17 October 2023

ADEX 2023: KAI optimistic of Indonesia's ability to fulfil KF-21 cost-share agreement

by Akhil Kadidal

Indonesia's delays in payments towards the joint development of the KAI KF-21 4.5-generation fighter programme has been of concern to the South Korean government. (DAPA/KAI)

Amid concerns over Indonesia's delays in meeting its cost-share obligations for the Korea Aerospace Industries' (KAI's) KF-21 ‘Boromae' 4.5-generation fighter aircraft project, a KAI official, at the Seoul International Aerospace & Defense Exhibition (ADEX) 2023, said that a recent meeting between South Korean and Indonesian defense officials left room for optimism.

According to the KAI official, Indonesian Minister of Defense Prabowo Subianto has given assurances to Eom Dong-hwan, the South Korean minister for Defense Acquisition Program Administration (DAPA), that Jakarta would honour its financial agreements to the programme. Janes previously reported on the 5 October meeting between Eom and Subianto, however, the Indonesian Ministry of Defense has not provided specifics on the outcome of that meeting.

The official, a member of the KAI KF-21 development team, told Janes during Seoul ADEX 2023 on 17 October that Indonesia still owes KRW1 trillion (USD739 million) to the project as part of its cost-share agreements.

South Korea has few options if Indonesia cannot pay its 20% cost-share for the joint development of the KF-21 fighter aircraft. In the original financial layout of the cost-share agreement, the South Korean government covers 60% of developmental costs. KAI's financial commitment to the joint development is 20% of the total project cost of KRW8.8 trillion (USD6.73 billion).

The KAI official said that a reassessment of the cost-share agreement is now a possibility owing to Jakarta's delays in additional payments. Under the current agreement, Indonesia's cost-share involvement gives it access to four joint-development facets of the engineering, manufacturing, and development (EMD) phase of the KF-21 programme.

Amid concerns over Indonesia's delays in meeting its cost-share obligations for the Korea Aerospace ...

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