Indonesia's Dual Strategy: Balancing Defense Modernization with Economic Pressures
Despite growing budgetary pressures, Indonesia is pushing ahead with its military modernization efforts, maintaining prior year defense funding in the 2025 budget while all other ministries saw cuts and a planned gradual defense increase to 1.5% of GDP, even as concerns persist over the ability to handle the budget deficit. Finance Minister Sri Mulyani expressed confidence in Indonesia’s outlook, citing strong tax revenue trends and introducing deregulation measures to ease the tariff burden on businesses, even as domestic worries about job losses linked to tariffs are mounting within the legislature. Still, military expansion appears to continue with a joint production agreement with Turkish missile manufacturer Roketsan and President Prabowo Subianto expressing strong interest in joining Turkey’s fifth-generation fighter jet program, KAAN, following high-level talks with President Recep Tayyip Erdogan. Indonesia is also exploring billions in U.S. arms purchases, seeing them as a strategic tool to address both its defense needs and to reduce its trade surplus with Washington amid ongoing tariff disputes. In sum, Jakarta appears committed to the challenging dual-track approach of advancing its military capabilities while navigating economic pressures at home and abroad.
