Indonesia re-thinks USD900 million submarine contract with South Korea

Indonesia’s defence planners have convened a meeting to discuss the country’s KRW1.162 trillion (USD900 million) order for a second batch of three diesel-electric submarines (SSKs) with South Korea and are considering several options for the programme, including contract termination.

Two separate sources from the defence ministry and the Indonesian Navy’s (Tentara Nasional Indonesia – Angkatan Laut: TNI-AL) headquarters in Cilangkap have confirmed to Jane’s that among matters being discussed at the moment include legal and financial implications of walking away from the contract that was announced in April 2019.

Indonesia signed a contract with Daewoo Shipbuilding & Marine Engineering (DSME) for the second tranche of three Type 209/1400 diesel-electric submarines in April 2019. The vessels will be similar to the first batch of three boats that was signed in December 2011.

The 2019 contract was signed with funding arranged by the Export–Import Bank of Korea and is scheduled to complete by 2026. Under this contract, one vessel will be built in Surabaya as part of a technology transfer programme. This arrangement is similar to one that was undertaken in the earlier contract.

Separately, Jane’s understands from the same sources that the defence ministry has convened a committee to re-visit the offering from Turkey’s Golcük Shipyard for a variant of the Reis (Type 214)-class SSK. However, a planned visit by the committee to Turkey has been postponed indefinitely given the Covid-19 outbreak.