Speculation mounts over Indonesia pulling out of KF
By Kang Seung-woo
Speculation is again mounting over Indonesia pulling out of participation in Korea's KF-X fighter project, with the Southeast Asian country reportedly seeking to buy aircraft from the United States and France despite its snowballing arrears from the joint development program.
Some say Indonesia is leveraging the envisioned fighter acquisition to renegotiate the terms of a contract it signed with Korea, while others claim the Southeast Asian country is pulling out of the deal altogether.
The KF-X project aims to produce 120 advanced multi-role fighter jets to replace the Korean Air Force's aging fleet of F-4s and F-5s by 2032. Seoul and Jakarta signed a deal in 2010 to cooperate on the KF-X project, under which Indonesia would fund 20 percent of the total development cost of 8.8 trillion won ($7.9 billion), or about 1.7 trillion won, in exchange for 50 planes that would be manufactured there for the Indonesian Air Force, and technology transfers.
However, Indonesia has paid only 227.2 billion out of the 831.6 billion won it promised as of this month, citing financial problems.
While Indonesia has been falling behind on its payments, local media there reported recently that the country's Air Force was planning to acquire multiple warplanes, including Boeing's F-15EX and Dassault Rafale fighters, as part of the modernization of its aircraft fleet by 2024. Last year, the country was reportedly close to an agreement to purchase 48 Rafale jets.
"Its payment delay and plan to buy new aircraft are regarded as a gambit to renegotiate the terms of payment, or lower its financial commitment," a government official said on condition of anonymity because of the sensitivity of the matter.
Officials from the Defense Acquisition Program Administration (DAPA), Korea's arms procurement agency, visited Jakarta for renegotiations last September; but the talks ended without a deal.
However, Shin Jong-woo, a senior researcher at the Korea Defense and Security Forum, said the overdue payments were a sign Indonesia was quitting the program, adding that its Defense Minister Prabowo Subianto has shifted his focus to procuring weapons that can be operational immediately. Subianto took office in October 2019.
"We cannot wait blindly until Indonesia pays the agreed-upon sum for the pivotal project. Since the appointment of a new defense minister in 2019, the two countries have made little progress on the KF-X project," Shin said.
"Given that its defense budget is limited, it seems almost impossible to continue working with Indonesia on the KF-X and we need to seek ways to independently proceed with the project."
Shin also said Indonesia's calls to renegotiate the terms "make little sense."
"Indonesia joined the KF-X program on favorable terms. After paying over 1 trillion won, it can produce aircraft on its home soil and receive and benefit from technology transfers," he added.
In response to the media reports, DAPA said Saturday, Indonesia's procurement plan was separate from the KF-X project, adding that the two sides have held multiple working-level negotiations in a mutually beneficial manner.
Amid growing uncertainty over the KF-X, there are growing calls for Korea to end the program partnership with Indonesia.
"Both countries are not talking about parting ways out of concerns over causing diplomatic problems. If DAPA brings up the issue first, Korea will fall into Indonesia's break-up strategy," Shin said.
"That's why DAPA keeps saying negotiations are still under way although it looks like an almost done deal internally."