S. Korea to adjust KF-21 development costs with Indonesia

The South Korean government is poised to accept Indonesia's proposal to reduce its financial commitment towards developing the KF-21 joint fighter jet, known as "Boramae," from 1.6 trillion won to 600 billion won, with fewer technology transfers.

During a press briefing, the Defense Acquisition Program Administration (DAPA) disclosed that Indonesia had suggested providing a financial contribution of around 100 billion won every year until 2034. However, South Korea requested Indonesia adhere to the original payment deadline of 2026. Following negotiations on Indonesia's maximum payable amount, both parties agreed to reduce Indonesia's financial contribution to 600 billion won. The government agency plans to present Indonesia's proposal for a vote at the Defense Program Promotion Committee meeting scheduled for late May.

According to a DAPA official, discussions will continue to determine the scope of technology transfers to Indonesia. Initially, Indonesia had committed 1.7 trillion won (with a 100 billion won discount in the subsequent negotiation), representing 20 percent of the total development cost (8.8 trillion won), at the time of signing the KF-21 joint fighter jet development contract in 2016, to be fulfilled by June 2026 in exchange for a prototype and associated technology transfers. Now, with the financial contribution reduced to one-third, the provision of a prototype is no longer part of the arrangement, and technology transfers will be limited.

Indonesia has delayed its financial contributions, citing economic challenges. To date, Indonesia has paid a total of 300 billion won and made an additional payment of 100 billion won while seeking adjustments to its financial commitments. With Indonesia's payment reduced to 600 billion won, the remaining amount to be paid by 2026 is 200 billion won.

Following the reduction in Indonesia's contributions, DAPA clarified that South Korea's share of additional payment would amount to 500 billion won - not 1 trillion won - as development costs for the KF-21 have been scaled down. "The additional costs will be covered by the government budget and Korea Aerospace Industries," stated DAPA.

In January, allegations surfaced regarding technology leakage by Indonesian experts working with Korea Aerospace Industries (KAI). This raised concerns that Indonesia may have obtained KF-21-related technology and could potentially evade full payment. Some fear this could pose a risk to the growth of "K-defense," which aims to develop Korea's defense industry and expand defense exports. However, DAPA dismissed these concerns, emphasizing that Indonesia has consistently been urging negotiations to adjust financial contributions, and the reduction in contributions is unrelated to the technology leakage allegations.


Sang-Ho Yun ysh1005@donga.com