By Ed Davies

JAKARTA, May 15 (Reuters) - Indonesia does not need or have the funds to build up a large and threatening military, and is more concerned with equipping itself better to respond to natural and man-made disasters, the defence minister said on Thursday.

"We don't have the money to build a large threatening force in Indonesia. First because we don't need it, second we can't afford it and third because" a large proportion of the country's budget is focused on economic development and social protection, Defence Minister Juowno Sudarsono told foreign correspondents.

For a country the size of Indonesia, which has about 230 million people and more than 17,500 islands, the minister estimated a defence budget of more than $10 billion was required. The current budget is about $3.2 billion budget, he said.

Sudarsono, who is on his second stint as defence minister, contrasted the size of the budget with the nearby island state of Singapore.

"Singapore is only, what, 65 km (40 miles) long and has a defence budget of about $5.6 billion," he said.

"So forget about building up a 200-ship navy, or a three squadron airforce, that's not on," added Suhdarsono, who had a previous career as an academic.

"Our focus is on transport ships, transport aircraft, transport vehicles because the role of the defence force is more of an emergency response to help Indonesians affected by natural disasters, man-made disasters," he added.

Indonesia has suffered a series of devastating disasters in recent years and the Indonesian military, known by its Indonesian acronym TNI, has played an important role in disasters such as the tsunami of 2004.

The minister also touched on more general security issues and said that Indonesia faced problems policing its huge coastline and protecting its rich natural resources.

Quoting data from the maritime ministry, Sudarsono estimated that $16 billion of Indonesia's natural resources were stolen each year by well organised and financed groups. He identified such concerns as illegal logging, fishing and smuggling.

He said the problem came down mainly to money and that better pay was needed for all levels of bureaucracy in this area, not only defence but fisheries, customs and the police.

(Editing by Jeremy Laurence)

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