Fostering Indonesia-Australia’s Naval Industry Partnership

During the “two plus two” meeting between Indonesian and Australian officials on September 10, 2021, the representative of both countries signed a joint statement regarding the deepening of bilateral relations. Indonesian Defence Minister Prabowo Subianto and Australian counterparts, then Defence Minister Peter Dutton, are committed to enhancing strategic cooperation on cybersecurity, anti-terrorism, and defence. Prabowo said that both countries would strengthen their connection into “a new comprehensive strategic partnership” through this agreement.

Furthermore, this agreement revised the Defence Cooperation Agreement (DCA) that existed since 2012 and was last reinstated in 2018 by then Defence Minister Marissa Payne and Indonesian counterparts Ryamizard Ryacudu. As a foundation of defence industrial partnership, in late 2016, both countries materialised the DCA by establishing a joint-production program of the Bushmaster Protected Mobility Vehicle between Thales Australia and Indonesian PT Pindad.

Under the latest agreement, both countries may increase the possibility of cooperating on further defence development, including the naval industries sector, as the imminence of maritime-based threats is growing. The vast Chinese military expansion, including the latest militarisation of at least three artificial islands in the South China Sea, should be a factor.

The rise of non-traditional maritime threats such as illegal, unreported, and unregulated (IUU) fishing also alerts both countries. Australia and Indonesia must extend their coordinated patrol to implement the shared commitment to tackling IUU fishing.

Affected by the increasing number of IUU fishing, Indonesia and Australia have suffered tremendous losses. Indonesia had the most significant economic loss in ASEAN by US$ 3 billion in 2019. Meanwhile, Australia had losses of more than AU$ 600 million in 2018. Considering the vast maritime area needed to guard, aging patrol boats and surveillance technology, and the limited number of vessels, it is necessary to cooperate to develop a new initiative for the naval industry.

Other factors include the typical defence architecture of both countries. The 2016 Defence White Paper states that Australia seeks to strengthen its naval posture, following Australia’s cognisance of threatening Chinese activities in the Indo-Pacific. Under this White Paper, Australia plans to increase its naval power projection, amphibious deployment, and underwater deterrence.

On the other hand, Indonesia also transformed its maritime power under the Minimum Essential Forces (MEF) policy. Indonesian Ministry of Defence is currently obtaining six new FREMM frigates from Italy and securing the long-term contract of Arrowhead 140 frigates between Babcock International and PT PAL in 2021.

Indonesian and Australian officials should carry out several key steps to foster naval industrial cooperation. First, the government of both countries should create a long-term plan for maritime cooperation. It might also be preceded by a procurement plan on strategic naval assets.

The process may be followed by a round of talks between appointed naval corporations of two countries, including the conveyance of naval production capability and technology and a roadmap for the future development of procured assets. Once agreement on a long-term plan and roadmaps is granted; afterward, a joint-production program is established. A formation of a joint-venture consortium may follow it.

There are several benefits and significance following the expansion of naval industry partnerships for both sides.

First, the partnership is aimed to implement the critical points of the ASEAN Outlook of Indo-Pacific (AOIP), a set of formal declarations that Indonesia and Australia accept. It will support the enactment of the Australian “ASEAN priority” policy. As Indonesia is one of Australia’s most prominent dialogue partners in ASEAN, the cooperation may strengthen the mutual understanding of regional maritime threats.

Second, the cooperation is a part of an effort by Indonesia to escape the ASEAN’s divisive approach to resolving regional disputes. In particular, certain members, such as The Philippines and Vietnam, call on more adamant responses against China. Meanwhile, Cambodia, Laos, and Myanmar have taken more friendly stances toward China. To curb Chinese military expansion effectively, Indonesia needs a more solid strategic partner with a more advanced defence capability.

In this context, bilateral cooperation is considered more attractive, as two parties have acknowledged shared interests, thus underpinning the shared perception of regional stability and “common adversary”.

Furthermore, both countries may benefit from the transfer of technology (ToT) agreement. Previously, both countries have experienced ToT from different foreign partners. The Indonesian Nagapasa-class submarine, for example, was built under the ToT from South Korea, while Australia partnered with Spain to create the Canberra-class Landing Helicopter Dock. Under the naval industry partnership, both countries may concede a transfer of technology that will support the future independence of the shipbuilding industries of both countries.

Indonesia and Australia have reached a substantive phase of strategic relations. Both countries need to acquiesce further in strategic programs to implement the agreement effectively. Government officials and defence consortiums from both countries must also be involved, including naval industries.

In a region tainted with regional maritime disputes, strong cooperation between countries with common interests is a part of concrete steps to build regional stability and security, particularly to resolve regional conflicts and enhance political leverage.

Alfin Febrian Basundoro
Alfin Febrian Basundoro
Alfin Febrian Basundoro is a Research and Teaching Assistant of the Department of International Relations, Universitas Gadjah Mada, Indonesia. Aside from assisting researches and lecturers on the Geopolitics, Security, and Strategic Studies, he is also a freelance writer for several local Indonesian online medias.