Seoul: Republic of Korea and Indonesia have finalized a deal to significantly reduce Jakarta’s financial contribution to their joint KF-21 fighter jet project to 600 billion won (US$443 million), roughly one-third of the original commitment, as confirmed by Seoul’s defense procurement agency on Friday.
According to Lao News Agency, the agreement was signed at an arms exhibition in Jakarta on Wednesday, as announced by the Defense Acquisition Program Administration (DAPA). This development addresses previous uncertainties regarding the financing of the 8.1 trillion-won project, which aims to develop an advanced supersonic fighter jet.
Initially, Indonesia had agreed to contribute around 1.7 trillion won, representing about 20 percent of the project’s costs, in exchange for technology transfers from Seoul, a KF-21 prototype, and other terms. However, due to missed payment deadlines, Indonesia has only contributed approximately 400 billion won thus far. In May of last year, Indonesia proposed reducing its total contribution to 600 billion won and requested a decrease in the level of technology transfers.
Seoul agreed to Jakarta’s reduced contribution last August, but formalizing the revised agreement was delayed due to tensions stemming from a police investigation into alleged technology theft by Indonesian engineers at Korea Aerospace Industries Ltd., the manufacturer of the KF-21, earlier in the year. The recent signing suggests both parties have moved beyond this issue.
A DAPA official stated that the terms of technology transfers and other conditions in exchange for Jakarta’s revised contribution will be renegotiated after the project’s completion, ensuring they do not exceed the 600 billion-won value. “Indonesia’s defense ministry has indicated that it has initiated administrative procedures to fulfill the remaining payment, and if the payments proceed as planned, defense industry cooperation between the two countries is expected to gain momentum,” DAPA stated in a release.
Furthermore, during the exhibition, DAPA officials met with Indonesian Defense Minister Sjafrie Sjamsoeddin and Deputy Defense Minister Donny Ermawan Taufanto, agreeing to expand defense industry cooperation beyond fighter jets to include land-based and maritime systems.
The KF-21 project is nearing its final stages, with the first production model expected to be delivered to the Air Force in the latter half of next year.