Purchase of Sukhoi Aircraft has Potential for Indonesia-Russia Exports

By : Herry Barus And Aldo Bella Putra | Wednesday, August 23 2017 - 13:03 IWST

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INDUSTRY.co.id - Jakarta- The purchase of Sukhoi SU-35 fighter from Russia worth 1.14 billion US dollars gives the potential of export to Russia for Indonesia by 50 percent from the purchase or 570 million US dollars.

Trade Minister Enggartiasto Lukita and Defense Minister Ryamizard Ryacudu said the Indonesian and Russian governments had agreed to buy back in the procurement of defense equipment security equipment (Alpalhankam) in the form of Sukhoi SU-35 fighter aircraft.

"The percentage in this procurement of SU-35 is 35 percent in the form of offset and 50 percent in the form of buy-back, thus Indonesia earns export value of 570 million US dollars from 1.14 billion US dollars of SU-35 procurement," said Minister Enggar at a press conference at the Ministry of Defense Jakarta, Tuesday (8/22/2017)

Enggar explained that the Indonesian Government buys SU-35 from Russia and Russia as the selling country is obliged to buy a number of Indonesian export commodities.

Article 43 of Law No.16 Year 2012 on Defense Industry is stated that every procurement of Alpalhankam from abroad shall include trade returns, local content and a minimum of 85 percent ofset where local content and / or ofset is at least 35 percent.

Since the Russian side is only able to provide offset and local content of 35 percent, then Indonesia reaffirms the purchase of SU-35 carried out through the purchase with a value of 50 percent of the contract value.

With the yield scheme, Indonesia gets export potential of 50 percent of the purchase value of SU-35.

The agreement was signed on August 10, 2017 during the implementation of the Trade Mission to Russia led by the Minister of Trade. The Russian and Indonesian governments agreed to appoint Rostec and PT Perusahaan Perdagangan Indonesia (PPI) as the technical implementers of the buyback.

In the MoU, Rostec guarantees that it will buy more than one export commodity, with options of processed rubber and derivatives, CPO and derivatives, machinery, coffee and derivatives, cocoa and derivatives, textiles, tea, footwear, processed fish, furniture, copra, And its derivatives, resins, paper, spices, defense industry products, and other products.

"With this rate of return, Indonesia can export commodities that have been exported or have not been exported before," said Enggar.

He added that Rostec is given the freedom to choose exporters so that they can get Indonesian export products that are highly competitive. This buyback mechanism then uses a working group whose members are from Rostec and PT PPI.

Russia is Indonesia's 24th trading partner by 2016. The total value of Indonesia-Russia trade in 2016 was 2.11 billion US dollars and Indonesia got a surplus of 410.9 million US dollars, all of which came from non-oil and gas sector surplus.

Indonesia's non-oil exports stood at US $ 1.26 billion, while Indonesia's non-oil and gas imports from Russia were 850.6 billion US dollars. There is also the development of Indonesia's non-oil exports to Russia in 2012-2016 recorded a positive 8.5 percent. (Ant)

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