Indonesian Defence Ministry's plan to jump into pharma draws ire

The Star

06-05-2025

JAKARTA: The Indonesian Defence Ministry's plan to establish a pharmaceutical factory to produce and distribute medicine through pharmacy cooperatives in villages across the country has been met with concern.
It is feared that the initiative may violate the military's professionalism and do little to solve problems plaguing Indonesia's pharmaceutical sector.
The plan was first announced by Defence Minister Sjafrie Sjamsoeddin during a meeting with House of Representatives Commission I overseeing defence and foreign affairs in Jakarta on April 30.
Also attending the meeting was Indonesian Military (TNI) commander Gen Agus Subiyanto.
Sjafrie said at the meeting that the plan was raised after hearing complaints about high medicine prices in Indonesia compared to other countries.
Health Minister Budi Gunadi Sadikin claimed last year that certain medicines in Indonesia sometimes cost up to five times more than in Singapore or Malaysia.
'We have revitalised the pharmaceutical laboratories within the armed forces into a single factory assigned to support the national defence of medicine,' the minister said during the recorded meeting.
The military's pharmaceutical factory was developed to create a more inclusive pharmaceutical ecosystem, according to Defence Ministry spokesperson Brig Gen Frega Wenas Inkiriwang.
'For the plan, we will prioritise essential, widely beneficial and accessible health needs, while supporting grassroots-level pharmacy cooperatives,' Frega told The Jakarta Post on Saturday (May 3).
The initial steps toward the plan, he added, included mapping and utilising the TNI's existing laboratory infrastructure across its three branches: the Army, Navy and Air Force.
The plan will focus on synchronising and optimising these resources, 'with an emphasis on efficiency and sustainability without the need for new infrastructure,' Frega went on to say.
Sjafrie said at the House Commission I meeting that the Defence Ministry would work with the Health Ministry to supply medicines produced by the military laboratory through cooperatives across villages.
The said cooperatives were the ones established under the Red and White Village Cooperative Programme, in which President Prabowo Subianto ordered the creation of 80,000 cooperatives across the country as part of his national development strategy.
The instruction was stipulated in a presidential instruction (Inpres) issued in March.
Among the programme's aims were to strengthen food self-sufficiency, promote economic equality and push for self-reliant villages in pursuit of the Indonesia Emas (Golden Indonesia) 2045 vision, the nation's aim to become an advanced and prosperous one by its centennial.
The village cooperative initiative, projected to cost Rp 400 trillion (US$24 billion), will be financed through state, regional and village budgets. Each unit is then expected to provide essential goods, savings and loans, clinics, pharmacies, cold storage, warehousing and logistics services.
Military observer Khairul Fahmi from the Institute for Security and Strategic Studies (ISESS) said that the plan for the Defence Ministry and TNI to be involved in drug production could be strategic intervention by the state to solve the issue of high prices and unequal distribution of medicines.
However, the plan should focus on public service instead of profit making so that it does not compromise the TNI's professionalism, he warned.
Khairul questioned product distribution through cooperatives, which could open room for commercialisation.
'Don't let the TNI's goodwill in producing and distributing the drugs kill business firms that must adhere to strict regulations and market mechanisms,' Khairul said.
'State intervention should correct and complement the system, not replace the old and legitimate firms.' Bhima Yudhistira, executive director of the Center of Economic and Law Studies (CELIOS), concurred, saying that the military could breach its main duty and function should it seek profit from the drug plan.
He added that issues plaguing the national pharmaceutical industry are, among others, high credit interest rates for technology purchases and patent monopoly by multinational pharmaceutical companies that hinder local manufacturers to compete.
Another issue is the national industry's heavy reliance on imported raw materials, which made up to 90 per cent of components used in domestic drug production.
The imported materials, whose price is affected by the state of rupiah, have put local medicine manufacturers such as private firm PT Kalbe Farma and state-owned PT Kimia Farma under pressure.
'If the government wants to help the local pharmaceutical industry, it should focus on solving these fundamental issues, not replacing the existing firms,' Bhima said.
Also in the April 30 meeting, the Defence Ministry raised a plan to improve military hospital services by increasing the number of specialist doctors.
The ministry sought to recruit professionals from abroad in addition to relying on 75 graduates of the first cohort of the military medical undergraduate programme in the Indonesia Defense University's (Unhan) medical school.
Sjafrie also emphasised the importance of improving soldiers' welfare, proposing to increase daily food and operational allowances for troopers, especially those stationed in high-risk areas. - The Jakarta Post/ANN