I. Introduction

As a sovereign State, Indonesia protects its sovereignty from threats. To maintain sovereignty, Indonesia has a strong enough army. The armed forces are equipped with adequate weapons. In fact, Indonesia has been able to meet the need for defense equipment by producing its own. The production of weaponry in Indonesia is carried out by one of the State-Owned Enterprises (SOEs).

The SOEs that produce weaponry is involved in the production of weapons, munitions, combat vehicles, and defense system equipment and security, as well as the production of industrial components. The types of defense equipment produced domestically are metallic components, manufacture of weapons, and combat vehicles (PT Pindad, 2016).

Preparation of metallic components process consists of producing a shell of a bullet for caliber 5.56 mm to 12.7 mm; projectiles for caliber 5.56 mm to 12.7 mm; and primary component including primary boxer. The pyrotechnic process that consists of primary composition; pyrotechnic composition for instance smoke, tears, and bullets; and high explosive composition. Also preparation and assembly of munitions for large caliber, small caliber clerk, and rocket system. Ballistic test facilities from 25 to 1000m, speed test, high-pressure test, and accuracy test.

For weapons manufacture, a lot of weapons and defense equipment have been produced includes the ability to produce long barrel guns, and hand-held weapons. The detail producing process and the weapon have been produced are as follows (PT Pindad, 2016):

1. swaging process for barrel making,

2. broaching process to create the hole of the magazine,

3. machining process for components such as mechanical homes, pistols, gas blocks, closures, pen and other components,

4. process stamping, blanking and forming like making the magazine, SS1 mechanical homes, hand protective plate and dust cover,

5. welding process,

6. metal injection molding includes the process for the manufacture of precision small parts shaped like spanking, triggers, pistol holders, and hook of pistols,

7. surface and heat treatment processes such as chroming, hard anodizing, painting, and heat treatment processes include vacuum, induction, and temper harden,

8. long run barrel assembly process, hand-held weapon, and heavy weapon,

9. testing processes such as material testing (spectrometer and Hardness Vickers); dimension test (projector profile, height master, and gauges) and ship auction (rate of fire, shoot down, and gun function test),

Despite producing weapons, the SOE also has been produced combat vehicle type 6x6, combat vehicles type 4x4 and combat vehicles canon. In producing combat vehicles, carried out through the production process as follows:

1. Hull fabrication process, whether using armored steel, aluminum, or high hardness steel. The entire production process requires a special process in production.

2. Machining process for fabrication preparation, whether for hull, structural or sub-component.

3. The process of cutting Sheet Steel pattern using Plasma Cutting and Laser Cutting from CAD drawing.

4. Rolling welding jig, for the perfection of vehicle hull welding process especially for the gravity counter welding process.

5. Shoot blasting the system, competence to clean material from contamination that may interfere with the fabrication process. Used also for the cleaning process of the hull as preparation for painting.

6. Rolling dynamometer, competence testing of indoor vehicle performance by using the static equipment.

7. Internal test field used to conduct internal testing related to vehicle performance.

8. Crane facilities with 5, 10, 15 and 25 tons, for vehicle assembling process.

9. Leak test facility for both rainfall and fording.

10. Special painting facilities, with Indonesian military standard competence.

II. Indonesia’s Initiative in Defense Equipment

Given the importance of the defense equipment industry and production capabilities that have been done by SOEs, the Government of Indonesia expects SOEs engaged in arms production and support the Government Program, especially in the Revitalization of Defense Industry. The support through the planning of a transformation program that can improve the competitiveness of the company, capturing as much as possible opportunities in Minimum Essential Force (MEF) Program and able to compete in international markets, both for defense equipment products and industrial products.

The huge potential of defense equipment market provides a great opportunity for SOEs to continue to produce weaponry equipment. The market potential, especially for defense equipment products, can be seen from domestic basic needs which still can not be fulfilled entirely by SOE. When associated with defense independence, the fulfillment of MEF is ideally met by the domestic defense industry. Thus, the fulfillment of MEF through the realization of defense independence depends on the production capacity owned by SOEs.

To meet the need for weaponry, the Government of Indonesia should be able to develop the industry that has been done by SOEs. The purpose of the development of domestic defense equipment industry is the ability of technology in the defense industry can be used for various industries. So the whole production process should be more commercial. If only concentrate in the defense industry, hence the ability of research and development will be low. The development of non-defense equipment products by SOEs aims to transfer the use of foreign products with domestic products or import substitution.

In addition to the weaponry industry, SOEs have also been able to produce explosives. Thus, the business of commercial explosives by SOEs needs to be developed because the market potential is huge. Explosive Industrial Market inside the country is estimated to be around 7.56 trillion Rupiahs per year. In addition, the Company is licensed as a producer and distributor Commercial explosives only 9 companies. Whereas 24% is controlled by companies that join with foreign companies (Directorate General of State Assets Management, 2016).

To improve business competitiveness in the field of commercial explosives business strategy needs to be done are (Indonesia Ministry of Finance, 2016):

1. Establish commercial production of explosive capabilities both on a regular basis Independent and working with strategic partners. The products to be built are a bulk emulsion, packaged emulsion, electric detonator, nonelectric detonator, electronic detonator, and booster. This is done in the context of import substitution or local content program.

2. Build capability in large-scale blasting services for coal, metals and quarry mining, both for open pit and underground mining by recruiting human resources with competence and experience in the required fields and working with experts in the required fields.

3. Establish business cooperation in the form of Joint Operation that has experience in the commercial explosive industry.

Currently, SOE are experiencing production facing problems that production machines have not fulfilled the ideal capacity despite already done line balancing to restore the initial capacity. So it is necessary to build the new production line for the defense equipment product expected to be used to support industrial product development from an extensive production on sector:

1. Development and repair of the production line, which can be done through the construction of large caliber and rocket caliber production line.

2. Development of tank and combat vehicles production line.

3. Automation of small caliber munition production line.

4. Improvement of weapons production line.

Industrial products business development is expected as a balancer and supporter of defense equipment products. The initial process that needs to be addressed is building the ability to increase the production capacity of existing products as well as build new product lines to capture potential markets. The production capability for industrial products can be supported by existing production facilities in the defense equipment production line. Industrial products business development among others through the development of industrial explosives business; business development facilities and infrastructure transport and development facilities and product development process and learning center.

As a step towards a company with high technological capabilities as well as a reputation to be built that SOEs as the center of development of defense equipment and strategic industry, then this program is very important to do. Going forward the company will have sufficient facilities to conduct research and development in creating new products. In addition, the company will change the concept of education and training that tend to become a conventional learning center with teaching methods in the form of a non-conventional learning process. Program development of product development facility through improvement of product development facility and modernization of training and education center.

III. Conclusions

Based on the description of market conditions, it can be summed up as follows:

1. The enormous market of defense products is related to the MEF program, so the business focus that needs to be achieved is related to the security products.

2. Currently, there is a gap between the needs of the MEF program with the production capacity of the Munitions, hence capacity building is needed.

3. The potential of the commercial market in explosives product is very wide, especially for the mining industry. It is necessary to get special attention in order to fulfill the market.

4. To run the company's plan mentioned above, the company needs fund from the government for development and repair of defense equipment production line.

Writers: Hendro Nugroho and Robi’ul Atri Duha, Seksi Informasi, Bidang Kepatuhan Internal, Hukum dan Informasi, Kantor Wilayah DJKN Sulawesi Selatan, Tenggara, dan Barat

References

(n.d.). Retrieved from PT Pindad, Indonesia's SOE defense equipment producers: https://www.pindad.com/

(n.d.). Retrieved from Directorate General of State Assets Management, Indonesia Ministry of Finance: http://www.djkn.kemenkeu.go.id/

(n.d.). Retrieved from Indonesia Ministry of Finance: https://www.kemenkeu.go.id/