Indonesia Implements PMK Nomor 45 Tahun 2026 for Military Import Duty Exemptions

Peraturan Menteri Keuangan (PMK) Nomor 45 Tahun 2026

The Indonesian government is moving to simplify the complex and often costly process of acquiring defense technology. Under the new Peraturan Menteri Keuangan (PMK) Nomor 45 Tahun 2026, issued on July 6, 2026, by Minister of Finance Purbaya Yudhi Sadewa, the state will waive import duties on weaponry, ammunition, and specialized military or police hardware. The regulation also extends these benefits to spare parts and raw materials used in the domestic production of defense goods, replacing a previous 2021 framework. The Ministry of Finance stated the update is crucial for supporting the procurement of necessary defense materials and establishing clearer legal certainty for such transactions.

The rationale behind the new regulation was summarized in the document’s considerations: “That in order to support the procurement of goods that will be used for state defense and security purposes, simplify the procedure for importing goods, and provide legal certainty in granting import duty exemption on imports of weaponry, ammunition, military and police equipment, including spare parts, as well as goods and materials used to produce goods for state defense and security purposes.”

Modernization of the ITS Giuseppe Garibaldi

Strategic Impact on Defense Ties with Italy

The timing of the policy shift coincides with a significant expansion of Indonesia’s defense partnership with Italy. The exemption is expected to lower financial barriers for several high-profile Italian-led acquisitions. These include the modernization of the ITS Giuseppe Garibaldi aircraft carrier—a project involving a budget of US$450 million (around Rp7.3 trillion) for retrofitting, separate from an additional US$550 million (around Rp8.9 trillion) earmarked for its supporting helicopter fleet—and the procurement of Leonardo’s 12 M-346F Block 20 light multirole fighter aircraft and AW149 helicopters.

The contract for the 12 M-346F jets, which includes provisions for maintenance, repair, and overhaul (MRO), operational support, pilot training, and human resource development, is set to see deliveries begin in 2030.

Indonesian Maritime Security Agency

Broadening Eligibility and Regulatory Scope

A notable update in the 2026 regulation is the explicit inclusion of the Indonesian Maritime Security Agency (Bakamla) as an eligible institution for these duty exemptions. By granting Bakamla the same status as other security forces, the Ministry of Finance is signaling a push to standardize the import procedures for all agencies involved in national defense and security. Bakamla can now import necessary armaments and supporting equipment without incurring import duties, provided the items are intended for national defense and security purposes.

While the regulation facilitates current deals, experts suggest the policy is designed for long-term versatility rather than being a targeted favor to a single partner. Dr. Teuku Rezasyah, an international relations scholar at President University, emphasized that the policy’s reach is universal. I think this policy was not intended solely for Italy. Once implemented, it automatically applies to defense equipment imported from other countries as well, he told Indonesia Business Post (IBP) on Wednesday, July 22, 2026.

PT ESystem Solutions Indonesia

Economic and Governance Considerations

Rezasyah noted that the new policy has generated concerns among countries that exported defense equipment to Indonesia before 2026, as they did not benefit from the same incentives. Furthermore, he argued that while the exemption may reduce costs, it does not fundamentally overhaul the complex tender processes that have historically defined Indonesian defense procurement. Instead, he noted the measure accelerates government-to-government decision-making and reduces opportunities for third parties claiming privileged access to manufacturers to influence pricing.

The government remains the primary beneficiary, as the policy allows the Ministry of Defense to strengthen its position to negotiate directly with defense manufacturers and seek specific technical requirements. For local entities, such as PT ESystem Solutions Indonesia, the potential for growth lies in the technical offsets and industrial participation tied to the Leonardo contracts. As Rezasyah observed, the full extent of technology transfer and industrial commitments will only become clear if the government discloses further details of the procurement contracts.