Indonesia resumes KFX payments

14 January 2019

Indonesia has restarted payments to support its continuing involvement in the project with South Korea to develop the next-generation KFX fighter aircraft. Source: IHS Markit/Patrick Allen

Jakarta has restarted payments to support the development of the next-generation Korean Fighter Xperiment (KFX) aircraft, Korea Aerospace Industries (KAI) confirmed to Jane's on 14 January.

KAI said it received KRW132 billion (USD118 million) from the Indonesian Ministry of Defence (MoD) in late 2018 and that the payment will "dispel concerns" about Indonesia's potential withdrawal from the KFX development programme.

KAI added that up to 150 engineers and technicians from Indonesia are expected to travel to South Korea this year to participate in the fighter development programme. KAI added that 28 Indonesian engineers were originally involved but this number had increased to 72.

A KAI statement, citing an unidentified KAI official, said, "Through mutual trust we have not only restored trust but also confirmed our intention to jointly participate in the KFX programme. We will do our best to lead the KFX programme successfully through co-operation with Indonesia."

KAI said the payment from Indonesia was received following successful diplomatic engagement between the two countries in recent months. This engagement, it added, has strengthened the KFX joint development project and wider defence industrial collaboration efforts between South Korea and Indonesia.

Due mainly to fiscal constraints, Indonesia had previously halted payments to support the fighter aircraft development project. However, defence officials from the two countries are currently negotiating a new payment structure for the Indonesian MoD through which it will continue involvement in the programme.

KAI also confirmed that Indonesia is committed to investing "about KRW1.7 trillion" in the KFX programme, which equates to 20% of total development costs. This payment structure was agreed in 2015, although Jane's understands that Indonesia is behind by about 40% of its agreed financial commitment.

Under the original agreement, the South Korean government will pay for 60% of the development programme, with prime contractor KAI covering 20%.

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