How Prabowo Saved Indonesia’s 3 Defense Firms from Sale to Foreigners

Prabowo’s Strategic Move to Protect Indonesia’s Defense Industry from Foreign Acquisition

A Decisive Intervention in Defense Sector Privatization

Tempatdonasi.com – President Prabowo Subianto has disclosed that he successfully blocked efforts by various stakeholders to transfer Indonesia’s domestic defense manufacturing capabilities to international corporations. The proposed divestment was driven by the perception that these state-owned enterprises lacked the capacity to deliver substantial financial returns. During his address at the ceremonial opening of five dams located at the Meninting Dam facility in West Lombok, West Nusa Tenggara, on Friday, July 10, 2026, the President emphasized his commitment to maintaining national control over critical defense assets.

Speaking at this significant infrastructure event, Prabowo made clear his determination to prevent the erosion of Indonesia’s industrial sovereignty. The President recalled a period when multiple defense companies stood on the verge of being acquired by foreign investors who viewed them as undervalued assets ripe for purchase.

Preventing the Sale of Key Defense Enterprises

According to the President, three major defense manufacturers were particularly vulnerable to foreign acquisition during this period. PT PAL, PT Pindad, and PT Dirgantara Indonesia all faced potential sale to international buyers who believed they could extract greater value from these companies than the Indonesian government could.

“There were many companies that were seemingly about to be sold to foreigners, and I prohibited it!” President Prabowo declared during his speech, as reported by Antara news agency.

The President explained that the defense sector was experiencing a critical moment when external interests sought to acquire these strategic assets. Each of the three companies was considered a prime target for foreign investment, with various parties pushing for their divestment.

“Initially, the defense industry was about to be sold. PT PAL was about to be sold, PT Pindad was about to be sold, PT DI was almost sold. We turned them around! Now, we will revitalize all those companies,” he stated, highlighting the successful reversal of these impending transactions.

Rapid Growth and Modernization Under New Leadership

Prabowo, who previously held the position of Defense Minister during Joko Widodo’s second presidential term from 2019 through 2024, announced that these protected companies have since undergone remarkable transformation. The state-owned defense firms have experienced substantial growth in their production capabilities and technological advancement.

“PT PAL can now produce formidable warships. PT PAL can now build submarines. PT PAL will manufacture advanced vessels,” the President noted, underscoring the expanded capabilities of Indonesia’s premier shipbuilding enterprise.

Additionally, PT Pindad has achieved significant international recognition through its defense contracts. The company has secured a major agreement with Saudi Arabia to supply military equipment.

“All rifles and machine guns for the Saudi military will be manufactured by PT Pindad. Our weapons are battle-tested,” Prabowo emphasized, pointing to the proven quality of Indonesian defense products in global markets.

Consolidation and Strategic Development

Since 2022, Indonesia has implemented a comprehensive restructuring of its defense sector through the creation of Defend ID, a holding company that unifies five key defense enterprises. This organizational framework includes PT Len Industri as the parent organization, along with PT PAL, PT Dirgantara Indonesia, PT Pindad, and PT Dahana working under a coordinated strategy.

PT PAL Indonesia, recognized as the nation’s largest shipyard facility located in Surabaya, has been instrumental in meeting both domestic requirements and international export opportunities. The shipyard has produced diverse vessel types ranging from combat warships to medical hospital ships, demonstrating versatility in naval construction.

Recent developments include the construction of submarines at PT PAL’s Surabaya facility through collaboration with South Korea’s Daewoo Shipbuilding & Marine Engineering. This partnership resulted in the KRI Alugoro-405 submarine, marking an important milestone in Indonesia’s submarine capabilities.

Furthermore, in early July 2026, PT PAL initiated the physical construction phase for two Scorpene-class submarines in partnership with France’s Naval Group. Both companies began the steel-cutting process during this month, with the Scorpene representing an advanced submarine design originally developed by the French manufacturer and subsequently ordered by Indonesia. These two submarines will be constructed entirely within PT PAL’s Surabaya shipyard, reinforcing Indonesia’s position as a regional naval power with growing domestic manufacturing capabilities.