KF-21 (Image courtesy of Yonhap)
SEOUL, May 7 (Korea Bizwire) – Indonesia, which had agreed to share a portion of the development costs and receive technology transfers for South Korea’s KF-21 fighter jet, has recently proposed paying only about a third of its originally committed share while also accepting a reduced level of technology transfer, according to sources familiar with the matter.
If negotiations result in Indonesia contributing less funding but receiving less technology from the project, it is expected to spark significant controversy.
This comes as Indonesian technical personnel stationed in South Korea are already under investigation for allegedly leaking core KF-21 technologies.
According to the Defense Acquisition Program Administration (DAPA) and Korea Aerospace Industries (KAI), Indonesia has notified South Korea that it will struggle to pay its full share of the agreed-upon contribution by the program’s completion in 2026.
The two countries had reached an agreement in 2016 in which Indonesia would cover 20% (approximately 1.7 trillion won) of the KF-21′s total 8 trillion won development costs in exchange for partial technology transfers from South Korea.
The deal required Indonesia to make its full contribution by June 2026 when the fighter jet’s development is slated for completion.
However, Indonesia has repeatedly delayed its payments. It recently proposed paying an additional 300 billion won annually from this year until 2026, totaling 900 billion won – a significant reduction from its original 1.7 trillion commitment.
Indonesia has also stipulated that the level of technology transfer it receives from South Korea will be proportionally reduced.
To date, Indonesia has paid South Korea approximately 300 million won. Under the new proposal, only the final 600 billion won of the proposed 900 billion won total would be paid.
A DAPA official stated, “While Indonesia has made this proposal, our side has not made a final decision yet and is currently reviewing the plan.”
The two sides had previously renegotiated the cost-sharing arrangement in 2021. There are projections that a new round of negotiations could conclude as early as the end of this month.
Last year, Indonesia had also floated the idea of extending its payment deadline from 2026 to 2034 and contributing 110 billion won annually.
Compounding the tensions, two Indonesian technical personnel stationed in South Korea are under police investigation for allegedly leaking core KF-21 technologies, which constitutes a violation of the Defense Acquisition Program Act.
The two individuals are suspected of illegally transferring data related to critical critical KF-21 technology created in the CATIA 3D design program.
One of the suspects, an Indonesian team leader identified as Mr. A, was caught in January attempting to remove multiple USB drives containing some 6,600 documents from the KAI’s premises.
After a joint security investigation by South Korean military counter-intelligence, the National Intelligence Service, and DAPA concluded there was evidence of technology leakage, the case was referred to police.
During the probe, a second suspect among the Indonesian technical staff, identified as Mr. B, also came under scrutiny. In March, authorities searched the KAI offices and personal devices used by the two individuals.
M. H. Lee (mhlee@koreabizwire.com)
