Indonesia Signs ‘Coming into Force’ Contract for 36 Rafale Jets: Report

Indonesia Signs ‘Coming into Force’ Contract for 36 Rafale Jets: Report

Indonesia is believed to have signed a ‘Coming into force’ contract with France/Dassault Aviation for 36 Rafale jets on June 7 which will go into effect in December 2021.

Indonesian publication, Airspace Review reported quoting its sources said that the contract was signed in Jakarta but did not mention who were the officials involved in signing the contract on either side.

The “Coming into force” contract will then become the basis for an Effective Contract after all agreements between Indonesia and France are reached and Indonesia has paid an advance for the purchase of 36 Rafales, it said.

Meanwhile, until now Indonesia and France have not reached an agreement on theTrade Returns, Local Content and/or Offsets (IDKLO) which is a requirement under Law no. 16 of 2012 of the Indonesian government. The law mandates that the purchase of defense and security equipment from abroad must be accompanied by an IDKLO.

While the Indoneisian MoD has not  confirmed any developments regarding the Rafale jets purchase, it must  be seen in the context of another recent contract announced by Fincantieri- for the supply of 6 FREMM class frigates besides the modernization and sale of 2 Italian Navy’s Maestrale class frigates to the Indonesian Navy.

The Fincantieri press release, announcing the contract was dated June 10, 2021  but did mention where and when the signing took place or  who signed it. It is likely it occurred in the days preceding the announcement. The Indonesian MoD is yet to confirm the FREMM deal too.

The timing of the Fincantieri announcement (June 10, 2021) and the media report regarding the ‘Coming into Force’ agreement regarding Rafale (June 7, 2021) lend suspicion that the two events are somehow related.

It was reported earlier that Indonesia and France are negotiating a joint purchase of Dassault Rafale jets and FREMM frigates. The FREMM frigates built by Italy’s Fincantieri are similar to that made by the French Naval Group and share several common vendors. The Italian FREMM frigates are believed to have elbowed out competition from Japan, the Netherlands and United Kingdom to bag the Indonesian Navy deal.

So, did Naval Group yield the ground to its partner, Fincantieri whose offer of FREMM frigates are believed to be priced lower than their French analogues? Did France step aside to let its Italian partner in the FREMM program  bag the deal?

Interestingly, Fincantieri has listed the announcement of the Indonesian warship deal under “Price Sensitive Press Releases.” Perhaps a way of communicating that the price of the deal will not be revealed.

Another reason why Rafale has caught the eye of the Indonesian MoD is the possibility of loan to buy the aircraft. This could be similar to a financing deal between the French government/banks and Egypt which eased the process to buy  Rafale jets, a facility that no other country offers.