[Yang Nak-gyu's Defence Club] Korea-Indonesia Defense Meeting Without KFX

On the 14th, at Seoul Airport in Seongnam, Gyeonggi Province, a model of the Korean fighter jet KFX was unveiled during the 'Seoul International Aerospace and Defense Industry Exhibition 2019 Media Day.' / Seongnam - Photo by Jinhyung Kang aymsdream@

[Asia Economy Yang Nak-gyu, Military Specialist Reporter] Although the Defense Acquisition Program Administration (DAPA) held a Defense Industry Cooperation Committee meeting with Indonesia, it is reported that no discussions were held regarding the cost-sharing for the next-generation fighter jet (KFX) development project.

On the 25th, DAPA announced that during a video conference chaired by Sung Il, DAPA’s International Cooperation Officer, and Dadang Hendra Yudha, Director General of Indonesia’s Ministry of Defense Reserve Forces, both sides discussed ways to strengthen cooperation in defense technology protection and shared the current status of weapon systems.

Time was also allocated for eight defense companies from both countries to introduce their products and share the status of ongoing cooperative projects. On the Korean side, three companies participated: Poongsan, LIG Nex1, and Daewoo Shipbuilding & Marine Engineering. DAPA views Indonesia, which operates domestically produced aircraft such as the KT-1B and T-50i as well as submarines, as a key defense cooperation partner for jointly operating various weapon systems in the future.

However, it is reported that no discussions were held during the meeting regarding the cost-sharing for the KF-X/IF-X development project. Indonesia had dispatched over 110 technical personnel to Korea Aerospace Industries (KAI), the lead developer of the KF-X, starting in the second half of 2016, but all were withdrawn in March. Although the official reason cited was the domestic spread of COVID-19, it is known that Indonesia harbors dissatisfaction over technology transfer. Indonesia had expressed intentions to redeploy personnel once the COVID-19 situation subsides but has yet to take any follow-up action.

The Indonesian government agreed to bear 20% of the total KF-X development cost of 8.5 trillion KRW, amounting to 1.7 trillion KRW, but had only paid 220 billion KRW by early last year and then suspended further payments. Indonesia is currently reported to be attempting to offset the cost-sharing by providing rubber raw materials or CN-235 transport aircraft produced domestically in Indonesia, citing its financial situation.

Issues continue regarding submarine exports as well. According to foreign media including CNBC Indonesia, Eti Suwardani, Director General of Human Resources at Indonesia’s state-owned PAL Shipyard, testified before the House of Representatives’ 11th Committee on the 18th, stating, "Although the secondary project contract to build the 4th to 6th submarines was signed in March last year, no progress has been made so far." Indonesia plans to acquire a total of 12 submarines, contracting three 1,400-ton submarines (worth 1.3 trillion KRW) with Daewoo Shipbuilding & Marine Engineering in 2011 as the first phase. Subsequently, three additional 1,400-ton submarines (worth 1.16 trillion KRW) were ordered from Daewoo Shipbuilding & Marine Engineering as the second phase. However, it has now been confirmed that no progress, including payment of contract fees, has been made on the second phase project.

The Indonesian Ministry of Defense recently reported that Defense Minister Prabowo Subianto instructed revisions to the first submarine project in September, citing that "the submersion capability is less than 90 days and is inconsistent." Indonesia desires submarines with higher performance and claims that technology transfer from Daewoo Shipbuilding has been insufficient. Recent local media reports indicate that Indonesia has decided not to proceed with the second submarine project with Daewoo Shipbuilding & Marine Engineering and has received submarine contract proposals from other countries such as Turkey, Russia, and France. Some speculate that Indonesia may be using the additional submarine contract as leverage to reduce its KF-X development cost-sharing obligations.

A DAPA official stated, "This meeting was held to maintain consultation channels between the two countries," adding, "Individual development projects such as the KF-X/IF-X development project were not on the agenda."