2024-03-18 18:00:00
“Please delay the payment deadline until 2034” An extension was proposed to the Defense Acquisition Program Administration at the end of last year… Confidence falls following attempt to leak confidential information Korea: “It is difficult to extend the payment deadline, but for the first time, there is a willingness to pay in full…” “Working level discussions on solutions”
Korean fighter KF-21
While Korea and Indonesia are jointly developing the Korean supersonic fighter KF-21, it was belatedly revealed that the Indonesian government requested South Korea at the end of December last year to extend the development fee payment deadline until 2034.
Previously, Indonesia had agreed to pay 1.6 trillion won until June 2026 at the time of the 2016 contract. It was decided to share 20% of the development cost in the Korean fighter jet project, the largest weapons development project since the founding of the military (KRW 8.8 trillion). However, following that, the payment was postponed one following another, and as of this month, regarding 1 trillion won less was paid than the scheduled amount. After causing controversy due to unfaithful payment, the final payment deadline was requested to be postponed by 8 years to 2034, rather than 2026 as originally contracted.
It has been reported that the Korean government is in the position that it is difficult to accept the proposal to pay for eight years following development is completed as the development of the fighter jet is scheduled to be completed in 2026. However, as Indonesia has expressed its intention to pay in full and confirmed its intention to continue joint development, it is reported that informal discussions are underway to find a compromise between the working-level officials of both countries.
● Indonesia to pay development fees following KF-21 development is complete According to diplomatic sources and defense industry officials on the 18th, the Indonesian Ministry of National Defense proposed an extension of the development fee payment deadline to our Defense Acquisition Program Administration, which manages the KF-21 development project, at the end of December last year. At the same time, a proposal containing an annual payment plan until 2034 was also sent. Currently, the balance of Indonesia’s development cost share is approximately 1.3217 trillion won. If you pay the same amount every year from this year, you will pay regarding 110 billion won every year until 2034.
It is said that our government has not officially announced its rejection of this proposal. However, it is known that this policy is difficult to accept internally. The proposal to pay the weapons system development costs following development is complete is unrealistic. Development of the KF-21 system ends in 2026. The initial quantity, expected to be 40, is scheduled to be mass-produced between 2026 and 2028 and deployed to the Korean Air Force.
Although Indonesia has announced its intention to pay in full, the fact that it has continued to undermine trust is known to be a background that makes it difficult to readily accept the extension proposal. When Indonesia signed a contract with Korea Aerospace Industries (KAI), the manufacturer of KF-21, in 2016, it decided to pay the contribution in installments by year, but paid 50 billion won only in the first year of 2016. Since then, non-payment has continued, and as of March, the cumulative payment amount is only 278.3 billion won. It said it would pay 30% of the development cost in kind in 2021, but did not present a specific implementation plan.
Previously, in January, an Indonesian researcher was caught trying to take 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 highly likely that our trust in Indonesia has fallen further due to this incident.
● We do not consider canceling the contract, etc.
However, the government believes that it is significant that Indonesia, which has been complaining regarding financial difficulties, has expressed its intention to pay its share in full by specifying 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 pressing issues such as the KF-21.” Indonesia is evaluated as the market with the largest defense export potential in Southeast Asia, having signed an import contract for six Korean submarines.
Accordingly, the government is said to be continuing talks at the working-level level with Indonesia to find a compromise. It is said that termination of the contract is not being considered at all at present.
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 counteroffer, or a plan to transfer related technology only to the amount that (Indonesia) paid by the original payment deadline (June 2026).” He said. He added, “The issue of unpaid bills will be resolved in some way within this year.”
Reporter Son Hyo-joo [email protected]
Reporter Shin Gyu-jin [email protected]
Military reporter Sang-ho Yoon [email protected]
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