Brodjonegoro, Bambang Permadi Soemantri
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Defense Budget Gaps and Legal Implications of Alternative Financing in Indonesia: A Legal Reform Perspective Marsudiyanto, Aris; Subroto , Athor; Brodjonegoro, Bambang Permadi Soemantri; Ghafur, A. Hanief Saha
Journal of Law and Legal Reform Vol. 5 No. 4 (2024): Contemporary Issues on Law Reform in Indonesia and Global Context
Publisher : Universitas Negeri Semarang

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.15294/jllr.v5i4.18076

Abstract

This paper examines the critical defense budget gap in Indonesia, which has become a pressing issue over the past decade. With global challenges, particularly the escalating wars in the Middle East, Indonesia faces growing security concerns that necessitate a stronger defense program. However, the country’s defense budget allocation, ranging from 0.5 to 0.9 percent of GDP, remains insufficient to meet the required defense expenditures. Using the Autoregressive Integrated Moving Average (ARIMA) approach, we predict future budget availability and compare it with the projected defense needs, revealing a significant gap. To address this, the paper explores alternative financing mechanisms, such as optimizing military assets, enhancing the defense industry, leveraging Public-Private Partnerships (PPP), and integrating these strategies. The urgency of addressing this funding shortfall is heightened by Indonesia’s need for robust defense capabilities in an increasingly unstable geopolitical environment. This study’s novelty lies in analyzing the legal implications of these alternative financing options, an area that has received limited attention in defense policy discourse. It critically examines the legal challenges posed by these financing mechanisms, particularly in relation to Indonesia’s existing laws, including Law No. 17 of 2003 on State Finances, Law No. 3 of 2002 on National Defense, and various regulations governing defense industry and national security. The paper’s contribution lies in offering a comprehensive legal analysis of alternative financing in Indonesia’s defense sector, proposing necessary legal reforms to facilitate these strategies. By providing policy recommendations, this study aims to inform lawmakers, defense planners, and legal scholars about the complexities and potential solutions to closing Indonesia’s defense budget gap while ensuring compliance with national legal frameworks.
Fiscal Resilience and Defense Financing Innovation for Sustainable National Security Post Ukraine–Russia War Marsudiyanto, Aris; Subroto, Athor; Brodjonegoro, Bambang Permadi Soemantri; Ghafur, A. Hanief Saha
Proceedings of International Conference on Science, Education, and Technology Vol. 11 (2025)
Publisher : Universitas Negeri Semarang

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Abstract

Global geopolitical escalation following the Ukraine–Russia conflict intensifies fiscal and security pressures across many regions, including Indonesia. Long-horizon macroeconomic evaluation demonstrates persistent structural limitations marked by slow revenue elasticity, recurring deficits, exchange-rate exposure, and rising debt-service commitments, all of which reduce flexibility for long-term defense modernization. Geopolitical disturbances amplify those constraints through elevated global military expenditure, higher procurement costs, and expanding cyber, maritime, and hybrid threats within the Indo-Pacific region. Sectoral vulnerabilities further weaken strategic readiness, particularly due to import dependency, limited domestic industrial capability, and increasing operational expenditure. Institutional rigidity also limits adoption of innovative financing mechanisms capable of supporting multi-source and multi-year commitments. Integrated analysis indicates the need for diversified financing pathways that reduce exposure to external shocks and enhance the predictability of defense investment. Potential strategies include defense-industry reinvestment, public-asset monetization, public–private partnerships, and hybrid financing frameworks aligned with long-term capability requirements. Sustainable security therefore depends on structural fiscal reform, institutional modernization, and coordinated integration of fiscal, security, and industrial policy to strengthen Indonesia’s strategic resilience in an increasingly volatile geopolitical landscape.