South Korea said on Monday that a project to develop a fighter jet with Indonesia was on track, and it will negotiate a way for the Southeast Asian country to pay its contribution, of which about $200 million is unpaid. (Photo courtesy of Korea Aerospace Industries)

Indonesia, South Korea to Renegotiate Cost Sharing of Joint Fighter Jet Project


OCTOBER 19, 2018

Jakarta. The recent depreciation of the rupiah has taken its toll on Indonesia's plans to develop an advanced fighter jet in collaboration with South Korea, prompting the government to call for a renegotiation of the joint project's financing scheme.

The Korean Fighter eXperimental (KF-X) project was estimated to cost $6.3 billion when the two countries inked the agreement in 2015, but the cost has since swollen to $7.7 billion.

Indonesia – which committed to contributing around a fifth of the jet's development costs over 10 years – now says it is no longer able to keep up with the increases. The rupiah has declined by 12 percent against the US dollar so far this year and the country's foreign-exchange reserves currently stand at $114 billion after a record high of $132 billion in January.

"The president decided not to cancel, but renegotiate," Coordinating Political, Legal and Security Affairs Minister Wiranto said on Friday.

"It will be on how Indonesia can reduce its burden with regard to the financing," he added.

Wiranto said he would personally lead the renegotiation team and that he expected the process to take up to a year.

"We will renegotiate many issues, including our percentage contribution to the development costs, production expenses, technology transfers to Indonesia, intellectual property rights and marketing," Wiranto said.

Thomas Lembong, head of the Investment Coordinating Board (BKPM), said Indonesia was trying to save its foreign-exchange reserves to deal with growing uncertainty in the global economy. He said South Korea has been very supportive of Indonesia in this regard.

"We are very appreciative of the South Korean government for its understanding and for approving the renegotiations," Thomas said.

The agreement involves cooperation between local aircraft manufacturer Dirgantara Indonesia and Korea Aerospace Industries to develop the fifth-generation multi-role twin-engine KF-X/IF-X fighter, which would have similar stealth and weapon concealment capabilities as the Lockheed Martin F-35 Lighting II.

This would be Indonesia's first fighter jet project, after the successful development of turboprop transporter aircraft, such as the CN-235 and NC-212.