) small and light weapons , (2 ) the main tank class , (3 ) surface warships , (4 ) submarine ; ( 5 ) aircraft combat ; ( 6 ) attack helicopters ; ( 7 ) missiles , and ( 8 ) military communication systems and sensing .

To implement this model , a country must have a commitment to invest into the defense industrial sector , especially with trying to obtain military technology transfer from established weapons manufacturers . This strategy , for example , is effectively carried out by South Korea to develop surface warships , submarines , tanks , and fighter planes .

For warships , Hyundai Heavy Industries , is developing a Korean Destroyer Destroyer Ship Experiment ( KDX ) King Sejong ( 11000 tonnes ) which is designed to have the technical expertise on the U.S. destroyer ship . DDG - 51 Arleigh Burke and maritime technology developed by Thales ( France ) , BAE ( UK ) , and Raytheon ( United States ) . For Tank , Hyundai Rotem has developed an equivalent K1A1 Tank M1 Abrams or the Leopard 2A6 . Tank K1A1diproduksi by Hyundai Rotem in cooperation with the tank manufacturers in the world such as Rheinmetall Land Systems and General Dynamics Land Systems .

To make the future Korean fighter Fighter Experiment ( KFX ) IFX , Korea Aerospace Industries involving other aerospace industry . KAI has only 63% of the technology needed to make K / IFX and should involve the Turkish Aerospace Industries , Saab , Boeing , and Lockheed Martin to acquire other technologies .

Opportunities to get this technology transfer can be enlarged mainly by exploiting the emergence of the consumer market gap in the international arms market . International arms market consists of two characters : the consumer market ( buyers market) and market producers ( suppliers market ) . Consumer market is characterized by high supply weapons weapons while demand tends to be low . This condition tends to occur when the situation created by the peace dividend ( peace gains that occur when there is a war to peace transition ) and tends to favor buyers weapons . Manufacturers market characterized by high demand while supply weapons weapons tend to be limited . This condition tends to occur when the crisis broke out in an area or when the countries in the region to modernize the military that led to the arms race . Markets tend to favor producers of weapons manufacturers .

Currently , the global arms market is likely to lead to consumer markets . There are three indications to support this , namely : ( 1 ) the producer countries have weapons with old technology base that must be sold before the new generation of emerging weapons . For example , the emergence of next-generation fighter V ( F22/F35/Euro Fighters ) in 2013-2027 will force major manufacturers ( Lockheed Martins , BAE , EADS ) to immediately sell the fourth -generation fighter aircraft ( F16 , Typhoon , Mirage 2000 ) , (2 ) regional security situation ( East Asia ) is relatively stable and has not led to a crisis which will provoke significant military development occurs , (3 ) the world economic crisis ( the U.S. and European debt crisis ) will affect the defense spending cuts , so the manufacturers were forced to delay the development of next-generation weapons new , and tend to rely on the transitional revenue generation from the sale of long guns .

Because the consumer market is created , then the consumer countries tend to have a bargaining position better than to get a weapon system . For grants from the U.S. F - 16 , for example , the U.S. and Indonesia could ask Lockheed Martins for providing special facilities , such as ( a) the financial support package that is lighter to grant F - 16 , (b ) grant a more complete package that includes training , ammunition , regular maintenance , to transfer technology , (c ) technology transfer mechanisms are equipped with defense industry cooperation in the form of co -production , joint production , or license , and ( d ) off - set mechanism ( counter trade ) to save foreign exchange .

When the consumer market is created , manufacturers tend not to have a strong position to push for a state buyers adopt a code of conduct is strictly regulated arms trade in the Code Arias . In fact , manufacturers should compete to offer special facilities . Russia offers loan facilities are equipped with state - set off mechanism . European Consortium offers a mechanism that relies on a strategic partnership mechanism between EADS joint -production with the domestic defense industry . To grant F - 16 to Indonesia , U.S. offers special facilities such as Foreign Military Financing accompanied by technology transfer facilities to improve qualifications F - 16 fighter that could match the qualifications possessed by technologies such as Singapore and Taiwan .

Character of the consumer market in the global arms market tends to be short-lived . This character will only last until the producers in the U.S. and Western Europe out of the debt crisis is expected to be completed from 2015 to 2017 . This character will also be shifted to the character of the market as a manufacturer of weapons manufacturers are ready to launch a new generation of weapons that will make the older generation of weapons is no longer relevant to the dynamics of weapons technology . For aircraft , the shift to a market producer is expected to occur between the years 2015-2017 at the V generation fighter began to be marketed by the U.S. , Russia , and Western Europe . Strategic gap emergence of consumer market that allows a country to establish a niche -production models to seek the transfer of technology in every weapon procurement contracts . This technology transfer will be transformed into a major military technological mastery that allows a country to strengthen the national defense industry .

Global Supply Chain Model tend to be carried out by countries that already have an established base of military technology but do not have great access to the international arms market . This lack of access makes these countries undertake rationalization of the production process by integrating the production of weapons of weapons to a consortium of global defense industry . This rationalization is done by three main methods , namely ( 1 ) the creation of an industry consortium weapons at level regional or global , (2 ) the mobilization of financial resources from the private sector to finance cross-border investment in the defense industry sector , and ( 3 ) deployment of military technology to the major arms producers consortium members .

This model , among others , performed by the Australian has consolidated the Australian Defense Industry with Thales (France ) , Australian Aerospace Industry with EADS , with BAE and Tenix Defence ( UK ) . The same is done by Singapore with developing cooperation between Thales and Singapore Technologies Engineering ( STEngg ) to make components for the communication and pengindraaan Lafayette -class warships Fregate . Cooperation initidak just make STEngg as part of the production chain Thales , but also part of the production chain European warships are utilizing technology from Thales .Of the three existing models , the model is an ideal model autarky to gain independence defense . This model can only be achieved by the countries that have the status or ambitions to become a major world power ( great power ) which is supported by a large military posture .

To be able to apply these models , four strategies should be applied in Indonesia : 

First , formulate a long-term strategic plan of defense . The strategic plan should be able to describe the three major planning , namely : ( 1 ) The evolution of Indonesian military forces became a major power in East Asia . Evolution is not just describe the minimum target for Defence Forces in 2024 , but also the defense posture development plan to 2050 , (2 ) Defense Industry Revitalization Blueprint which contains the Public Policy Development Defence Industry , Defence Industry Revitalization Strategy 2024, and the Defence Industry Self-Reliance Program 2050 and ( 3 ) Procurement Plan 2024 Alusista disaggregated form Alutsista Procurement Plan 2012-2014 , 2014-2019 , and 2019-2024 .

Second, establish a long-term political commitment to ensure budget sustainability defense industry development programs . Political commitment of the budget is done by setting a target allocation of the defense budget to GDP has gradually increased from 1 % of GDP in 2014 to the 2.5 % of GDP in 2024.

Political commitment budget must also be accompanied by the formulation of procurement contracts that are medium-term mega projects of the government to the defense industry . This mega project aimed to build conventional weapons systems such as fighter aircraft , surface warships , submarines , tanks , attack helicopters , and missiles in large numbers so as to provide certainty and continuity of the production process for the national defense industry . Nominal value of procurement contracts must also gradually increased from 10% of the value of all arms procurement in 2014, to a minimum of 30 % in 2024.

Third , consolidate national defense industry by establishing two strategic consortium , which is a consortium of national aviation industry (national aerospace industry) and a consortium of industry and maritime national defense ( national maritime and defense industry) . The second consortium should establish national defense equipment production chain involving other national industries , including small - and medium industries .

Fourth , alliance defense industry pioneer in regional and global levels , increasing the likelihood for Indonesia to quickly adopt the latest military technology into the procurement process . The adoption of this technology is a method for implementing niche -production model that can be used as a transition stage to achieve the independence of Indonesia's defense . This alliance was also formed to increase market access weapons that allow national defense industry to be part of the global production chain . The method relies on the application of global supply chains can also be used as a model for the transition stage of development of national defense industry .

The fourth strategy was formulated to ensure the existence of a strong political commitment to establish the independence of Indonesia's defense industry . If the political will can be realized , the development of the national defense industry could be used to initiate the transformation over the defense which makes military capabilities as a determinant of technology adoption to build a modern defense force in the XXI century 

(1) Andi Widjajanto. “Revolusi Teknologi Militer dan Kemandirian Industri Pertahanan Indonesia”, Jurnal Pertahanan, Mei 2012, Vol. 2, No. 2, p. 7.