US plans $1.4-billion arms package for Indonesia

* Includes 8 Boeing Apache AH-64D attack helicopters

* Apaches to help free flow of ships in Malacca Strait

* US to supply state-of-art Hellfire missiles

By Jim Wolf

WASHINGTON, Sept 21 (Reuters) - The Obama administration is proposing a potential $1.4-billion arms package for Indonesia, including eight Boeing Co Apache AH-64D attack helicopters, in a fresh tightening of security ties in a region rattled by China's growing territorial assertiveness.

The deal would include fire control radars, common missile warning systems, radar signal detecting sets and 140 state-of-the-art Lockheed Martin Corp Hellfire II AGM-114R precision-strike missiles, the Pentagon's Defense Security Cooperation Agency said in a notice to the U.S. Congress published Friday.

Indonesia is Southeast Asia's most populous country and the world's most populous Muslim-majority state. Plans for several U.S. arms transfers to it have been announced since late last year that would make Jakarta a more militarily capable regional partner.

Indonesia would use the twin-engine Apache helicopters to defend its borders, conduct counterterrorism and counter-piracy operations, "and control the free flow of shipping through the Strait of Malacca," the security agency said in its memo.

The proposed sale would provide Indonesia assets vital to deterring external and other potential threats, the Pentagon agency said.

The narrow and congested waterway is a potential choke point linking the Indian Ocean to the South China Sea and Pacific Ocean. The shortest sea route between the Middle East and growing Asian markets, it washes the shores of Indonesia, Malaysia and Singapore, and carries about 40 percent of the world's trade.

Piracy, including attempted theft and hijackings, is a constant threat to tankers, though the number of attacks has dropped following stepped-up patrols by the littoral states.

REGIONAL SECURITY

U.S. Secretary of State Hillary Clinton, who announced the planned Apache sale on Thursday without providing details on the rest of the arms package, said it would boost a comprehensive partnership with Indonesia and enhance security across the region.

She spoke in Washington during a meeting with visiting Indonesian Foreign Minister Marty Natalegawa.

Indonesia represents just part of an increasing U.S. emphasis on the Asia-Pacific region for national security planning as China presses its claims on disputed territory, notably in the South China Sea.

The United States is also building Guam as a strategic hub, deploying up to four shore-hugging littoral combat ships on a rotational basis to Singapore and preparing a 2,500-strong Marine Corps task force rotation as part of a growing military partnership with Australia.

The arms and services called for under the $1.4 billion Indonesia package will provide key elements required for "interoperability" with U.S. forces, the security agency's notice said.

Also included are "Identification Friend or Foe transponders," 30mm guns and ammunition, communication equipment, tools and test equipment, simulators, generators, personnel training and logistics support services, the agency said.

The Hellfire II, included in the package, is the primary air-to-ground precision missile of its size for U.S. armed forces as well as the Central Intelligence Agency's paramilitary capabilities and many U.S. allies.

The notice of such a sale is required by law. It does not mean that a deal has been concluded.

President Barack Obama announced in November plans to give Indonesia 24 decommisioned Lockheed Martin F-16 fighter jets, with Jakarta paying up $750 million to upgrade them and overhaul their engines, which are made by United Technologies Corp's Pratt & Whitney unit.

The Pentagon moved in August to supply Raytheon Co AGM-65 Maverick air-to-ground guided missiles and related gear valued at $25 million for Indonesia's growing F-16 fleet.