“Please delay the payment deadline until 2034” An extension was proposed to the Defense Acquisition Program Administration late last year… Confidence collapses after attempt to leak classified information Korea: “It is difficult to extend the payment deadline, but for the first time there is a willingness to pay in full…” “Work-level discussions on solutions”
Korean KF-21 fighter
While Korea and Indonesia are jointly developing the Korean KF-21 supersonic fighter, it was belatedly revealed that the Indonesian government had asked South Korea in late December last year to extend the deadline for payment of the development fee until to 2034.
Previously, at the time of the 2016 contract, Indonesia agreed to pay 1,600 billion won until June 2026. It was decided to share 20% of the development costs in the project of the Korean fighter aircraft, the largest Army Founding Weapons Development Project (8.8 trillion KRW). However, later, the payments were postponed one after another, and as of this month, about 1 trillion won less than the expected amount have been paid. After causing controversy due to the unfaithful payment, it was asked to postpone the final payment deadline by 8 years to 2034, rather than 2026 as originally planned.
It is reported that the Korean government is in the position where it is difficult to accept the proposal to pay for eight years after the completion of the development, as the development of the fighter aircraft is expected to be completed in 2026. However, as Indonesia has expressed the intention to pay the full amount and confirmed the intention to continue joint development, it is reported that informal discussions to find a compromise are underway between officials of both countries.
● Indonesia will pay development fees once the development of the KF-21 is completed According to diplomatic sources and defense industry officials, on the 18th, the Indonesian Ministry of National Defense proposed an extension of the deadline for paying fees development to our Defense Acquisition Program Administration, which manages the KF-21 Development Project, in late December of last year. At the same time, a proposal was also sent containing an annual payment plan until 2034. Currently, the balance of Indonesia’s share of development costs amounts to approximately 1.3217 trillion won. If you pay the same amount every year starting this year, you will pay about 110 billion won every year until 2034.
It is said that our government has not officially announced the rejection of this proposal. However, this policy is known to be difficult to accept internally. The proposal to pay the development costs of the weapon system once development is completed is unrealistic. The development of the KF-21 system will end in 2026. The initial quantity, expected to be 40 units, will be mass-produced between 2026 and 2028 and deployed in the Korean Air Force.
Although Indonesia has announced its intention to pay the full amount, the fact that it has continued to undermine confidence is known to constitute a context that makes it difficult to readily accept the extension proposal. When Indonesia signed a contract with Korea Aerospace Industries (KAI), manufacturer of the KF-21, in 2016, it decided to pay the contribution in annual installments, but paid 50 billion won in the first year of 2016 alone. Since then, the missed payments continued, and as of March, the cumulative amount of payments amounted to only 278.3 billion won. It said it would pay 30% of development costs in kind in 2021, but did not present a specific implementation plan.
Previously, in January, an Indonesian researcher was caught trying to get hold of a personal portable storage device (USB) containing data related to the development of the KF-21 from the KAI headquarters in Sacheon, Gyeongsangnam-do. It is very likely that our trust in Indonesia has further diminished due to this incident.
● We do not take into account cancellation of contract, etc.
However, the government finds it significant that Indonesia, which has been complaining of financial difficulties, has expressed its intention to pay its share in full, setting out a detailed annual plan for the first time. Defense Minister Prabowo Subianto, who won the Indonesian presidential election held last month, also said on the 6th (local time): “I look forward to an amicable resolution of urgent issues such as the KF-21 issue.” . Indonesia is considered the market with the greatest potential for defense exports in Southeast Asia, having signed an import contract for six Korean submarines.
As a result, the government would continue operational-level talks with Indonesia to find a compromise. It is said that termination of the contract is not being considered at all at the moment.
A Korean diplomatic official said: “We are considering several scenarios, such as a plan to drastically shorten the period proposed by Indonesia and make a counter-offer, or a plan to transfer technology related only to the amount paid (by Indonesia) with the original payment due (June 2026).” He said. He added: “The issue of unpaid bills will be resolved somehow within this year.”
Reporter Son Hyo-joo hjson@donga.com
Journalist Shin Gyu-jin newjin@donga.com
Military reporter Sang-ho Yoon ysh1005@donga.com
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