BLUE LANTERN LEVEL 3--PRE-LICENSE END-USE CHECKS ON

UNCLAS JAKARTA 009156

SIPDIS

SIPDIS

DEPT FOR EAP/IET, PM/DTCC/BLUE LANTERN COORDINATOR - REBECCA
VALERIN

E.O. 12958: N/A
TAGS: KOMC ETTC ECON ID
SUBJECT: BLUE LANTERN LEVEL 3--PRE-LICENSE END-USE CHECKS ON
APPLICATION 05-05008154

REF: SECSTATE 065656


1. Summary: PT Dirgantara Indonesia (DI) verified on July
21 that it ordered the CN235 components from Summit Aviation
in October 21, 2005 (see reftel). The transaction is
related to a sales contract from 1996 between DI and
Indonesia's Department of Defense to build CN235 aircraft
for the Indonesian Air Force (IDAF). We believe that this
contract is legitimate. End summary.


2. We contacted PT Dirgantara Indonesia's Engineering
Services and Logistics Division Head Mulawarman Wangsaputra
on July 21 to verify order number 05-0008154. Mulawarman
confirmed that DI had ordered the CN235 components detailed
in reftel from U.S. firm Summit Aviation on October 21,

2005. According to Mulawarman, DI provides post-sale
services and product maintenance to all its customers
including IDAF. As such, when DI receives an order from one
of its customers, they will endeavor to buy spare parts and
components from the original manufacturer or its affiliate.
Mulawarman said that DI is well aware of the restrictions of
USML articles, including those pertaining to re-export.


3. According to Mulawarman, the current DI order is related
to the 1996 sales contract between Indonesia's Department of
Defense and PT Dirgantara Indonesia to build CN235 aircraft
for the Indonesian Air Force as end user. Due to the
Government of Indonesia's budget constraints, DI's
production process was subject to a substantial delay. The
reftel order included the components that DI bought from
various sources as they re-started their production line to
build the CN235 for IDAF.


4. We also contacted the Indonesian Air Force, Aero
Division, Air Transport Section Head Lieutenant Colonel Amin
Sulaksono on July 21 to confirm order number 05-0008154.
According to Amin, he is still trying to find the original
paperwork from 1996 for the IAF's order. He said that he
will inform us as soon as he finds the 1996 documents. He
did confirm, however, that IDAF is still awaiting the
delivery of its CN235 aircraft from DI.


5. PT Dirgantara Indonesia, also doing business as
Indonesian Aerospace (IAE),was established in 1976 and is
an Indonesian state-owned enterprise. DI is one of the
first indigenous aerospace companies in Asia with a core
competence in aircraft design, development and manufacturing
of civilian and military regional commuter aircraft. Before
2000, the company was called Industri Pesawat Terbang
Nusantara (IPTN) and was led by former Indonesian President
Habibie. On August 24, 2000, then President Abdurrahman
Wahid officially changed the name of IPTN into PT Dirgantara
Indonesia or Indonesian Aerospace. The Government of
Indonesia owns 100 percent of the outstanding shares in the
company. DI has produced and delivered more than 300 units
of aircraft and helicopters, defense systems, aircraft
components, and other services to their customers.


6. Dirgantara Indonesia's aircraft products include the
CN235 Civil, CN235 Military and CN235 Maritime. They also
hold an aircraft production license as part of a subcontract
program for the NC212, Boeing 757, and Airbus A330, A340 and
A380 and a helicopter production license for the Super Puma
NAS-332. The company also provides engineering services
such as design development testing, manufacturing
subcontracts, and aircraft and engine maintenance repair and
overhaul (MRO). DI also has four subsidiary companies
including a company named IPTN-North America, Inc., located
in Tukwila 1035 Andover Park West, Suite B, Seattle, WA
98188 - 7681, U.S.A. Detailed information about the company
can be viewed at their website: www.indonesian-aerospace.com


7. The following are DI's regular customers:

-- Domestic civil aviation: Merpati Airlines, PT. Gudang
Garam;

-- Foreign civil aviation: Asian Spirit (Philippines) and
Thailand's Department of Agriculture;

-- Domestic military: Indonesian Air Force, Indonesian Navy
and Indonesian Army;

-- Foreign military: Malaysian Air Force, Brunei military,
Korean military, Pakistani Air Force.


8. Post finds that PT Dirgantara Indonesia is a well-known
and legitimate company. The address for PT Dirgantara
Indonesia is as follows:

Jl. Pajajaran 154
Bandung 40174
West Java, Indonesia
Tel: +62 22 603 3900, 603 1717
Fax: +62 22 603 3912, 603 2052

PASCOE