[Yang Nakgyu's Defence Club] Will Indonesia Ultimately Walk Away from the KF-21 Joint Development?

Despite Accepting Payment Extension, Indonesia Caught Leaking Confidential Data
Turns to Turkish Fighter Jets After Cost-Sharing Reduction Approved

Concerns are mounting that Indonesia may ultimately turn its back on the joint development of the KF-21 'Boramae', a Korean fighter jet. Despite being cleared of charges regarding the leakage of confidential information by Indonesian technicians and even having its cost-sharing burden reduced, Indonesia is pressing ahead with the introduction of fighter jets from other countries.

According to the Defense Acquisition Program Administration on June 16, Indonesia agreed in January 2016 to bear about 20% of the KF-21 development costs?approximately 1.7 trillion won (later reduced to about 1.6 trillion won)?by June 2026, in exchange for the transfer of related technology.

Request for Extension of Cost-Sharing Deadline While Partnering with Boeing

The promise was not kept. At the end of 2023, Indonesia requested an extension of the cost-sharing payment deadline to 2034. Even before making this request, Indonesia had already partnered with Boeing. In August 2023, Indonesia signed a memorandum of understanding (MOU) with the American aircraft manufacturer Boeing to purchase 24 F-15 EX 4.5-generation fighter jets. The F-15 EX is the latest upgraded version of the F-15, and the price offered by the United States to Indonesia is reported to be about $8 billion (approximately 11 trillion won).

Bargaining for Reduced Technology Transfer After Being Caught Leaking Technical Data

Indonesia also employed dubious tactics during the negotiations to reduce its cost share. In May last year, Indonesia proposed to South Korea that it would accept a reduction in technology transfer proportional to a lowered cost share?down to 600 billion won, about one-third of the original amount. Earlier, in January of the same year, Indonesian technicians dispatched to Korea Aerospace Industries (KAI), the manufacturer of the KF-21, were caught by authorities attempting to leak technology. Industry insiders criticized that Indonesia might have already siphoned off key KF-21 technologies to justify lowering its cost share.

Turning to France After Cost-Sharing Reduction Was Delayed

When the reduction in cost-sharing was not approved due to the confidential information leak, Indonesia considered French fighter jets. At the end of last month, French President Emmanuel Macron visited Jakarta and held a summit with Indonesian President Prabowo Subianto, signing a preliminary letter of intent (LOI) on defense cooperation and mentioning the possibility of additional sales of Rafale fighter jets. Previously, in 2022, when Prabowo was Minister of Defense, he signed a contract to purchase 42 Rafale fighter jets for $8.1 billion (about 11.1 trillion won), with six of them scheduled for delivery next year.

Becoming increasingly desperate, KAI took direct action to reach an agreement on reducing Indonesia’s cost share. Efforts included submitting petitions requesting leniency for the Indonesian technicians. Last month, the Daegu District Prosecutors’ Office cleared the Indonesian technicians, who had been investigated for leaking military secrets related to the KF-21, of violating the Defense Technology Protection Act, the Defense Acquisition Program Act, and the Foreign Trade Act, and gave them a suspended indictment for violating the Unfair Competition Prevention Act.

Despite Korea's Efforts, Indonesia Now Considers Chinese Options

Despite these efforts, Indonesia turned its attention elsewhere. This time, it began considering the purchase of Chinese J-10 fighter jets. The J-10 was reportedly deployed during last month’s armed conflict between India and Pakistan, where it was said to have shot down the latest French Rafale fighter jets. Pakistan claimed that its J-10 CE fighters shot down five Indian Air Force jets, including three Rafales, and China later announced that the J-10 CE had downed several jets in aerial combat without any losses. Deputy Minister Taufan Toto stated, "We are also considering the French proposal," adding, "We are comparing various options, including the J-10 and F-15, along with the overall budget." However, he made no mention of the KF-21 'Boramae', the Korean supersonic fighter jet that Indonesia had agreed to develop jointly with South Korea.

On June 11-12, Indonesia and the Korean government signed an amendment to the 'Joint Development Basic Agreement' at the 'Indo Defense' defense exhibition held in Jakarta. The two countries officially decided to reduce Indonesia’s share of the development costs. During the same period, Indonesia continued its dual-track approach. On June 11, during the defense exhibition, Turkish President Recep Tayyip Erdogan announced via social media that "according to the contract signed with Indonesia, 48 Khan fighter jets will be produced in Turkey and exported to Indonesia." The project is worth $10 billion (about 13.7 trillion won). This stands in stark contrast to Indonesia’s request last year to reduce its KF-21 cost share by 1 trillion won after repeatedly delaying payments.

Industry insiders are skeptical about the Defense Acquisition Program Administration’s announcement on June 13 that it had agreed to expand and specify comprehensive cooperation with Indonesia on the production and marketing of the Indonesian version of the fighter jet (IF-X). They believe Indonesia will not pay the reduced cost share, citing budget shortfalls caused by the introduction of fighter jets from other countries.

Choi Kiil, a professor in the Department of Military Studies at Sangji University, stated, "It is very regrettable that Indonesia is taking the opposite approach, even though our government has shown a willingness to cooperate in various ways, including reducing the cost share," and added, "Smooth coordination is necessary."