As both commercial and defense interests in the West intensify their focus on growth in Asia, Indonesia stands out, offering the greatest opportunities. And with a major government push to build up Indonesia's own industrial expertise, Western suppliers are looking to establish a foothold to bolster their chances of success.

Air travel in the world's fourth most populous nation is poised for expansion, and airlines have a healthy appetite for new aircraft (see p. 21). On the military side, Indonesia's defense forces have a long list of equipment they plan to purchase in the coming years, and—unlike their colleagues in some other Asian countries—they appear to be relatively successful at getting budgets approved.

The air force intends to increase its combat squadrons to 12 from seven by 2024, which will boost the number of fighter aircraft to 150 at least. This plan represents merely a “minimum essential force,” though, says Air Chief Marshal Imam Sufaat, the service's leader, who adds that the actual air force should be much larger to provide the full range of military capability needed by his country.

The current fighter modernization plan foresees the air force fielding a fleet of Sukhoi Su-30 Mk. 2s and Lockheed Martin F-16s. The latter comprises 24 Block 25 aircraft that will be upgraded to the Block 52 standard as well as four Block 25 and two Block 15 aircraft that will be used for spare parts. The F-16s are to be delivered by July 2014 to form two more squadrons.

Additional F-16 and Su-30 purchases are on the horizon to meet fleet objectives. Moreover, while a type decision has yet to be made on an F-5 replacement, the F-16 is the frontrunner.

The Su-30 fleet is set to grow during the next three years as well, with two aircraft to be handed over each year. Indonesia is still finalizing plans for the weapons package, and there is interest in a medium-range missile.

At mid-year, the first of 16 Embraer Super Tucanos should arrive to replace the air force's OV-10 Broncos. Next year, Korea Aerospace Industries will hand over the initial 16 T-50 trainers to replace the Hawk Mk. 53s, says Imam. The rest of the Hawk fleet is due to be replaced by the South Korean KF-X fighter as a result of Indonesia joining the development program.

To help direct the fighters, Indonesia would like to field an airborne early warning and control system aircraft, although a decision is not expected before 2014, says Imam. Even though the air force is buying C295 airlifters, he says Indonesia would want a larger system than the AEW concept put forward by Airbus Military. The AEW aircraft will need more endurance than the C295 can deliver, he notes.

The airlifter has nevertheless firmly established itself in Indonesia. At the Singapore air show, Airbus Military secured an order from the Indonesian defense ministry for nine C295s, to be operated as transport aircraft from Halim air base.

Sales to the Indonesian army and domestic security forces may follow, says Defense Minister Purnomo Yusgiantoro. Moreover, special-mission sales in Indonesia may be possible as the country addresses anti-submarine warfare, maritime patrol and search-and-rescue requirements, says Airbus Military President and CEO Domingo Urena-Raso. The initial agreement covers only transport aircraft.

To secure the deal, Airbus Military gave a firm commitment to work with state-owned PT Dirgantara Indonesia, which will see its workshare increase gradually as the program progresses, says PTDI President and CEO Budi Santoso. The company will end up—around the last two or three aircraft—with a “light” final assembly line (FAL). Initial activity will focus on the tail empennage, rear fuselage and fuselage panels, as well as on the computer-based training system for the global C295 program. Depending on market demand, the Indonesian light FAL could produce aircraft for other countries. The Spanish FAL, which currently turns out roughly 18 CN235s and C295s per year, will remain open, says Urena-Raso.

The program builds on the CN235 and C212 relationship between Airbus Military and PTDI.

Similarly, Lockheed Martin has made a strategic decision to focus on Indonesia. Having already expanded its F-16 foothold, the company now hopes to secure a contract for more than 40 TPS-77 and FPS-117 ground-based air surveillance radars. To help underpin its push, Lockheed will open a Jakarta office, says Jim Gribbon, Asia-Pacific regional president.

Lockheed Martin also signed an industrial agreement on Feb. 14 with privately owned PT CMI Teknologi. CMI's role will be to build parts and systems for the radar, conduct acceptance tests and maintain the radars in-country, says Gribbon.

Currently, Indonesia has too few radars and the ones it has are from a mix of suppliers; some of the equipment dates back to the 1970s. “By integrating new sensors with Indonesia's command-and-control system, the Nasri [National Airspace Surveillance Republic of Indonesia] network will greatly enhance air sovereignty and surveillance over the country's more than 17,000 islands, which span a distance wider than the U.S.,” says Gribbon.

Giving Indonesia the capability to maintain the radars is significant because it should make the country less reliant on overseas suppliers for spare parts—an important consideration, especially since Indonesia has been subjected to embargoes.

For Lockheed Martin, the partnership may offer a way to ease sales owing to an Indonesian rule allowing sole-source contracts to be awarded to businesses that have at least a 30-50% local workshare.

The radar proposed by Lockheed Martin is dual-use. Data feeds from the network also will enhance civilian air traffic control, including commercial air traffic management (ATM), some of which is now handled by radars in nearby Singapore, according to Lockheed Martin.

Radar coverage for commercial aviation is an issue in Indonesia because the current ATM system is struggling to keep pace with growth in Indonesia's airline industry. This problem came to the fore on Jan. 1, 2007, when an Adam Air Boeing 737-400 crashed a short distance off the coast of Sulawesi island, killing all on board. It took weeks to locate the aircraft because it was in an area without adequate radar coverage.

Meanwhile, Gribbon is bullish about Indonesia's market potential. “In the past two years, they've doubled the [defense] budget each year,” he says. “It is a big country with a huge land mass and sea area to cover,” so it makes sense for Indonesia to build its defense capability, he adds.