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Nov 21, 2022
Indonesia Says F-15 Deal in ‘Advanced Stages’ as US Defense Secretary Visits
(Bloomberg) -- Indonesia’s defense chief said a $14 billion deal to purchase 36 new F-15 jets from Boeing Co. are in “advanced stages” after praising cooperation with the US during a visit by Defense Secretary Lloyd Austin.
“Negotiations are continuing and we are at advanced stages of that negotiation,” Defense Minister Prabowo Subianto said Monday at a news conference in Jakarta alongside Austin. “Now, it will be dependent on, of course, the Indonesia government to finally decide the go-ahead at this time.”
The deal with Boeing is a critical part of US efforts to bolster its partnerships in Southeast Asia. The State Department backed the sale of the jets in February, with the aircraft valued at about $9.5 billion. There’s also approximately $4.4 billion in related equipment as part of the deal.
Bloomberg previously reported that the deal hasn’t gone smoothly, with Boeing concerned about Indonesia’s ability to finance the jets and Jakarta insisting on paying in installments, according to people familiar with the matter. Plans to sign the deal before the end of this year will likely be delayed, they said.
Asked if Boeing is receptive to Indonesia’s request to pay in installments, Prabowo said, “Yes, we discussed with Boeing and they have agreed to the financial package. The big question has been arranged so everything is in place.”
An official at Boeing directed questions about a deal to the Indonesian and US governments.
For Indonesia, the F-15 purchase is part of President Joko Widodo’s efforts to modernize his nation’s military. But ballooning subsidies to temper soaring inflation, as well as the push to complete infrastructure projects, means the military has to compete with other priorities for the country’s financial resources.
Austin is the latest top Biden administration official to travel through Southeast Asia, coming with Vice President Kamala Harris in the Philippines following an APEC meeting in Bangkok and President Joe Biden’s trip last week to Cambodia and the G-20 meeting in Bali.
Prabowo -- a likely presidential candidate in 2024 -- praised Indonesia’s joint cooperation with US, including a larger version of the regular Garuda Shield military exercises, but made a point of also saying the country has very good ties with China, which it considers a “friendly nation.” That was the latest sign the country doesn’t want to be forced to choose between the US and China, a common criticism in the region of the still-tense ties between Beijing and Washington.
(Adds Boeing directing questions to US and Indonesia in sixth paragraph.)
©2022 Bloomberg L.P.
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