South Korean government hints at approving Indonesia’s proposed reduction in KF-21 payment

Amid negotiations, South Korea considers accepting Indonesia’s proposal to reduce its KF-21 financial commitment to one-third. Jakarta’s overdue payment prompts Seoul to revise the share to 600 billion won, while exploring alternative data-sharing options to maintain cooperation.

Amid ongoing negotiations between South Korea and Indonesia, the future of the joint development of the KF-21 fighter jet hangs in the balance as Seoul contemplates accepting Jakarta’s proposal to reduce its financial commitment significantly. Reports suggest that the South Korean government is nearing a decision to revise Indonesia’s share of the project’s cost to approximately one-third of the initially pledged amount.

According to statements from the Defense Acquisition Program Administration (DAPA) during a press briefing on Wednesday, South Korea aims to lower Indonesia’s financial burden to 600 billion won, equivalent to around 440 million U.S. dollars, with completion expected by 2026. This adjustment comes in response to Indonesia’s accumulated overdue payment, which amounts to around one trillion won.

Initially, Indonesia had agreed to shoulder 20 per of the total project cost, amounting to 1.7 trillion won, later reduced to 1.6 trillion won by June 2026. The agreement entailed Indonesia’s participation in the manufacturing of 48 jets following the receipt of a prototype and technical data from South Korea.

However, Jakarta has recently proposed covering only 600 billion won, approximately one-third of its initial contribution, while also suggesting a reduction in the transfer of technical information from South Korea. This move signals a significant shift in Indonesia’s commitment to the project, prompting Seoul to reconsider the provision of the KF-21 prototype.

In response to the proposed reduction in payment, a DAPA official indicated that South Korea is exploring alternatives, including the informal sharing of a s version of its technical data with Indonesia. Such measures are indicative of efforts to maintain cooperation between the two nations while addressing financial constraints and diverging priorities.

The KF-21 project holds strategic significance for both South Korea and Indonesia, symbolizing their collaboration in advancing aerospace technology and strengthening defence capabilities. As negotiations continue, the outcome will shape the future trajectory of this bilateral partnership and the development of the KF-21 fighter jet.