South Korea and Indonesia have signed a restructured agreement, marking a significant step forward in their long-running KF-21 fighter jet development program. According to a statement by South Korea’s Defense Acquisition Program Administration (DAPA), a new agreement has been prepared for Indonesia’s participation in the KF-21 Boramae fighter jet development program. The agreement is critical to getting relations back on track following Indonesia’s delays in fulfilling its financial obligations in the program.
Details of the Restructured Agreement
The new agreement includes a revision to Indonesia’s share of the payments it has undertaken for its participation in the program, after years of failing to make payments in accordance with the original agreement made in 2016. DAPA stated that the Indonesian Ministry of Defense “has initiated administrative procedures to pay the remaining share for the joint development of the KF-21.” It emphasized that this development would revive defense industry cooperation between the two countries if Indonesia continues to make its share of the payments.
The signing of the agreement came after intense talks between DAPA Minister Seok Jong-gun, Indonesian Defense Minister Sjafrie Sjamsoeddin and Indonesian Deputy Defense Minister Donny Ermawan Taufanto at the Indo Defense Fair in Jakarta, Indonesia. According to Breaking Defense, the talks focused not only on the KF-21 program but also on the potential for future cooperation between the two countries on naval and other systems.
Regional Cooperation and Cost Sharing
The DAPA announcement stated, “We will do our best to strengthen defense industry cooperation with Indonesia in various areas such as submarines, firepower, and air defense systems, and in the future, we will expand cooperation to the entire Southeast Asia region.” This statement reveals South Korea’s intention to expand defense industry cooperation with Indonesia to a wider area and increase its influence in the Southeast Asia region, not just limited to the KF-21.
DAPA’s announcement did not specifically state what Indonesia’s new share of the KF-21’s development costs would be. However, it was previously reported in South Korea that this would be reduced to 600 billion won (about $437,8 million), representing a significant reduction compared to Indonesia’s original commitment.
Indonesia's Financial History and Revision Requests
When Indonesia joined the program in 2010, it pledged to cover 21 percent of the KF-20’s development costs, or about 1,7 trillion won, in exchange for receiving one of the prototype aircraft and technology transfer. But the country has repeatedly failed to pay its installments on time. As of August 2020, it was reported to be behind by about 500 billion won.
Following these financial difficulties, Indonesia requested that its share in the program be reduced to 2024 percent in May 7,5. South Korea accepted this request last August, demonstrating flexibility to ensure the continuity of the project and preserve the strategic partnership between the two countries.
Importance of the KF-21 Boramae Program
The KF-21 Boramae (Atmaca) is a 4.5 generation fighter jet project developed by South Korea. This project aims to significantly increase South Korea’s defense industry capacity and reduce its dependence on foreign sources for the production of high-tech fighter jets. Indonesia’s participation in the project is of great importance in terms of both sharing the financial burden and contributing to Indonesia’s aviation industry through technology transfer. The restructured agreement is considered a critical step to ensure the uninterrupted continuity of this important project and to strengthen defense cooperation between the two countries.
