JAKARTA: Indonesia’s aircraft industry is ready to take off again after collapsing as a result of the 1997 Asian Financial Crisis.
Before the devastating crisis, Indonesia’s aircraft industry supplied major jetliner makers like Boeing and Airbus in the 1980s.
Now, it’s ready to take off again as two Indonesian aircraft manufacturers – Dirgantara Indonesia (DI) and Regio Aviasi Industri (RAI) – continue to expand their business and develop new plane types.
Nevertheless, the resurgence of this aircraft industry face challenges of poor maintenance, safety issues and lack of support.
PROMISING AVIATION INDUSTRY
Indonesia’s promising aviation industry is reflected in the thriving business of its two plane makers, DI and RAI.
DI is a state-owned company, while RAI is privately owned.
As both have yet to go public, we could not assess their performances in numbers. However, business for both firms has gone well so far as they continue to develop new plane models and expand to other countries.
Since 2012, DI has produced almost 60 aircraft and helicopters. The company has exported its products to South Korea, Senegal and Thailand.
The company also continues developing new plane types, including the N-219, a 19-seat transport aircraft for multipurpose missions in remote areas, and is collaborating with Korea Aerospace Industries to develop IF-X/KF-X fighter aircraft for both countries’ air forces.
But things were different for DI two decades ago.
Established in 1976, DI was known as Nusantara Aircraft Industry. It employed up to 16,000 staff and became a subcontractor to the world’s major aircraft industries, such as Boeing, Airbus, General Dynamics and Fokker.
When the economy crashed in 1997, the financial crisis forced the firm to downsize its operation, delay the development of new aircraft and cut 12,000 jobs. It only became DI in 2000.
Indonesia's RAI is also doing well. It is developing the R-80 aircraft, an 80-seat regional transport aircraft.
Up to 155 R-80 planes have been ordered by local airlines, and its prototype is targeted for flight tests by 2022.
STILL FACING HUGE CHALLENGES
Indonesia has signed agreements to export N-219 aircraft to China and Mexico. Meanwhile, Turkey is interested in selling them to Africa.
But DI’s N-219 aircraft is yet to be certified due to the lack of financial budgets for flight tests.
Should the aircraft pass the flight tests, it will get a certification from the Transportation Ministry, which without, the plane cannot be marketed and sold to other countries.
Meanwhile, the IF-X/KF-X project was put on hold in mid-2018 due to contract disagreements between Indonesia and Korea on intellectual property rights, technology transfer, and marketing. Various issues with finance, administration and political conditions also delayed the project.
It was only after renegotiation by the end of 2018 that both countries agreed to continue the project.
Other challenges include poor maintenance due to the lack of supporting industries, and inadequate human resources, such as technicians and aircraft maintenance experts.
Poor maintenance has caused devastating plane incidents in a country notorious for its poor aviation safety.
In the past 100 years, Indonesia booked 147 fatal accidents.
These data does not mention how many DI and RAI planes were involved. But in 2011, it was reported that a DI airplane was involved in one such fatal incident.
Indonesia’s aircraft industry is still behind others in the region despite its potential.
Business consulting firm Frost and Sullivan reports that, among Southeast Asian countries, the overall trade value of Indonesia’s aerospace products is still below Singapore, Malaysia, the Philippines and Thailand.
In 2017, Indonesia’s aerospace exports only reached US$103.9 million, while Singapore and Malaysia’s exports reached US$7.4 billion and US$2.1 billion, respectively.
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To tap into the enormous potential of the regional aviation industry, Indonesia needs to tackle the above challenges.
Indonesia is the only country in Southeast Asia with complex aircraft manufacturing capability. Other Southeast Asian countries, such as Singapore, Malaysia and Thailand, focus more on maintenance, repair and overhaul services, as well as manufacturing parts.
DI has produced different types of aircraft and helicopters, including transport aircraft for civil airlines, military planes, as well as several helicopter under agreements with Airbus Helicopters and Bell Helicopter Textron.
Meanwhile, Thai Aviation Industries (TAI) manufactures RTAF-6 trainer aircraft in very small numbers. And the Philippines’ Aviation Composite Technology (ACT) produces only one Apache 1 trainer aircraft.
Developing new aircraft projects is a key move to increase the growth of the country’s aircraft industry. But for these to succeed, it is important for the government to provide support.
For instance, the government, as one of DI’s shareholders, can provide financial support to help the firm get certification for its N-219 plane.
The government can also help DI hold talks with the US and European countries to promote the company’s aircraft and help get certification from international aviation regulatory authorities.
Meanwhile, for the IF-X/KF-X project, the government should make sure the renegotiation with South Korea succeeds.
The government must persuade South Korea to agree on Indonesia’s intellectual property rights over the aircraft and guarantee the transfer of technologies to Indonesia.
This will give Indonesia the freedom to market the fighter jet.
To promote its aviation industry, the government also needs to establish the aircraft industry ecosystem to improve maintenance and ensure safety on its planes.
Tangguh Chairil is lecturer in the Department of International Relations at Bina Nusantara University. This commentary first appeared on The Conversation. Read it here.