Unlocking Defense Supply Chain Opportunities in East Indonesia

Windriargo Hario Widodo

Centre for Security, AI, Digital Transformation and Technological Advancements

Indonesia stands at a strategic crossroads. With growing security challenges in the Indo-Pacific, the ability to rapidly source, process, and deploy defense-related materials is a matter of national resilience. The Nusra Economic Council’s Centre for Security, AI, Digital Transformation and Technological Advancements introduces its report on Supply Chain Opportunities for Indonesia’s Defense Sector in East Indonesia, highlighting both the challenges and opportunities in building a stronger defense-industrial base closer to the nation’s eastern frontier.

Unlocking Defense Supply Chain Opportunities in East Indonesia

Geopolitical Pressures and the Need for Defense Revitalization

The global defense landscape is being reshaped by intensifying geopolitical competition. Around the world, countries are rebuilding their defense postures through internal and external balancing. The European Union, for instance, has launched the European Defense Readiness 2030 initiative, committing EUR 800 billion to improve military readiness, infrastructure, and defense industry capabilities. In East Asia, Japan has increased investments in the Japan Self-Defense Forces (JSDF) by acquiring Tomahawk cruise missiles, expanding its domestic industrial base, and prioritizing high-technology sectors to strengthen combat capabilities.

Indonesia is charting a similar course. Shortly after taking office, President Prabowo Subianto declared his intent to revitalize the national defense industry so that the country can independently produce its own primary weapons systems (alutsista). Indonesia has partnered with countries such as Turkey, South Korea, Italy, and France while also encouraging local industries to expand production of drones, rockets, small arms, missiles, and artillery munitions for the Indonesian National Armed Forces (TNI). These efforts accelerate capacity-building and bring valuable lessons from abroad, but they also highlight a critical vulnerability: Indonesia still relies heavily on imported raw materials, with an estimated 70 percent sourced internationally.

This dependency exposes Indonesia to risks from global supply chain disruptions. A blockade in the Suez Canal, attacks on cargo vessels in the Red Sea, or an escalation in the South China Sea could interrupt the steady flow of raw materials, leaving domestic defense production paralyzed. To safeguard autonomy, Indonesia must leverage its own natural wealth to secure raw material supply chains for its defense industry.

East Indonesia’s Material Wealth

East Indonesia holds some of the nation’s most strategically significant natural resources. Among them, three stand out for their direct defense and military-industrial applications:

Copper

Copper is essential for defense electronics, communication systems, radar arrays, and advanced weapon platforms. Its superior conductivity makes it indispensable for wiring, circuit boards, and ammunition casings. With significant deposits in Papua, copper is a backbone material for defense modernization. Locally refining copper into usable industrial inputs could reduce reliance on foreign suppliers while positioning East Indonesia as a hub for defense electronics production.

Nickel

Nickel reserves in Sulawesi and Maluku are among the largest in the world. Nickel-based alloys are vital for jet engines, naval vessels, and armored vehicles due to their strength and heat resistance. Nickel is also central to the future of defense energy systems — including batteries for autonomous drones and mobile military bases. Combined with other elements, nickel can also be used to build warships and other maritime defense platforms, making it doubly strategic for an archipelagic nation.

Brass

Brass, an alloy of copper and zinc, plays a direct role in defense industries as the standard material for small arms ammunition casings, artillery shells, and naval propellers. It is prized for its ability to withstand high pressure while remaining recyclable. Localized brass production in East Indonesia could ensure a steady and secure supply of munitions, reducing exposure to embargoes or sanctions.

Supply Chain and Logistical Challenges

Despite its mineral wealth, East Indonesia faces enduring challenges that restrict its ability to meet defense sector demands:

• Geographic Fragmentation: The archipelagic geography creates transportation inefficiencies and slows the movement of both raw and finished goods.

• Infrastructure Gaps: Limited port facilities, uneven road networks, and a lack of specialized logistics hubs hinder efficient supply chain operations.

• Industrial Capacity: Processing facilities remain underdeveloped, forcing reliance on Java or international centers, lengthening supply chains at a time when speed is critical.

These structural weaknesses underscore the need for localization of supply chains and expansion of industrial capacity within East Indonesia.

Opportunities for Defense Manufacturing Expansion

Indonesia has a strategic opportunity to transform East Indonesia’s natural wealth into a forward defense supply chain anchored in the very region it is meant to secure. To do so, several strategic steps are necessary:

1. Downstream Processing and Metallurgy: Developing metallurgical capabilities to transform copper, nickel, and brass into high-grade materials usable in weapons production.

2. Defense-Industrial Parks in East Indonesia: Establishing manufacturing hubs for defense equipment that decentralize logistics, reduce costs, and stimulate local economies.

3. Governance Reform: Improving the effectiveness of the Directorate General of Defense Potential (Ditjen Pothan) within the Ministry of Defense, or exploring new governance models, such as an independent agency dedicated to managing and developing Indonesia’s defense industry, as seen in Turkey.

A Strategic Imperative for National Security

Strengthening supply chains in East Indonesia is more than an economic priority — it is a strategic necessity. By leveraging copper, nickel, and brass deposits, investing in downstream industries, and reforming defense governance, Indonesia can build an agile and resilient defense-industrial base. Localized production would ensure faster delivery of arms and spare parts, reduce vulnerabilities to international disruptions, and empower local economies while advancing national security.

The Centre for Security, AI, Digital Transformation and Technological Advancements calls for decisive action to transform East Indonesia’s natural resource potential into a strategic shield — ensuring that the defense of the nation’s eastern frontier is backed by a secure, independent, and future-ready industrial base.

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