TSAMTO, May 7. Indonesia has offered to pay only about a third of the initially agreed cost of the next-generation KF-21 fighter development project being implemented jointly with the Republic of Korea.
This is reported by the Korea Times, citing its sources in the defense industry. At the same time, Indonesia expressed its willingness to limit the level of technology transfer of the KF-21, which raised even greater concern about the deal, which was once hailed as a symbol of partnership between the two countries.
According to sources of the publication, the Indonesian Armed Forces recently passed this proposal to their colleagues from the Defense Procurement Program Agency (DAPA). A DAPA representative said that the agency is in the "final stage of negotiations with the Indonesian side on the cost allocation methodology for the KF-21 project." The representative did not confirm or deny the details of the proposal that became known to the media.
As reported by CAMTO, in accordance with the initial agreement signed by the two countries in 2015, Indonesia has committed itself to pay 20% of the total cost of developing a fighter jet by 2026, which is about 8.1 trillion. won ($5.99 billion). The Government of the Republic of Korea has committed to pay 60% of the costs, and KAI will cover the remaining 20%. In exchange for investments, Indonesia should receive one prototype, access to technologies and know-how developed under the program, and purchase up to 48 fighters.
In total, Indonesia should contribute about 1.7 trillion won. However, payments were suspended from January 2019 to November 2022. It is estimated that Indonesia has currently paid about 300 billion won for the project, and the current debt exceeds 1 trillion won. In an attempt to solve the problem, Jakarta offered to make payments in kind, in particular, by supplying palm oil.
At the end of last year, Jakarta asked Seoul to extend the payment deadline until 2034, but the South Korean government refused, since serial production of the KF-21 is due to begin this year, and its adoption is scheduled for 2026.
In the latest proposal, Indonesia agreed to pay 100 billion won annually until 2026, which will amount to 600 billion won. Look at the project. In return, the country agrees to reduce the level of technology transfer (about a third of the originally agreed level).
If Seoul decides to accept this proposal, it will be presented at the upcoming meeting of the Defense Projects Promotion Committee of the Ministry of National Defense of the Republic of Korea. The adoption of the proposal will require Seoul to incur additional costs in the amount of 1 trillion won, and will also likely have a negative impact on the prospects for a defense partnership with Indonesia, since, despite budget constraints and delays in payments for the KF-21 project, in February 2022, the Indonesian Ministry of Defense began purchasing 42 French Rafale fighters".
In January of this year, security guards detained Indonesian employees while trying to take out several flash drives with confidential KF-21 data from the Korea Aerospace Industries (KAI) enterprise in Sacheon.
Thus, the prospects for partnership between the two countries on the fighter jet project remain uncertain, especially given the coming to power of the new Indonesian President Prabowo Subianto. During his tenure as Indonesian Defense Minister in 2019, P. Subianto supported the suspension of payments for joint projects and stressed the importance of ensuring greater technology transfer.