With Indonesia proposing to pay only one-third of its share for developing the Korean KF-21 fighter jet while requesting a corresponding amount of technology transfer, all eyes are on whether the South Korean government will accept this proposal. Concerns are rising that about 1 trillion won of the government budget might be needed depending on the situation, or that technology may have already been leaked.
The Defense Acquisition Program Administration (DAPA) plans to decide this month whether to accept Indonesia’s proposal, believing that it is difficult to continue dragging out negotiations since the KF-21 development will be completed in two years.
At a regular press briefing on May 7, Choi Kyung-hwan, spokesperson for DAPA, responded to a question about whether South Korea would accept Indonesia’s proposal to pay only a third of its share for the KF-21 by saying, “The Korean government has been closely cooperating with the Indonesian government regarding the payment of development contributions for the successful development of the KF-21,” adding that “final consultations with the Indonesian side are currently underway.”
In January 2016, Indonesia agreed to cover 20% (approximately 1.7 trillion won, later reduced to about 1.6 trillion won) of the total development cost of 8.8 trillion won for the KF-21 project by June 2026 in exchange for receiving related technology. Recently, DAPA reported that Indonesia proposed to pay only about 600 billion won, which is one-third of the originally promised amount, and receive a corresponding reduction in technology transfer by 2026. So far, Indonesia has paid 380 billion won for its share of the KF-21 development, and proposed to pay an additional 220 billion.
Indonesia is currently in arrears on its contributions of nearly 1.0 trillion won, citing budget shortages. At the end of last year, Indonesia requested an extension of the payment deadline until 2034, eight years beyond the original deadline. However, when South Korea expressed reluctance, stating that the KF-21 development would be completed by 2026 and that Indonesia must make full payment by then, Indonesia counter-proposed to pay only a third of its share by 2026.
If Indonesia’s proposal is accepted, the South Korean government may have to bear an additional burden of about 1.0 trillion won.
Some suspect that Indonesia, which has technicians stationed in South Korea under investigation for attempting to leak KF-21 development data, is demanding a drastic reduction in its contribution after already diverting the technology. After signing the contribution agreement in 2016, Indonesia sent its technicians to Korea Aerospace Industries (KAI), the manufacturer of the KF-21. Earlier this year, some of them were caught attempting to leak KF-21 development data onto a USB storage device. They are currently under investigation by South Korean police on charges of technology theft involving the KF-21.
