DEFENSE BUDGET PREPARATION BASED ON LIFE CYCLE COST (LCC) AS AN EFFORT TO IMPROVE THE READINESS OF TNI'S DEFENSE EQUIPMENT

Abstract

This study analyzes the Life Cycle Cost (LCC)-based defense budgeting as an effort to improve the readiness of the Indonesian National Armed Forces (TNI)'s Main Weapons Systems (Alutsista). To date, Indonesia's defense budget has tended to focus on the procurement of new defense equipment, while aspects of maintenance, modernization, and long-term logistical support have not been fully accommodated. This creates an imbalance between capital expenditures and maintenance expenditures, which has resulted in a degradation of the operational readiness of defense equipment. This study uses a qualitative approach with descriptive-analytical methods, through in-depth interviews, observations, and documentation studies at the Ministry of Defense, TNI Headquarters, the three branches of the TNI, and defense experts. The results indicate that the LCC concept has not been fully integrated into defense budget planning due to regulatory constraints, limited life cycle cost data, and a lack of human resource capacity. However, there is a strong awareness that implementing LCC can improve transparency, efficiency, and fiscal sustainability in supporting the readiness of TNI's defense equipment. This study recommends the need for budget regulation reform to enable multi-year budgeting, strengthen the maintenance and operational cost database, and improve human resource competency in LCC analysis. Furthermore, synchronization between institutions (Ministry of Defense, Indonesian National Armed Forces (TNI), Ministry of Finance, Bappenas, and economic experts) is key to realizing more realistic budget planning oriented toward long-term readiness. With consistent implementation of the LCC, the defense budget will not only be more effective and efficient but will also ensure the TNI's continued combat readiness in the face of dynamic global threats.