From Consumption To Investment: Defense Spending and Strategic Industrial Development In Indonesia
DOI:
https://doi.org/10.59175/pijed.v5i2.926Keywords:
Asta Cita, Defense Economy, Defense Industry, Strategic Investment, Spend-to-InvestAbstract
Indonesia’s defense budget has increased substantially, yet spending remains dominated by routine operational and management needs rather than productive investment. This study analyzes the transformation of Indonesia’s defense spending into strategic investment through a “spend-to-invest” approach in support of the Asta Cita national development agenda. Using a descriptive qualitative design and document analysis of defense spending data from 2021 to 2025, the study finds that the defense budget rose from Rp154.88 trillion in 2021 to Rp264.35 trillion in 2025, but the spending structure remains oriented toward management support and operational needs. Investment in research and development, local content (TKDN), technology mastery, and domestic defense industry involvement remains limited. Key obstacles include routine spending dominance, import-dependent procurement, weak technology transfer, and reliance on foreign components. The study recommends a five-pillar “spend-to-invest” model: budget recomposition, local-content-based procurement, research and technology transfer, domestic supply chain resilience, and indicator-based governance. This model can strengthen industrial self-reliance and economic resilience in support of Indonesia Emas 2045.
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