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Indonesia’s defense products must be marketable: Jokowi

Wearing a life vest over his suit, President Joko “Jokowi” Widodo took a test-drive on the Anoa amphibious armored personnel carrier (APC), the latest advanced technology product from state-owned weapons manufacturer PT Pindad

Haeril Halim (The Jakarta Post)
Jakarta
Tue, January 17, 2017

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Indonesia’s defense products must be marketable: Jokowi

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earing a life vest over his suit, President Joko “Jokowi” Widodo took a test-drive on the Anoa amphibious armored personnel carrier (APC), the latest advanced technology product from state-owned weapons manufacturer PT Pindad.

Crossing the lake inside the Indonesian Military (TNI) headquarters compound into the main hall to attend a TNI leaders meeting, the president commended the performance of the APC, although he admitted the short trip had made him jittery.

“Everyone was tense when crossing the water,” Jokowi said telling of the experience he shared with TNI commander Gen. Gatot Nurmatyo and the National Police chief Gen. Tito Karnavian on board the APC, which was produced last year.

“This APC is very good, it can cross water. This is a high-quality product. This shows us that we now have the ability to produce high-quality [defense] products.”

Jokowi encouraged the firm to look beyond the country’s borders in marketing its products. Pindad sells around 90 percent of its products for domestic use, with the TNI and National Police as its main consumers. The other 10 percent is exported overseas to countries such as Laos, Thailand, Philippines, Egypt and Nigeria.

In order to increase the competitiveness of the products, Pindad must first press its production costs to minimize unnecessary production expenses without compromising on quality, said the President. It would be useless to have high-quality products that could not be attractive to potential buyers if the price was too expensive.

“If the price is competitive, we can easily sell the products. We must have the courage to sell our products to other countries.”

“[PT Pindad] should not only focus on selling its products domestically. We have to shift the focus to overseas markets,” Jokowi said.

Government support is still crucial for the company, as 87.5 percent of the 2016 sales target of Rp 4 trillion (US$299.5 million), or around Rp 3.5 trillion, came from the government. The figure increased from Rp 2.8 trillion in sales to the government the company recorded from the previous year.

Jokowi has announced the government’s commitment to increase Pindad’s sales by 30-40 percent every year as he has targeted sales to reach Rp 5 trillion by the end of his administration.

Furthermore, as a state-owned company, Pindad also still heavily relies on the state budget to cover its operational and production costs.

Pindad received a total Rp 700 billion from the government, the largest the government spent on a strategic industry company, according to data from the National Development Planning Board (Bappenas). The company used the funds to cover production costs, modernize its facilities and forge cooperation with strategic partners abroad.

Military expert Al Araf urged the government to push the company further to improve its production capacity in more ways than just providing funds. He said cooperation with lenders could be an alternative source of funding for Pindad to produce high-quality defense products,

“The company has the ability to compete with other companies abroad,” Al Araf said.

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