Worries over China may boost Indonesia's defence spending to $26.3b a year: Official

Indonesian helicopters fly over navy ships sailing in formation during the celebration of the 69th anniversary of the Indonesian armed forces on Oct 7, 2014. -- PHOTO: AFP
Indonesian helicopters fly over navy ships sailing in formation during the celebration of the 69th anniversary of the Indonesian armed forces on Oct 7, 2014. -- PHOTO: AFP

WASHINGTON (Reuters) - Indonesia's defense spending could grow to US$20 billion (S$26.3 billion) a year by 2019 to protect its sovereignty, including an area of the South China Sea near China's claims, an adviser to Indonesian President Joko Widodo said on Tuesday.

Mr Luhut Panjaitan, a former commander of Indonesia's special forces, said Jakarta had no plans to use force to resolve territorial disputes in the South China Sea and would continue to promote dialogue between Beijing and its regional rivals.

But he said it was important to strengthen the Indonesian military to protect national interests, including Natuna - a scattering of 157 mostly uninhabited islands off the northwest coast of Borneo that are rich in oil, gas and fish.

Officially, China and Indonesia agree the islands are part of Indonesia's Riau Province. But in April, Indonesia's armed forces chief accused China of including parts of Natuna within its so-called "Nine-Dash Line", a vague boundary used on Chinese maps to lay claim to about 90 per cent of the South China Sea, including territory claimed by other members of the Association of Southeast Asian Nations. "Regarding Natuna, we understand very much that this is the territory of Indonesia," Mr Luhut told Washington's Centre for Strategic and International Studies think-tank.

Indonesia's joint gas exploration in Natuna with US oil firm Chevron Corp should be "a signal to China that you cannot play a game here because it's also the presence of the US", he said.

Mr Lahut said Indonesia had a role to play in maintaining the balance of power in Asia and planned to increase its defense spending to 1.5 per cent of gross domestic product over the next five years. "We link to economic growth of about 7 per cent ... so by 2019, the national defence budget can go to around US$20 billion per annum," he said. "If you look at now the Chinese armed forces - much stronger - and you look at India and Indonesia... Indonesia can play a role to balance the power in this region."

Mr Lahut said the government wanted to strengthen Indonesia's navy to enable more sea patrols and to increase its three squadrons of C-130 transport aircraft to five. He also said drones would be an important part of Mr Joko's border-protection strategy.

Indonesia's special forces, meanwhile, would concentrate on the fight against the Islamic State in Iraq and Syria, a radical Muslim organisation in the Middle East that about 300 Indonesian nationals have joined.