24 November 2021

DAPA confirms cost adjustments to KF-21 development programme

by Alessandra Giovanzanti

DAPA confirmed to Janes that Indonesia's cost share for the KF-21 fighter aircraft (seen here) has been reassessed and lowered by KRW100 billion. (Korea Aerospace Industries)

The overall cost of the engineering and manufacturing development (EMD) phase of the KF-21/IF-X multirole fighter aircraft programme has been adjusted from approximately KRW8.6 trillion (USD7.2 billion) to KRW8.1 trillion (USD6.8 billion), South Korea's Defense Acquisition Program Administration (DAPA) told Janes.

A DAPA spokesperson confirmed to Janes on 24 November that, because the KF-21 has been designated as a ‘defence article' and therefore is exempt from value-added taxes, the EMD cost had been adjusted and is now being reflected in the cost-sharing agreement between South Korea and Indonesia.

DAPA said that Indonesia's cost share for the KF-21/IF-X development programme will total approximately KRW1.6 trillion (USD1.35 billion), KRW100 billion lower than initially estimated. The South Korean cost share will also be adjusted accordingly.

Confirmation of the new cost structure comes a few weeks after the Indonesian Ministry of Defense reaffirmed its commitment to funding 20% of development costs for the KF-21 through 2026, with approximately 30% of its contribution (KRW480 billion) set to be paid in kind.

DAPA spokesperson told Janes that such payments in kind will include natural resources and other goods, however, details on the exact products and delivery type will be discussed in future consultations with Indonesia.

Indonesia's contributions to the project stopped in 2017 after it had paid KRW227 billion, with arrears growing to date to approximately KRW800 billion. How and when the balance of KRW1.3 trillion, including arrears, will be paid will also be the subject of further bilateral consultations.

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