Korea, Indonesia commit to KF-21 but remain apart on funding

South Korea and Indonesia have committed to co-operation on the KF-21 fighter aircraft, but remain apart on an agreement on Jakarta's financial obligations in the project.

South Korea Foreign Minister Chung Eui-yong and his Indonesian counterpart Retno Marsudi agreed during talks in Jakarta on 25 June to progress their countries' development of the aircraft, which was unveiled in April by prime contractor Korea Aerospace Industries (KAI).

A statement by the South Korea foreign ministry said, “The ministers agreed to closely co-operate to make sure that mutually beneficial, substantive co-operation projects like the KF-21/IF-X project will proceed smoothly.”

The bilateral commitment towards KF-21 development is the second in recent months. Visiting South Korea for the roll-out of the KF-21, the two countries' defence ministers - Suh Wook and Prabowo Subianto – also communicated an intention to strengthen industrial co-operation on the USD8 billion development project.

Despite this, it has recently been confirmed to Janes by sources in Jakarta that Indonesia and South Korea remain apart on agreeing a renewed financial framework for the KF-21, also known as KF-X.

Under the original finance agreement – signed in 2016 – Indonesia committed to pay for 20% of the total development costs of the aircraft, with South Korea and KAI covering 60% and 20% respectively. However, under a new financial framework Indonesia wants to reduce this burden to 15%.

Indonesia has been looking to renegotiate the project's cost structure since 2017 but, since then, has fallen behind on payments. Janes understands that between 2016 and 2019 the Indonesian government made KF-X payments of KRW227.2 billion (USD205 million). However, up until earlier this year its due payments had grown to about KRW600 billion.