Jakarta (ANTARA News) - Russia would invest in aircraft maintenance, repair and overhaul (MRO) industry for Sukhoi jet fighters that were purchased by Indonesia, the Investment Coordinating Board (BKPM) said.
"It has been decided by our cabinet to finalize the procurement of 11 Sukhoi Su-35 fighter jets. This is a remarkable effort of our defense minister, Russian state-owned firm Rostec, and PT Perusahaan Perdagangan Indonesia (PT PPI), as they have now agreed to invest," BKPM Chief, Thomas Lembong, said here on Monday.
He stated that the law on defense and law on defense industry have stipulated the requirement of minimum 85 percent offset for each purchase of defense equipment, which means that the expense from the states funding should be returned through trade and investment activities.
"Of the total 85 percent of the procurement, 50 percent would be paid in barter trade and the remaining 35 percent with investment contract," he elaborated.
The total procurement of the jet fighters is amounted at US$1.145 billion.
The Trade Ministry has appointed PPI and Rostec to undertake the barter trade. Indonesia would send some commodities, including rubber and palm oil.
"Their investment value is 35 percent of the total $1.145 billion in order to build a spare part factory for the MRO industry," he continued.
He added that the jet fighter procurement would be finalized by the Defense Ministry. "BKPM and Trade Ministry will follow."
The barter trade deal of SU-35 between Indonesia and Russia was signed on Aug 10.
Source: ANTARA News