Reuters reports that the value of Indonesia’s forthcoming purchase of 11 Sukhoi Su-35 Flanker-E multi-role fighters from Russia’s United Aircraft Corporation (UAC) is set at $1.14 billion U.S.
Of the amount, Indonesia will provide $570 million (i.e. 50%) in various commodities in-exchange for the Su-35 fighters. IHS Jane’s adds that $400 million U.S. will also return to Indonesia in the form of offsets, potentially in the form of local maintenance, repair and overhaul work. Deliveries are scheduled to commence in two years.
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Indonesia first announced its intention to acquire the Su-35 in September 2015 when its Defence Minister, Ryamizard Ryacudu announced that the fighter was being sought to supplant the Indonesian Air Force’s (TNI-AU) aging Northrop F-5E Tiger II.
Jakarta and Moscow provisionally agreed to a deal in June. Earlier in August, both Russian and Indonesian officials announced that the Su-35 deal would involve a counter-trade element where Russia will acquire commodities from Indonesia, such as coffee and palm oil. Indonesian manufactures are also on offer.
Russia is reportedly hoping to use the counter-trade as a means to expand the supply of commodities in the midst of trade sanctions from the U.S. and European Union. Russia will have the right to choose the commodities it will acquire from Indonesia for the Flanker-E fighters.
Indonesia is the second export customer of the Su-35 Flanker-E.
Notes & Comments:
The Indonesian contract has a higher per-unit rate for each Su-35 than the deal China signed in November in November 2015, which was worth $2 billion U.S. for 24 aircraft. Inflation notwithstanding, it is possible that the higher price could be related to the counter-trade provision and – potentially – additional support (e.g. maintenance, logistics and training) packages for the fighters. However, the bartering provision will basically see Russia buying from Indonesia – Jakarta will only pay 50% of the value in cash (of which another $400 million will be reinvested into the Indonesian economy from Russia via offsets).
