KF-21, Did Only Technology Leak Without Payment? [Yang Nak-gyu's Defence Club]

DAPA Accepts Proposal to Reduce Indonesia Development Share
Receives 600 Billion Won Out of 1.6 Trillion Won and Transfers Some Technology

The South Korean government has decided to reduce Indonesia's development cost-sharing ratio for the jointly developed Korean supersonic fighter jet (KF-21). The shortfall in funding is ultimately expected to be borne by taxpayers or Korea Aerospace Industries (KAI).

On the 17th, the domestically produced supersonic fighter KF-21 was unveiled at the 'Seoul International Aerospace and Defense Exhibition (ADEX) 2023' held at Seoul Airport in Seongnam, Gyeonggi Province. Photo by Jinhyung Kang aymsdream@

According to the Defense Acquisition Program Administration (DAPA) on the 9th, Indonesia proposed to pay only 600 billion won out of the total contract amount of 1.6 trillion won for development cost-sharing, while receiving only one-third of the technology transfer. The South Korean government is expected to accept this proposal soon. Indonesia plans to pay 100 billion won each in the next two years following this year, and only the remaining 600 billion won by 2026, when the KF-21 system development is completed.

The South Korean government accepted Indonesia's proposal because the system development completion date is approaching. If the government reaches a final agreement with Indonesia, the scale of technology transfer to Indonesia is also expected to decrease in line with the reduction in cost-sharing.

However, it remains uncertain whether Indonesia will pay the promised 100 billion won in the next two years as scheduled. Given the precedent of multiple delays in payment so far, there is a possibility of non-payment again even if an agreement is reached this time.

In particular, in February, an incident occurred at Korea Aerospace Industries (KAI) where Indonesian engineers working at the company were caught attempting to leak internal documents related to the KF-21. The police are currently investigating the case, and if the Indonesian employees have already smuggled out KF-21 secrets, it is expected that they could grasp all the core information even with only one-third of the technology transferred.

A DAPA official stated, "We consider the technology leakage incident and the cost-sharing issue to be completely separate," adding, "The cost-sharing has been negotiated for as long as six years and as short as two years. It is not appropriate to link it to the confidential information leakage case that occurred this year."

DAPA plans to submit and review a proposal to accept Indonesia's offer at the Defense Acquisition Program Promotion Committee as early as the end of May. From July, they plan to discuss adjustments to the transfer value and mass production plans through 2026.