Indonesia Wants to Renegotiate Fighter Jet Cost with South Korea

Indonesia has indicated it wants to re-negotiate terms of payment for its participation in the joint KFX/IFX fighter jet project with South Korea.

South Korea is developing the KF-X project as a successor to its F-16 aircraft and has roped in Indonesia to share the development cost in return for a fixed number of aircraft and technology. The participation is expected to cost Indonesia US$1.3 billion.

Indonesian Investment Coordinating Board (BKPM) head Thomas Lembong stressed that renegotiations for a joint jet fighter development project with South Korea were aimed at easing the burden on the state budget amid uncertainty in the global economy, the Jakarta Post reported.

Thomas said that while renegotiations were under way, Indonesia would disburse funds for the project to assure that Indonesia was committed to proceeding.

“We want to renegotiate the terms of payment,” Thomas said after a meeting at the Office of the Coordinating Political, Security and Legal Affairs Minister in Jakarta on Friday.

Minister Wiranto said it was decided in the meeting that renegotiations would be sought with South Korea on the development of the Korean Fighter Xperimental /Indonesia Fighter Xperimental (KFX/IFX), the funding sources for which would be the state budgets of the two countries.

Thomas said Indonesia was seeking renegotiations because under the current agreement, Indonesia would spend hundreds of trillion of rupiah on the project.

According to Thomas, South Korea had agreed to renegotiations during President Joko “Jokowi” Widodo visit to the country. However, South Korea required Indonesia to complete renegotiations within one year.

The House of Representatives has approved the project, for which Indonesia has agreed to contribute 20 percent of its total needed investment. Indonesia has spent US$ 10 million on the research stage of the project since 2016.