Delay puts cooperation with Embraer at risk

Yuliasri Perdani, The Jakarta Post, Jakarta | National | Tue, May 06 2014, 9:53 AM


The Defense Ministry said on Monday that future cooperation with Brazilian aerospace conglomerate Embraer SA could be at risk after a seven-month delay in the delivery of four EMB 314 Super Tucano turboprops ordered by Indonesia.

Defense Minister Purnomo Yusgiantoro said he doubted the ministry would forge a new cooperation with the firm in the future.

“The delay is not because of us, but them [Embraer],” Purnomo said at the Defense Ministry in Jakarta on Monday.

“Why it is delayed? If our initial procurement ends up like this, what about our next procurement project?”

In 2010, the Defense Ministry signed a US$284 million contract with Embraer to build a squadron of Super Tucanos to replace its OV-10 Bronco aircraft, which have been in service for three decades.

Embraer was obliged by contract to hand over the first batch of eight aircraft by August last year and then another batch in March 2015. So far, however, the ministry has only received four turboprops.

“The company argued that [the delay] was due to the far distance [between Brazil and Indonesia]. Our main concern is that they fulfill their commitment as stipulated in the contract,” he said.

Purnomo said that Deputy Defense Minister Sjafrie Sjamsoeddin would fly to Brazil to discuss defense cooperation, including the troubled Super Tucanos procurement project.

“The deputy minister will visit Brazil, we want to confirm their commitment. [They] have promised to deliver the squadron before Oct. 5,” the minister said, referring to the day of celebration for the Indonesian Military’s (TNI) anniversary.

To compensate Indonesia for the delay, Embraer has paid the maximum penalty of around $7 million.

“They have paid the penalty. But, this issue also has political ramifications, especially for the relationship between Brazil and Indonesia,” Purnomo said while acknowledging that the Brazilian Embassy in Jakarta had been supportive in solving the matter.

The Super Tuscanos procurement fits into Indonesia’s goal to modernize its weapons systems. The country aims to have 128 up-to-date jet fighters by 2024.

The ministry is in the process of selecting a replacement for its old Northrop F-5 Tiger fighter jets. The Air Force and the TNI have named Lockheed Martin’s F-35 as its top choice, while state aircraft manufacturer PT Dirgantara Indonesia (DI) suggested the Eurofighter Typhoon — manufactured by a consortium of three companies: BAE Systems, Airbus Group and Alenia Aermacchi. PT DI suggested that the consortium would be willing to transfer their technology in producing the aircraft.

“We must carefully consider many aspects in choosing the F-5 replacement […] that includes price,” Purnomo said when asked about the ministry’s aircraft of choice.

Also on Monday, Purnomo welcomed the Crown Prince of Brunei, Haji Al-Muhtadee Billah, who was on a visit to the country.

Earlier in the day, the prince was inducted as a TNI honorary member, receiving berets from three elite forces: the Army Special Forces (Kopassus), the Marine Corps and the Navy’s elite Frogmen Command (Kopaska).

Purnomo said the honorary title signified the strong defense cooperation between the countries. In the last few years, Indonesia and Brunei have established partnerships on military education and training. Purnomo expressed hope that the defense cooperation would become stronger.

“The prince will take a look at Indonesian defense industry state-owned arms manufacturer PT Pindad. I also suggested he visit PT DI, which has manufactured many CN 235 and CN 295 helicopters,” Purnomo said.

Jakarta Post