Seoul agrees to reduce Jakarta’s KF-21 cost share by two thirds

South Korea has finally agreed to reduce Indonesia’s contribution to their joint KF-21 fighter jet development project by two thirds to 600 billion won ($440 million) on the condition of transferring less technology than earlier agreed, thus accepting Jakarta’s proposal.

The Defense Acquisition Program Administration (DAPA), South Korea’s state-run arms procurement agency, said on Friday that it signed an agreement to slash Indonesia’s financial contribution to their joint project during the Indo Defence Expo & Forum held in Jakarta this week.

Under the original contract inked in January 2016, Indonesia was obligated to shoulder some 1.7 trillion won, or about 20%, of the multi-billion-dollar project by June 2026.

In return, the Southeast Asian country was to receive a prototype of the KF-21 fighter jet and technical support for the local production of 48 units in Indonesia.

The KF-21 is a joint project to develop a next-generation supersonic fighter plane using Korean homegrown technology for key components.

However, Indonesia fell behind on the payment several times and in late 2023 requested an extension of the deadline to 2034.

In 2024, Jakarta proposed cutting its financial contribution to one third of the original amount in exchange for receiving less technology support. It has so far paid 400 billion won.

Seoul accepted the offer in August last year. But finalizing the revised terms was delayed after Indonesian engineers stationed at Korea Aerospace Industries Ltd. were allegedly caught attempting to leak technology from South Korea’s sole aircraft manufacturer in 2024.

The incident has since escalated to a diplomatic dispute between the two countries.

A DAPA official said the scope of technology transfer would be determined after the KF-21 development phase is complete, according to Yonhap News.

“Whether a prototype aircraft will be provided is also subject to negotiation,” Yonhap quoted a DAPA official as saying. “If Indonesia wants a prototype, we'll adjust the scope of technology transfer accordingly, reducing it by an amount equivalent to the value of the aircraft.”

In April 2021, Korea unveiled a prototype of the KF-21 fighter jet, nicknamed Boramae.

On the sidelines of the Indo Defence Expo, the two countries also agreed to expand their defense cooperation beyond fighter jets to include ground and naval systems, DAPA said in a statement.

Write to Yeonhee Kim at yhkim@hankyung.com