November 2, 2010:
Indonesia has increased its defense budget to over $6 billion for next year. That's about one percent of GDP. Over the next four years, the plan is to increase spending to 1.5 percent of GDP. There is a need for more money, Indonesia's armed forces desperately require new equipment. During two decades of dictatorship, which ended in 1998, corruption saw a lot of the defense budget diverted to non-military uses. The generals built themselves a commercial empire of businesses, rather than keep military equipment up-to-date. With the end of the dictatorship, there were attempts to curb the political and economic power of the military. This slowed down equipment upgrades.
There was a lot of damage to repair. For example, when the Cold War ended, Indonesia bought most of the East German navy. This was seen as a quick and cheap way to deal with the fact that the navy was full of elderly and inoperable ships. Many of the East German ships were small, and already ten or more years old. But maintained by the Germans, they were in pretty good shape. Maintained by less diligent Indonesian sailors, the ships began to break down. Operating in the tropics, instead of the chilly Baltic, aged these ships even faster. The government still hasn't got money to buy new ships, or even keep a lot of the old ones in repair. Indonesia is seeking affordable warships from Russia or South Korea.
Indonesia turned to Russia for new jet fighters. It now has on order, on in service, 16 Su-27s and Su-30s. Although expensive, the Russian fighters are modern, and look great. They are also relatively cheap to maintain. Still, to save money, Indonesia has gone to China for help in training pilots to fly its Su-30s. Russia is not happy with this, and fears that China is going to try and sell its illegal (according to Russia) copies of the Su-27 (the J-11) to countries like Indonesia. Russia has promised litigation if that should happen. China has produced over 120 J-11s so far. Indonesia wants at least fifty of the Russian fighters, but might be tempted, by bribes and lower prices, to buy J-11s.
The army has acquired lots of new infantry weapons and equipment, but not much in the way of major equipment (armor, artillery). The larger defense budgets are meant to address this, unless most of the money is diverted to big ticket items (warplanes and ships), which are easier to obtain bribes for (from the suppliers.)