Govt to Give $134m Capital Boost to State Munitions Firm Pindad
Bandung. State munitions firm Pindad will be among the first state firms to receive government aid as part of Indonesia’s plan to divert fuel subsidies.
President Joko Widodo said Pindad will receive another Rp 700 billion ($134 million) in capital to modernize its collection and increase production output.
“Once [Pindad] is given a capital boost, we will set a new target [for the state firm]. There is no way we will give money freely without setting a target,” the president said while touring the Pindad headquarters in Bandung, West Java.
The president said Pindad has a sound management but lacks funding to increase production.
“The production flow is very good, from raw material all the way to assembly. This shows how good production management [at Pindad] really is,” he said.
The president went on to say that he wanted Pindad to adopt a more aggressive marketing strategy, citing that 95 percent of its production output is purchased by the Indonesian Military (TNI) and the National Police.
“This means there are many commercial opportunities but we that need to increase the production and marketing capabilities [at Pindad],” he said.
Joko said Pindad is more than capable of producing weaponry, ammunition and combat vehicles, which are more than able to compete on the international market.
“We produce armed personnel carriers with 80 percent [of their components] sourced locally. This is wonderful. We must develop it further,” he said.
Joko said the Rp 700 billion would be the first of many incentives.
“But we will see how much [Pindad] can contribute to the nation’s economy [with the first incentive],” the president said.
Pindad president director Silmy Karim said his company requires Rp 4 trillion to modernize its production line and product development.
Silmy said he hopes the government would continue to provide the company with incentives, including obliging the military and police to continue to use Pindad products for their troops.
“The government has set an objective: for the military and the police to reduce their dependence on foreign weaponry, particularly those our own state firms are able to produce,” Silmy said.
Joko had pledged to increase the nation’s defense spending two- to three-fold, but the figure also includes increasing the welfare of its soldiers.
Speaking in Washington, DC, last month, Joko said Indonesia’s defense spending could grow to $20 billion a year by 2019. Silmy said this creates new demand for Pindad products.
“There will be an increase in demand of around 30 percent to 40 percent from the [Indonesian] defense industry,” he said.
President Joko also viewed some of the arms manufacturer’s latest products, such as the SSX assault rifle and the SPR 2 sniper rifle.
Joko said another state-owned defense firm, Dirgantara Indonesia, also has the chance to receive similar incentives but added that he wanted to see business plans from the company first.
“We are very proud to have Dirgantara Indonesia but we must first know where will the company will go in the long run,” the president said. “I want to see a 50- or 100-year plan. There must be a clear business plan.”
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