Abstract

Deliveries of Indonesia’s first Dassault Rafale multi-role fighters began in 2026, part of a 42-aircraft order that sits within one of the largest defence allocations in the country’s fiscal history. This spending accompanies a broader ambition under President Prabowo Subianto

to modernise the armed forces while building a self-reliant national defence economy. Since the 2022 creation of the state holding company Defend ID—consolidating firms such as PT Pindad, PT PAL, PT Dirgantara Indonesia, and PT Dahana—Jakarta has sought to raise domestic content, reduce import dependence, and position local producers within global supply chains.

However, expanding budgets do not automatically translate into industrial capacity. Persistent reliance on imported platforms, limited research funding, and structural constraints raise the question of whether defence spending strengthens the domestic base or merely finances the acquisition of foreign systems. Against this background, this roundtable examines the political economy of Indonesia’s defence economy and arms industries.

It explores three guiding questions:

(1) How can rising defence expenditure be converted into durable domestic industrial capacity rather than sustained import dependence?

(2) What fiscal, institutional, and technological conditions shape the ability of state and private defence firms to achieve self-reliance and enter global supply chains?

(3) How can Indonesia reconcile strategic autonomy, economic diplomacy, and military modernisation in shaping its defence economy?

About the Speaker

Makmur Keliat is an Expert Staff for the Republic of Indonesia’s Defence Industrial Policy Committee and a Senior Advisor at Laboratorium Indonesia 2045 (LAB 45). Since 1999, he has been a lecturer in the Department of International Relations at the Faculty of Social and Political Sciences (FISIP), Universitas Indonesia. His research covers monetary affairs, fiscal policy, the financial sector, and economic diplomacy. He holds bachelor’s degrees from UPN Veteran Yogyakarta and Universitas Gadjah Mada, and earned his doctorate from the School of International Studies, Jawaharlal Nehru University, New Delhi.