Economy in brief: Pindad spends Rp 700b to improve capacity

State-owned weapons manufacturer PT Pindad said it had allocated Rp 700 billion (US$55.5 million) in state capital injection to improve the production capacity of its weapons and ammunition division.

Pindad president director Silmy Karim said the funds would be used to modernize Pindad’s manufacturing equipment so that its production quality and capacity could increase.

“Along with the president’s instructions, Pindad must increase its production capacity and quality. We are aiming to use the funds to improve equipment so its production capacity could increase by between 30 percent and 40 percent,” Silmy said as quoted by Antara news agency after the visit of the Army’s Special Forces (Kopassus) commander Maj. Gen. Doni Monardo and his entourage in Bandung on Thursday.

He said modernizing equipment was crucial for Pindad as Indonesia’s defense budgetary allocations would continue to increase along with the country’s economic growth.

“It will be really unfortunate if Pindad is unable to tap into the opportunity because [without such improved capacity and quality] it is possible for the Indonesian Military [TNI] to buy defense weapons systems from abroad,” said Silmy.

He further said quality improvement was important for Pindad to compete with weapons, ammunition and combat vehicle manufacturers abroad.

Silmy said Pindad should enter the international market because only around 5 percent of the company’s products were being absorbed by the international market, while most of the production was intended to fulfill domestic orders from the Defense Ministry, TNI and the National Police. “We don’t want to be just a domestic champion,” said Silmy.

Pindad recorded net sales of Rp 1.88 trillion from various divisions in 2013 while its profits amounted to Rp 97.60 billion, up by about 27 percent from Rp 76.91 billion in the previous year.

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