FORECASTING BUDGET REQUIREMENT FOR INDONESIAN ARMS MODERNISATION WITH INTERNATIONAL COST ESCALATION (ICE)

Authors

Curie Maharani, Bina Nusantara UniversityFollow
Reyhan Noor, Lab 45Follow
Sandy J. Pratama, Bina Nusantara UniversityFollow
Ganesh A. Wicaksono, Bina Nusantara UniversityFollow

Abstract

In 2021, the question "How much is enough" emerged in national debate following the plan of the then Indonesian Defence Minister, Prabowo Subianto, to allocate 1.7 quadrillion Rupiah for military modernisation from 2020 to 2045. This article follows up on this debate by recommending a budget forecasting model for the weapons acquisition requirements of the Indonesian National Defence Forces (TNI) during the period 2025 to 2044. The model is built by considering International Cost Escalation (ICE), which is the increase in the unit cost of successive generations of similar weapons, causing a steady increase in the price of weapons systems each year. Four main variables are integrated into the forecasting framework: the need for modernisation of 10 selected weapon systems categorised by two technology sources (Western and Eastern), macroeconomic growth trends, the defence burden to GDP and investment (modernisation spending) as a percentage of total defence spending, and the value of the selected ICE. This study concludes the following: (1) there are three possible scenarios for the modernisation of Indonesia's weapons systems based on technology sources from Western countries, Eastern countries, and a combination of Western and Eastern countries (diversification); (2) current macroeconomic conditions and defence burdens are not sufficient to support full-scale modernisation using Western technology alone.

Bahasa Abstract

Pada tahun 2021, pertanyaan "How much is enough" muncul dalam perdebatan nasional menyusul rencana Menteri Pertahanan Indonesia saat itu, Prabowo Subianto, untuk mengalokasikan 1,7 kuadriliun rupiah untuk modernisasi militer 2020-2045. Artikel ini menindaklanjuti perdebatan tersebut dengan merekomendasikan model peramalan anggaran untuk kebutuhan modernisasi senjata Tentara Nasional Indonesia (TNI) selama periode 2025-2044. Model dibangun dengan memperhitungkan Eskalasi Biaya Internasional (International Cost Escalation, ICE), yakni kenaikan biaya per unit untuk generasi senjata serupa yang berurutan, yang menyebabkan peningkatan harga sistem senjata secara stabil setiap tahunnya. Empat variabel utama diintegrasikan ke dalam kerangka peramalan: kebutuhan untuk modernisasi 10 sistem senjata terpilih yang dikategorikan berdasarkan dua sumber teknologi (Barat dan Timur), tren pertumbuhan makroekonomi, beban pertahanan terhadap PDB dan investasi (belanja modernisasi) sebagai persentase dari total belanja pertahanan, serta nilai ICE terpilih. Studi ini menyimpulkan hal-hal berikut: (1) terdapat tiga skenario yang mungkin untuk modernisasi sistem senjata Indonesia berdasarkan sumber teknologi dari negara-negara Barat, negara-negara Timur, dan kombinasi negara-negara Barat dan Timur (diversifikasi); (2) kondisi makroekonomi saat ini dan beban pertahanan tidak cukup untuk mendukung modernisasi skala penuh menggunakan teknologi Barat saja.

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Recommended Citation

Maharani, Curie; Noor, Reyhan; Pratama, Sandy J.; and Wicaksono, Ganesh A. (2026) "FORECASTING BUDGET REQUIREMENT FOR INDONESIAN ARMS MODERNISATION WITH INTERNATIONAL COST ESCALATION (ICE)," Global: Jurnal Politik Internasional: Vol. 27: No. 2, Pp. 101-120.
DOI: 10.7454/global.v27i2.1406
Available at: https://scholarhub.ui.ac.id/global/vol27/iss2/5