[Yang Nak-gyu's Defence Club] What Are the Coordination Plans for KF-21 with Indonesia?

[Image source=Yonhap News]

[Asia Economy Yang Nak-gyu, Military Specialist Reporter] Officials are expected to resume working-level negotiations on the 9th to resolve the payment issue of Indonesia, a co-developer of the Korean fighter jet (KF-21 Boramae).

On the 5th, a government official stated, Korea Aerospace Industries (KAI) and the Defense Acquisition Program Administration (DAPA) plan to resume working-level talks with the Indonesian Ministry of Defense next week regarding the KF-21 project. DAPA had announced during last month’s National Assembly audit report that the '6th Korea-Indonesia Working-Level Council' would be held in the fourth quarter of this year to address the issue of unpaid KF-21 contributions.

The KF-21 development project is a joint effort between Korea and Indonesia to develop a 4.5-generation fighter jet with a total project cost of 8.8 trillion won from 2015 to 2028. Indonesia agreed to invest 20% of the total project cost, amounting to 1.7 trillion won, and after receiving one prototype and technical data, to locally produce 48 next-generation fighters in Indonesia. However, since 2017, Indonesia has not paid its share due to economic difficulties. Currently, 74.1 billion won remains unpaid.

In this negotiation, both sides are expected to reach a final agreement on the timing and method of payment for the overdue contributions. Since Indonesia has delayed payments citing economic hardship, a 'installment payment' method is considered likely. There is also interest in whether the 20% contribution ratio will be adjusted.

So far, Minister Prabowo has repeatedly declined the Korean government’s requests to visit Korea. In December 2019, then-Defense Minister Jeong Kyeong-doo met with Prabowo in Jakarta and invited him, and Ambassador Park Tae-sung to Indonesia also repeatedly conveyed the government’s invitation for a visit.

Later, in March, when Kang Eun-ho, head of DAPA, visited Jakarta to attend the handover ceremony of a submarine jointly built by Daewoo Shipbuilding & Marine Engineering and Indonesia’s state-owned PAL shipyard, Minister Prabowo reportedly expressed a desire to participate in the project but requested assistance due to the worsening domestic economy.

Indonesia is reportedly requesting to reduce the KF-X contribution ratio from 20% to 10%. There are also reports that Indonesia has requested support for food development. Indonesian President Joko Widodo appointed Defense Minister Prabowo Subianto, rather than the Minister of Agriculture and Forestry, as the special minister in charge of food development. Due to heavy rains, Indonesia’s grain production has declined, causing grain prices to reach their highest level in 8 years and 6 months.

Accordingly, Indonesia assigned Minister Prabowo the task of food development and agricultural land development in Central Kalimantan on Borneo Island. Indonesia, with a population of 270 million, plans to develop 165,000 hectares of farmland in Pulang Pisau, Central Kalimantan?2.7 times the area of Seoul (60,000 hectares). In September last year, Indonesia also launched a large-scale farmland development project, ten times the size of Singapore, to secure 'food security.'

At that time, President Joko Widodo ordered the large-scale farmland development project in response to the potential global food crisis caused by the COVID-19 pandemic.

Additionally, Indonesia has reportedly proposed to the Korean government either to provide a loan of as much as 5 billion dollars (approximately 5.6 trillion won) or to postpone the payment schedule of its contribution from 2028 to 2031.

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