Indonesia’s defence expenditure is anticipated to grow at a compound annual growth rate of 11.13% during 2016-2021, to reach $11.94bn by 2021, according to a report by Strategic Defence Intelligence (SDI).

Titled, “Future of the Indonesian Defense Industry – Market Attractiveness, Competitive Landscape and Forecasts to 2021”, the report forecasts the Indonesian defence market trends and spending patterns.

"Indonesia is investing in new hardware, as well as upgrades to replace old systems."

Growing at an average rate of 7.9%,the Indonesian economy is expected to lead to greater defence expenditure. Indonesia’s defence spending is mainly driven by increasing tensions in the South China Sea, territorial conflicts with South-Asian countries, and continuous deployment of forces on the Natuna Islands, as well as anti-piracy and illegal fishing and drug smuggling control missions.

The nation’s initiatives to counter asymmetric threats are anticipated to create demand for maritime surveillance and security equipment, imaging systems, airport security, biometric systems and video-surveillance systems to counter security threats of internal and external origins.

The major naval procurement programmes that form part of the Indonesian Ministry of Defence’s (MoD) procurement plan include the AS565 Panther anti-submarine warfare (ASW) helicopters, Chang Bogo-class tactical submarines, and landing ship tanks (LSTs).

With the majority of equipment and platforms being from the Soviet-era, Indonesia is investing in new hardware, as well as upgrades to replace old systems. The country’s defence market is valued at $6.97bn in 2016.

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By GlobalData