Indonesia, Is It Severing Defense Ties with Korea?

On the 14th, at Seoul Airport in Seongnam, Gyeonggi Province, a model of the Korean fighter jet KFX was unveiled during the 'Seoul International Aerospace and Defense Industry Exhibition 2019 Media Day.' / Seongnam - Photo by Jinhyung Kang aymsdream@

[Asia Economy Yang Nak-gyu, Military Specialist Reporter] Negative signs regarding our defense exports and joint development issues are steadily emerging within Indonesia. The Indonesian side, which agreed to jointly develop the next-generation fighter jet (KFX) with our military and to pay the development costs, has been delaying the process repeatedly and is even showing signs of withdrawing from the contract to purchase three submarines from Daewoo Shipbuilding & Marine Engineering (DSME).

According to foreign media including CNBC Indonesia, Eti Suwardani, the Director General of Human Resources at Indonesia's state-owned PAL Shipyard, appeared before the House of Representatives' 11th Committee on the 18th and stated, "Although the contract for the second phase to build submarines number 4 to 6 was signed in March last year, no progress has been made so far." Indonesia had planned to acquire a total of 12 submarines, signing a contract with DSME in 2011 for three 1,400-ton submarines (worth 1.3 trillion KRW) as the first phase. Subsequently, as the second phase, they ordered an additional three 1,400-ton submarines (worth 1.16 trillion KRW) from DSME. However, it has now been confirmed that no progress, including payment of the contract amount, has been made for the second phase.

The Indonesian Ministry of Defense recently reported that Defense Minister Prabowo Subianto instructed a revision of the submarine project in September, citing that "the submerged endurance is less than 90 days and there are fluctuations." They want submarines with higher performance and have received limited technology transfer from DSME. Recently, local media reported that Indonesia has decided not to proceed with the second phase of the submarine project with DSME and has received contract proposals from other countries such as Turkey, Russia, and France.

Indonesia dispatched about 110 technical personnel to Korea Aerospace Industries (KAI), the lead developer of the KF-X, from the second half of 2016 but withdrew all of them in March. Although the spread of COVID-19 domestically was cited as the reason, it is known that dissatisfaction over technology transfer was a factor. Indonesia had expressed intentions to redeploy personnel once the COVID-19 situation stabilized but has yet to take further action.

Some speculate that Indonesia may be using the additional submarine contract as leverage to reduce its share of the KFX development costs. The Indonesian government agreed to bear 20% of the total KFX development cost of 8.5 trillion KRW, amounting to 1.7 trillion KRW, but had only paid 220 billion KRW by early last year and then stopped payments. Indonesia is reportedly attempting to offset its contribution by providing rubber raw materials or CN-235 transport aircraft produced domestically in Indonesia, citing its financial situation.

A source from the domestic defense industry said, "Although Indonesia's economic growth rates were 2.97% in the first quarter, -5.32% in the second quarter, and -3.49% in the third quarter compared to the same periods last year, indicating poor economic conditions, they have not yet canceled contracts or abandoned joint development. They still feel the necessity internally, so they are unlikely to give up easily."

This content was produced with the assistance of AI translation services.