Indonesia to create new coastguard, boost defense spending

JAKARTA (Reuters) - Indonesia will launch a new coastguard next month to crack down on piracy and smuggling which can disrupt commerce in Southeast Asia’s biggest economy, the chief security minister told Reuters on Thursday.

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The force is part of President Joko Widodo’s push to reassure investors at a time when the economy is growing at its slowest in five years and is strained by twin trade and current account deficits.

“There are too many overlapping agencies that are not effective in securing the seas,” Tedjo Edy Purdijatno said in his first interview to foreign media as chief security minister.

“We will bring it all under one coastguard to make sure businesses that use sea transportation are not harmed.”

Indonesia relies on a loose grouping of police and navy personnel to safeguard its shipping lanes but smuggling of natural resources is rife.

The Malacca Strait in western Indonesia, a regional and global trade corridor, has among the highest number of piracy attacks in the world.

The coastguard, to be launched in mid-December, will also secure maritime borders and tackle illegal fishing and human trafficking.

It will initially borrow personnel and vessels from the military with the aim of being fully independent in a year, Purdijatno said, declining to give details about the size of the force.

Indonesia, a sprawling archipelago, is set to beef up its defense, especially its navy and air force.

The government aims to boost defense spending from 0.8 percent to 1.5 percent of gross domestic product over the next five years, putting it on par with neighbors such as Malaysia, Purdijatno said.

The spending comes as competing territorial claims in the South China Sea between China and four Southeast Asian countries stoke tension.

Purdijatno raised the possibility that Indonesia, which is not involved in the disputes and under the previous government remained neutral, could play a greater role if requested.

“If asked, we are ready to be mediators in the with the spirit of maintaining security,” Purdijatno said.

The former navy chief said defense spending would be focused on weapons and technical know-how, from countries like South Korea and China, to domestically manufacture and eventually export equipment like submarines and missiles.

“For example, after the first two ships or fighter jets are built outside, number three we can build in Indonesia,” he said. “But it has to be for the domestic market first and then we export.”

Additional reporting by Dennys Kapa; Editing by Robert Birsel