South Korea open to Indonesian proposal to cut KF-21 payments

South Korea is leaning toward accepting the proposed cuts by Indonesia in its share of KF-21 fighter development costs, according to the government’s Defense Acquisition Program Administration on Wednesday.

The DAPA said that the reduction in the Indonesian contribution to the joint project was expected to translate into less of a financial burden than speculated by the press, explaining that expenses could be cut down considerably over the process.

At its onset, the project was calculated to cost 8.1 trillion won ($5.94 billion) but now the DAPA believes the final cost would total 7.6 trillion won, saving the government some 500 billion won.

In a closed-door briefing, a DAPA official said that as the project was turning out to be cheaper, South Korea would shoulder 500 billion won as opposed to the 1 trillion based on the initial calculation as a result of Indonesia failing to meet the commitment.

“We will be doing our best to make up for the possible shortages in funds that can arise from the adjustment in Indonesian input,” he said. “Once again, our top priority is not to let the project timeline be stymied by delays on Indonesia’s part.”

According to the DAPA, Indonesia has asked to slash its agreed share of the KF-21 development costs to 600 billion won, which is only about a third of the 1.6 trillion won that it was supposed to contribute, by the end of the project in 2026.

Under the original commitment, Indonesia was to pay for 20 percent of the joint project in exchange for technology transfers from South Korea.

“We are open to accommodating Indonesia’s suggestion and adjusting its share to an amount it is able to pay,” the DAPA official said.

He added that South Korea’s technology transfers could be “adjusted in a way” that can correspond with the reduced input from Indonesia. “The transfer of meaningful transfers takes place after 2026,” he said.

South Korea is due to make its final decision on the Indonesian proposal at the meeting of concerned government agencies slated for later this month.

The DAPA official said that the top priority was “completion of the project in time” and that South Korea was “determined not to be held back by Indonesia lagging behind payments.”

He also said the reduction in payments by Indonesia was “a separate matter” from the case of Indonesian nationals allegedly attempting to sneak away KF-21 secrets from the Korea Aerospace Industries. Earlier this year, Indonesian employees at KAI were caught trying to leave the office with removable drives containing confidential KF-21 data.

“The talks of cutting the amount of Indonesia’s share began before the alleged leak incident,” he said. “As the investigation is ongoing we are unable to comment further.”