The development of the shipbuilding industry is expected to meet the needs of the Indonesian Navy and the commercial vessels, and to support Indonesia's marine policy. The purpose of this study is to see the Shipbuilding industry Competitiveness, the influence of Technology Transfer to the Shipbuilding industry Competitiveness, and the influence of the industrial clusters on the Shipbuilding industry Competitiveness, as well as to analyze the institutional model of the Shipbuilding industry Competitiveness. This study uses the descriptive analysis, the Structural Equation Modeling (SEM) for the model causality testing, and the Interpretative Structural Modeling (ISM) for the institutional model of the competitiveness of the Shipbuilding Industry. This study uses the primary data, namely a survey of defense industry players, the national industry, the defense equipment users, the government institutions, the research institutes, and the universities that are determined purposively. ISM data are obtained from questionnaires and Forum Group Discussion (FGD) with 13 speakers representing academia, industry, and government. The results of the analysis of SEM state that the indicators on the industrial clusters, the competitiveness, and the technology transfer have a significant and real contribution to these variables. This research also shows that the industrial clusters and the technology transfer have a direct and significant effect on the competitiveness and the industrial clusters directly and significantly affect the technology transfer. However, the industrial clusters also have an indirect effect on competitiveness through the technology transfer to the shipbuilding industry. The results of the analysis of ISM conclude that the stakeholders involved have the greatest driving force, namely the Ministry of Defense and Ministry of State-Owned Enterprises, while the important factor affected by the stakeholders in strengthening the competitiveness of the shipbuilding industry is the Indonesian Navy Headquarters.