S. Korea cuts Indonesia’s payment in joint jet project

Indonesia will see its payment reduced by 100 billion won ($85 million) to 1.6 trillion won for the joint fighter jet project with South Korea, the Defense Acquisition Program Administration said Monday, a week after it reached a new deal with Indonesia amid rumors of the Southeast Asian country defaulting.

The KF-21 program — in which Indonesia seeks a 20 percent share and technology know-how while Korea holds the rest — aims to mass produce jets as early as 2027, but Indonesia had hardly paid any of its contributions to the project, which is worth at least 8 trillion won.

The reduction in Indonesia’s payment is in line with tax deductions for all “defense assets” that DAPA, the country’s chief weapons buyer, delivers and it has nothing to do with relieving the burden on Jakarta, according to a senior DAPA official.

“The designation had taken more time than we thought it would. Indonesia also knew it would have to sign on to a new contract when the designation took place,” the official said, adding Jakarta would spread out its contributions through 2026, and 30 percent of that would be in-kind transfers.

The official cited natural resources, like palm oil, along with industrial products as goods to expect, adding the plan to run all necessary flight tests, scheduled through 2026 before production, remains unaffected. Korea expects to build 120 jets, while Indonesia is to be responsible for 48.

“We’re planning to test the jet radars this month, on a borrowed Boeing 737 plane in South Africa,” the DAPA official said. The agency would have to wait until next year if it wants to run the test on a prototype jet here, according to the official.

“We will do the tests here with the real jet, after the initial run there,” the official added, saying that jet engine tests will take place too as the agency prepares to roll out the first two-seat prototype by this year. All prototype jets revealed since April have just one seat.

But the DAPA official said the agency still has a long way to go in mounting a weapons system on the jet. The military is trying to use local parts for not only the jet itself, but also the missiles aboard.

“I’d say it’s going really well with air-to-air missiles. But we haven’t made as many strides on the air-to-surface or anti-ship missile fronts. We need more time,” the official said.

Indonesia will be provided with one of the six prototype jets and the technology know-how once it finishes paying in full 1.3 trillion won, with late fees, owed to Korea.

By Choi Si-young (siyoungchoi@heraldcorp.com)