Reduced Development Costs for KF-21... Indonesia's Contribution Also Cut

[Image source=Yonhap News]

[Asia Economy Yang Nak-gyu, Military Specialist Reporter] With the Korean fighter jet KF-21 being designated as a defense industry material, the contribution amount that Indonesia must bear has also decreased by 100 billion won. When designated as defense industry material, value-added tax does not need to be paid, thereby reducing the total project cost by that amount.

According to an official from the Defense Acquisition Program Administration (DAPA) on the 15th, the total project cost for the KF-21 weapon system development has decreased from about 8.6 trillion won to about 8.1 trillion won due to the designation as defense industry material. Accordingly, Indonesia's contribution, which accounts for 20% of the total project cost, has been adjusted downward from about 1.7 trillion won to about 1.6 trillion won.

However, the government plans to recover the unpaid contribution from Indonesia (currently about 800 billion won) through additional negotiations but has not set a deadline for payment. Also, Indonesia has agreed to pay about 30% of the total contribution in kind, which is expected to increase future controversies.

A DAPA official said, "Indonesia is in a considerably difficult situation due to factors such as the novel coronavirus disease (COVID-19), so they will not pay the unpaid contribution all at once," but added, "We will promote Indonesia's payment of the contribution on the premise of mutual trust and honoring the contract."

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