On 10 February 2022, Indonesia signed an $8.1 billion USD contract with France’s Dassault Aviation for 42 Rafale multi-role fighters. Dassault will start implementing the first phase of the contract for six aircraft in the coming months. It will start the second phase for the remaining 36 aircraft in late 2022 or in 2023.
However, as it stands today, Indonesia has committed to six Rafale fighters. The remaining 36 aircraft are still subject to further approval by the Indonesian government.
This deal marks the conclusion of Indonesia’s several-year-long pursuit for a new multirole fighter. It had originally sought 11 Sukhoi Su-35 fighters from Russia’s United Aircraft Corporation (UAC) in 2017. But the United States put pressure on many of Moscow’s arms customers through CAATSA (Countering America’s Adversaries Through Sanctions Act) to stop buying Russian equipment. Ultimately, Indonesia was unable to finalize the Su-35 deal and, instead, explored alternative options.
As the winning option, the Rafale deal is expected to include a comprehensive package consisting of the fighters as well as munitions, training, and support equipment. However, a critical part of Indonesia’s new fighter requirement was the inclusion of offsets and, potentially, some transfer-of-technology (ToT).
Offsets Are Key
Regarding offsets and ToT, France and Indonesia’s respective defence industry vendors signed a series of agreements in support of the Rafale fighter program.
First, Dassault Aviation signed a memorandum-of-understanding (MoU) with Indonesia’s state-owned PT Dirgantara Indonesia (PTDI) to carry out the Rafale’s maintenance, repair, and overhaul (MRO) work.
Second, France’s Naval Group (formerly DCNS) signed a MoU with Indonesia’s PT PAL to jointly undertake R&D work on submarines. Indonesia is seeking two Scorpene submarines from Naval Group.
Third, Dassault Aviation and PTDI signed an MoU to implement the offset component of the Rafale deal.
Neither Indonesia or France revealed the terms of the offset obligation. However, during the days of the Su-35 deal, Russia had reportedly agreed to an offset worth $970 million consisting of both investment and counter-trade deals. This was equivalent to nearly 50% of the Su-35 deal.
Fourth, Thales Group signed a MoU with PT Len to cooperate in the telecommunications sector. This may be a vehicle to drive French investment in Indonesia’s wireless and/or fiber-based internet efforts.
Don't Stop Here. Unlock the Rest of this Analysis Immediately
To read the rest of this deep dive -- including the honest assessments and comparative analyses that Quwa Plus members rely on -- you need access.
