S. Korea approves cutting Indonesia’s contribution for joint KF-21 fighter project to 600 bln won

South Korea’s defense authorities on Friday approved a plan to reduce Indonesia’s contribution to a joint fighter jet development project to 600 billion won (US$440 million) from the original amount of 1.6 trillion won, the state arms procurement agency said.

The Defense Project Promotion Committee endorsed the plan amid concerns over Jakarta’s commitment to the KF-21 project designed to develop an advanced supersonic fighter by 2026 due to its repeated payment delays.

Indonesia initially agreed to pay about 20 percent of the 8.1 trillion-won program launched in 2015 in return for technology transfers and one prototype model, among other conditions.

South Korea and Korea Aerospace Industries Ltd. (KAI), the KF-21′s manufacturer, agreed to shoulder the remaining 60 percent and 20 percent of the cost, respectively, as part of the deal.

Indonesia, however, has so far contributed only around 380 billion won, recently requesting an adjustment to its total financial contribution to 600 billion won.

The Defense Acquisition Program Administration (DAPA) said the committee approved the plan by considering various factors, including bilateral relations and the possibility of securing the deficit amount.

DAPA said it would wrap up cost-sharing talks with Indonesia to successfully conclude the project, noting the approved plan covered measures to make up for the shortfall.

“The shortfall will be jointly covered by the (South Korean) government and the company, with the government shouldering a larger burden,” a DAPA official told reporters on condition of anonymity.

“Technology transfers (to Jakarta) were also decided to be made within the 600 billion-won range,” the official said.

Regarding the prototype, the official said it would be discussed in negotiations with Indonesia if requested but noted Jakarta would have to contribute more if the value of the technology transfers and the prototype exceeds the new contribution amount.

The decision came as DAPA expects the KF-21′s development to cost around 7.6 trillion won, 500 billion won less than the initial budget.

Despite the payment delays, the project is on track to start delivering the advanced fighters, designed to replace South Korea’s F-4 and F-5 Cold War-era jets, to the Air Force in 2026.

In June, KAI signed a 1.96 trillion-won deal with DAPA to start production of 20 KF-21s.

Aside from the KF-21 project, defense authorities approved a plan to mass-produce 155-millimeter artillery shells with a 30 percent extended range through 2027.

They also green lit a 382.5 billion-won project to locally purchase midsized tactical vehicles for infantry units from 2026 to 2031.