South Korea Agrees To Cut Indonesia's Contribution Amount In The KF-21 Fighter Jet Project

JAKARTA - South Korea accepts Indonesia's proposal to reduce financial contribution to the joint project of developing fighter jets, according to the arms procurement authority.

The Defense Acquisition Program Agency (DAPA) said on Friday it approved a proposed cut in Jakarta's contribution to the KF-21 fighter jet project from 1.6 trillion won to 600 billion won, about a third of the initial number.

"We are considering bilateral relations between the two countries and other factors such as whether we will be able to cover the financial holes," DAPA said in a statement.

"After completing the (new) cost-sharing agreement with Indonesia, we will try to fulfill public expectations by completing the project successfully," he continued.

Related to that, the DAPA official said the benefits that the Indonesian Government would receive from the project, namely technology transfer, would also be reduced proportionally.

However, they have not provided details on how they will do it.

Indonesia initially agreed to fund 20 percent of the program worth 8.1 trillion won, which was launched in 2015 to develop advanced supersonic fighter jets.

However, so far Indonesia has only contributed around 400 billion won. Citing the economic problems that arose during and after the COVID-19 pandemic, DAPA asked the government and participating companies in Korea to reduce their financial responsibility.

The decision to accept the request means that Korean participants the Korean government and Korea Aerospace Industries (KAI), which initially accounted for 60 percent and 20 percent of the total cost now have to absorb the financial impact.

On a positive note, Korean officials said they had found a way to cut the project's total cost to 7.6 trillion won. This means Korean partners will have to pay an additional 500 billion won to complete it by 2026 on schedule.

Despite delayed payments, the project went ahead as planned to begin shipping the advanced fighter jet, designed to replace Korea's F-4 and F-5 Cold War era jets, to the Air Force by 2026.

In July, DAPA said KAI officially started production of KF-21 at its head office in Sacheon, South Gyeongsang Province.

A month earlier, KAI signed an agreement worth 1.96 trillion won with DAPA to build 20 KF-21 units by 2027.

The Korean military seeks to build more units and operate a total of 120 KF-21 by 2032. The first production model is scheduled to be delivered to the Air Force by the end of 2026.

"Through this project, we aim to secure the ability to develop our own fighter aircraft, which is expected to strengthen our military strength and contribute to the export of its weapons," said DAPA.