INTERVIEW - Indonesia aims to buy planes, submarines

By Harry Suhartono

SINGAPORE (Reuters) - Indonesia is in talks with the United States to buy Lockheed Martin C-130 Hercules transport planes and might be in a position to buy fighter jets and submarines in 2-3 years, its defence minister said.

Juwono Sudarsono told Reuters on Saturday after talks with U.S. Defense Secretary Robert Gates that no final agreement had yet been reached on the transport planes, a possible first step in upgrading its military.

"With Gates we discussed the possibility of Hercules ... but because the market of that particular plane is quite tight we have to wait our turn," Sudarsono said in an interview.

"He promised for a discounted price but we don't know how much the discount will be. Because it is in their interest for Indonesia to remain stable," he said.

The country aims to raise its defence spending to 1.2 percent of gross domestic product within five years, from 0.68 percent or 33.6 trillion rupiah ($3.3 billion) now, Sudarsono said.

"It all depends on how quick the economy will recover," he said.

He said the defense spending of the world's fourth-most populous nation, home to 226 million people, was far below neighbouring countries such as Singapore, Australia and Malaysia.

China is building up its military and Australia said this month it plans a $72 billion defense upgrade over the next 20 years, including new submarines, leading to fears among some experts of an arms race in Asia as countries look to maintain control over trade routes and borders.