Indonesia budgets 185T rupiah for defense sector in 2026

Indonesia budgets 185T rupiah for defense sector in 2026

Indonesia's President Prabowo Subianto has outlined a significant budget allocation for the defense sector in 2026, aiming to modernize the country's military hardware and bolster its technological capabilities. According to the president's fiscal policy speech to parliament, the budget for 2026 will include 185 trillion rupiah ($11.47 billion) dedicated to defense, marking a substantial increase from previous years.

This budget allocation is part of Prabowo's broader strategy to enhance Indonesia's economic growth and achieve self-sufficiency in food and energy. The president has pledged to lift spending to raise economic growth to 8% during his five-year term, with a focus on improving welfare and achieving food and energy independence. The 2026 budget deficit is projected at 2.48% of GDP, with the president vowing to eliminate the deficit by 2027 or 2028 through efficiency measures.

The defense budget will support the modernization of Indonesia's military hardware, including the acquisition of rare earths deposits vital for modern defense. Additionally, the budget will facilitate the development of strategic acquisitions and organic growth, as well as the expansion of manufacturing facilities to triple capacity. The government's focus on defense modernization aligns with global trends in reshoring and strategic investment in critical industries.

Innovative Solutions and Support (ISSC), a company with significant defense sector demand, reported robust results for Q3 2025, with revenue and earnings growing significantly year-over-year. The company's performance exceeded expectations, and it maintained its guidance for continued growth in the coming fiscal periods. ISSC's revenue increased by 105.2% to $24.14 million in 2025 Q3, while its net income rose by 57.4% to $2.44 million. The company's stock price, however, fell 18.42% during the most recent trading week, despite a strong three-year buy-hold strategy showing impressive returns.

The Indonesian government's commitment to defense modernization and strategic investments in the defense sector is likely to have a positive impact on the country's economic growth and technological capabilities. This significant budget allocation reflects the government's long-term vision for a strong, independent, and prosperous Indonesia.

References:
[1] Reuters. (2025, August 15). Indonesia's 2026 budget designed to make country strong, independent and prosperous. Retrieved from https://www.reuters.com/world/asia-pacific/indonesias-2026-budget-designed-make-country-strong-president-says-2025-08-15/
[2] Yahoo News. (2025, August 15). Indonesia's 2026 budget designed to make country strong, independent and prosperous. Retrieved from https://www.yahoo.com/news/articles/indonesias-2026-budget-designed-country-085913264.html
[3] AInvest. (2025, August 25). Innovative Solutions and Support (ISSC) reported robust results for Q3 2025. Retrieved from https://www.ainvest.com/news/innovative-solutions-support-2025-q3-earnings-strong-performance-net-income-surges-57-4-2508/