Indonesia proposes slashing fighter jet payments to a third: Sources

The fifth prototype of the KF-21 fighter jet flies off the southern coast of Korea on May 16, 2023. [YONHAP]

Indonesia has proposed reducing its promised contribution to the KF-21 fighter jet development project by approximately two-thirds, Korean government sources said Monday.

Jakarta’s proposal to pay a total of 600 billion won ($440 million) by 2026 — which includes payments it had already delivered toward the development of the 4.5-generation supersonic fighter jet — comes amid concerns over its payment delays.

Indonesia initially pledged to cover 20 percent of the 8.1 trillion-won KF-21 development project when it launched in 2015 in return for one prototype and technical data, as well as the right to build 48 jets in Indonesia.

Indonesia is currently in arrears by more than 1 trillion won, having only paid around 278.3 billion won thus far.

In its recent proposal, Jakarta told Seoul it would be willing to receive fewer technology transfers in return for lowering its contribution to the project, according to sources.

Korean government sources had previously said last year that Indonesia requested to delay payments until 2034, but the state arms procurement agency said in March there is “no change” in its stance that Indonesia’s payments should be delivered by 2026, when development of the KF-21 is scheduled to end.

A Korean government official said talks are still ongoing with Indonesia and that Seoul has yet to make a decision regarding Jakarta’s latest proposal, which comes four months after two Indonesian engineers were banned from leaving the country for possessing multiple USB storage devices with data from the KF-21 project.

The two engineers were first caught on Jan. 17 carrying the USB devices out of the Sacheon headquarters of Korea Aerospace Industries (KAI), the country’s sole aircraft manufacturer and the lead developer of the KF-21.

A government joint investigation team consisting of the Defense Acquisition Program Administration, the Defense Forces Counterintelligence Command and the National Intelligence Service first conducted an internal probe before referring the case to the police on Feb. 22.

A KF-21 prototype passed an aerial refueling test in March.

Six prototypes of the KF-21 have been built. They passed tests on assorted capabilities, such as supersonic flight and air-to-air weapon separation, to qualify as provisionally suitable for combat. The first production model will be delivered to the Air Force in the first half of 2026.

Aimed at replacing the Korean Air Force's aging Northrop F-5 fighter jets, the KF-21, also known by its Korean name Boramae, is a 4.5-generation aircraft, on par with the latest F-16 but less stealthy than the fifth-generation F-35 Lightning II developed by Lockheed Martin.

During the KF-21’s development process, Korean engineers localized critical technologies needed in the indigenous stealth fighter, including the active electronically scanned array, infrared search and tracking system, electro-optical targeting pod and electronic warfare suite.

While disruptions and quality problems in the American-made parts supplies in the past five years led to 548 times when F-15K fighter jets could not be used by the Korean Air Force, the 65-percent production localization of the KF-21 is likely to mitigate such problems.

According to KAI, 40 KF-21s will be delivered to the Air Force by 2028 and 80 more by 2032. KAI plans to export the jets from 2028 onward at approximately $65 million per unit.

BY MICHAEL LEE [lee.junhyuk@joongang.co.kr]