Defense industries united in a single holding company for competitiveness

Merging PT Len Industri, PT Dirgantara Indonesia (DI), PT Pindad, and PT Dahana into a single holding company is expected to strengthen the efficiency and competitiveness of our defense industry, so that we can cover our own domestic needs. (Photo: Rayi Gigih/IO)

IO – PT Len Industri’s President Director, Zakky Gamal Yasin, stated that his company is consolidating and synchronizing with others to strengthen the competitiveness and independence of our defense industry. This consolidation involves the merging of PT Len Industri, PT Dirgantara Indonesia (DI), PT Pindad, and PT Dahana into a single holding company. Establishing this integrated defense holding company is expected to. “Len is going to lead the defense industry cluster, with PT DI, Pindad, and Dahana right under it. We are in the process of integrating into a single defense holding company in order to advance, to become independent and more competitive, to build a reputation in the Asian region,” Zakky said in a virtual discussion hosted by the Jakarta Defense Studies (“JDS”) “The Challenges of Sixth Generation Warfare Versus the Independence of the Defense Industry” held in Jakarta on Wednesday (26/08/2020). 

The holding company is established in order to strengthen our ability to supply the primary weaponry system needs of the National Army, the National Police, and other defense agencies such as the Indonesian Marine Security Agency (Badan Keamanan Laut – “Bakamla”) and the National Cyber and Crypto Agency (Badan Siber dan Sandi Nasional – “BSSN”). Zakky states that these Government defense companies are creating a Master Plan to get into the Top 50 global defense companies. 

Another target that must be achieved by 2024 is to increase the local content of our national defense companies’ products to 50%. In order to achieve this reality, all defense State-Owned Companies must synergize into a single cluster. This will strengthen their joint finances and integrate their supply chain and ecosystem. “We need to get all defense ecosystems in Indonesia to cooperate, including cooperation with privately owned businesses. This is how we build the strength of our national defense industry. This is the Road Map for 2020-2024. We are initiating an advanced program, and we announce our target to spur us more into achieving it,” Zakky said. 

Zakky further admits that the effort to establish a defense holding company is also meant to increase sales. This merger is also meant to prevent double investments that some defense companies do, and improve their joint ability to assess existing talents in the company and improve HR capacity. In the end, these companies will be a strong, integrated State-Owned Enterprise that supports national defense and economy. “We can’t afford to have our national defense companies needlessly fight each other, to have State-Owned and privately-owned enterprises fight over the same thing. We need to prioritize and avoid giving contracts to the same companies over and over again. Therefore, we need a workable strategic plan,” he said. 

In the same discussion, PT Pindad’s Director of Technology and Development Ade Bagdja states that PT Pindad is currently producing a special tactical vehicle ordered by Minister of Defense Prabowo Subianto, the Maung. The order is for producing 500 units of this vehicle. PT Pindad is also launching the tank boat battle vehicle Antasena APC-30. The Antasena has a missile tank boat variant and 105 mm gun caliber tank boat. It is meant for the Navy, and production is expecte to start in 2021. “We are looking at various opportunities and needs in the many conditions the Maung may find itself in. We are building up our industrialization. We hope to be able to produce 500 units by the end of the year, even though with our capacity we can produce up to 1,000 units of different variants,” he said. 

Meanwhile, Former General Secretary of the Ministry of Defense, Rear Admiral (Ret.) Agus Setiadji, speaks of military expenditures for items that serve as a deterrent. Military strategy is no longer a viable standard for victory in battle. Nowadays, military strategy is now more directed to the arts of intimidation, coercion, and deterrence. The apparent ability one country has to destroy another may motivate other countries to avoid direct confrontation. In other words, it affects the behavior of other countries. “We need to anticipate and avoid coercion. In order to prevent other countries from attacking ours, we use diplomacy. The ability of a power user to fight functions as a bargaining chip. This is the basis of the deterrence theory, wherein we succeed if we actually manage to avoid using our power for real,” he said. (dan)