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A regional military manufacturing leader

Interview - November 19, 2013
United World meets with Tri Hardjono, Acting President Director of PT PINDAD, a state-owned manufacturer of military and commercial products with over 200 years of history
Could you give us a brief background of your career, and how you came to be Acting President Director of this company? 

I studied at the Institute of Technology of Bandung, where I got a degree in Mechanical Engineering. I joined PT PINDAD nearly 30 years ago in 1984, and until 1990 my job was focused on the production facility. After that I went to Hamburg, Germany for two years to study and get involved in manufacturing. I came back to Indonesia to do a project for the Indonesian automotive industry, where we developed the engineering for Indonesian cars. 
In 1997, I returned to PT PINDAD to work in the special vehicle division, and in 2007, I became Operational Director. In August 2013, I became Acting President Director. 
Could you give us some insights into the company’s milestones? 

This company has two centuries of history; in fact it was first established by the Dutch in 1808. In the very beginning, the period between 1808 and 1850, we started off as a number of military equipment repair shops in Surabaya which held inventory and maintained tooling equipment. The shops also functioned to repair damaged arms weapons and make and repair explosives to meet the needs of the Dutch Navy. Between 1923 and 1932 all of our various repair shops throughout the country moved to Bandung and merged into one company. 
In 1950 the Dutch passed the company over to the newly established Indonesian government, and it became known as PINDAD in 1958. The name, PINDAD, is an abbreviation stemming from a Bahasa Indonesian phrase for industrial equipment for the army, which is our business. Finally, in 1983 the company became a state owned enterprise (SOE).
What is your company’s general structure and main products? 

At PT PINDAD we have six divisions – an ammunition division which is located in Malang (East Java, Indonesia), and in Bandung, we have a 66-hectare facility with the following 5 divisions: a weapon division, industrial machinery and services, a forging and casting division, a marketing division for commercial explosives, and a division for special purpose vehicles.

In terms of the production of military equipment, we have three main products. First of all we have small arms weapons in production. In fact we produce over 30 models of firearms used by the Indonesian Armed Forces (TNI) and the Indonesian National Police (POLRI). These range from revolvers to large vehicle mounted models. We also have plans to diversify within this industry and develop a new medium arms weapon system, and also a rocket system.

Secondly, we produce ammunition, specifically up to 20 mm ammunition and we are developing plans for an expansion to produce a bigger caliber of 105 mm. This is of critical importance to country’s strategic vision for increasing reliance on domestic industry. We are currently working towards supplying all of the country’s ammunition needs. As you can imagine, there are hundreds of thousands of members of TNI and POLRI to supply, so it is not an easy task. Furthermore, we cooperate with the European defense industry to make 120 mm ammunition which is also required by our security forces.

Our third main product is military vehicles. We construct 4x4 Komodo tactical vehicles, Anoa 6 wheeled armored vehicles and trucks. These are used for many purposes beyond military operations including police patrols, UN missions and medical evacuations.

Within the military vehicle industry we are currently engaged on a special project with Turkey in a government-to-government cooperation agreement. Under the auspices of the agreement, we are jointly developing medium-sized tanks with the Ankara-based, privately owned armored vehicles maker FNSS Defense Systems. The prototype of the medium-sized tanks will be completed in three years’ time. We then have to do some trials, so we expect the tanks to be on the market in approximately four or five years.

This is an important strategic project because it will represent the first Indonesian-designed and produced tank. For Pindad the technology transfer is a step forward for our vehicle division as we are moving from wheeled vehicles to track propulsion systems. It is one of the seven strategic projects the Ministry of Defense is pursuing, and it has exciting ramifications both for our industrial and military capabilities.

Can you tell us more about the company’s international strategic partnerships?  

We chose Turkey as a strategic partner because it is logical given the cooperative state of our government relations, but we are also open for cooperation with other countries. 
A common practice in the past has been for us to go to the European defense industry for strategic partnerships. Indeed, we cooperate with the U.S. and Europe for transmissions and a number of the materials we use to produce military equipment come from Europe as well. For example, we use engines from Renault in France. These are the main products we import from other countries, but the rest of the components of the products have domestic origins. 
What steps is the company taking to elevate Indonesia to the point of self-sufficiency in the domestic arms industries? 

The ‘Minimum Essential Force’, as emphasized by the Minister of Defense, stipulates Indonesia’s independent capability to protect its strategic interests in defense, with a particular emphasis on the replacement of its outdated weapon system. At the moment, we have to fulfill the targets of the ‘Minimum Essential Force’ in regards to ammunition, which is a reasonable target for us by the end of next year. 
However, the capacity of our products is still at a level of small and medium weapons and ammunition. In pursuit of self-sufficiency, the Indonesian Army needs more than that, so we have developed plans for the big caliber products. Next year we will be able to produce 105 mm gun ammunition, and within the next two years, we are committed to producing even larger caliber ammunition of 120 mm. 

What is your vision for the future of the company? What values would you like to have associated to the name of PT PINDAD?  

Our purpose for the company is to continuously improve our business, and to achieve that, we must always develop new products and innovate. When people hear PINDAD, I would like them to make the connection to innovation and quality. We have a vision that by 2025 we will become the leading manufacturer in defense and security equipment in Asia through efforts in product innovation and strategic partnerships. 
For our military products we want to achieve NATO quality assurance standards, because that is the demand of the international market. While we do have those quality standards in some areas, we strive constantly for product innovation, because it is so important in the successful expansion of exports.  
What are the main challenges you currently face?

A major challenge for us is that our reach in the military sector is not expansive enough on a domestic or international level. We face the challenge of marketing our products abroad, however this is not easy to do with military products. First we have to prove that our own national army can use our products before we can blossom out and sell to other countries. 
Furthermore, we face significant competition from foreign companies selling their products in Indonesia. One way that we have been able to distinguish ourselves from the competition recently is by obtaining two awards at the 2013 BUMN Marketing Event, where we received the Silver Award for our Marketing Strategies and a Bronze Award in the Tactical Category. 
How would you describe PT PINDAD’s approach to human resources?

Right now we have 2,400 employees in Bandung and East Java, and 200 of them are engineers. Our human resources development focuses on career, trainings, recruitment and assessments. 
One of the primary principles on which our entire company operates is that of group collaboration, and building synergies from teamwork and shared success. 
In regards to Corporate Social Responsibility (CSR), what does your company focus on?

To develop and nurture trust between the stakeholders and the people, PT PINDAD systematically carries out a CSR program that is implemented through several activities. For example, we have environmental development, providing help to victims of natural disasters. We also carry out special “State Owned Enterprises Programs” for the less fortunate people who live in the surroundings of the complex of PT PINDAD.
In fact, we were awarded the SOEs care award at the BUMN award event 2013 for the implementation of some of our CSR activities.
In your opinion, what is the international perception of Indonesia today, compared to what you believe it should be? 

Some people think that Indonesia is a developing country, and that we have a very conventional technology. They do not understand how developed Indonesia actually is and how advanced our technology is, particularly in the field of military manufacturing. 
Politically, I believe that what Americans think of our political situation differs from the actual reality here. Unfortunately the embargo is still fresh in their memories.
It is important for the international community to know that the business environment in Indonesia is good, and that there are many opportunities for the manufacturing of modern products, particularly in the military industry.