South Korea Slashes Indonesia's KF-21 Jet Contribution from $1.2B to $660M

After years of negotiations, South Korea has agreed to reduce Indonesia's contribution in the development of the KF-21 fighter jet from $1.2 billion to $660 million.

The Defense Acquisition Program Administration (DAPA), South Korea's state arms procurement agency, announced the revised agreement on August 16.

Under the updated arrangement, Indonesia will now contribute 600 billion won ($440 million) to the development of the KF-21, down from the original 1.6 trillion won pledged when the project began in 2015. The initial agreement had Indonesia covering roughly 20% of the total projected development cost, which was estimated at 8.1 trillion won. DAPA now anticipates the final cost of developing the aircraft to be around 7.6 trillion won.

The original agreement between South Korea and Indonesia included provisions for the delivery of a KF-21 prototype to Indonesia, along with technical data and the rights to produce 48 jets domestically. However, a DAPA official, told Korea JoongAng Daily that the reduced financial contribution from Indonesia would necessitate joint coverage of the shortfall by the South Korean government and Korea Aerospace Industries (KAI), the manufacturer of the KF-21.

According to the official, technology transfers to Indonesia will be limited in line with the revised contribution of 600 billion won, which includes 380 billion won already paid by Indonesia. If the value of the technology transfers and the prototype exceeds this new contribution, Indonesia will be required to provide additional funds.

KAI plans to produce 20 KF-21 aircraft this year, with another 20 scheduled for production next year. The first delivery to the South Korean Air Force is expected in the latter half of 2026.

The KF-21, also known as Boramae, is a 4.5-generation fighter jet, intended to replace the aging fleet of Northrop F-5 and McDonnell Douglas F-4 fighters in the Korean Air Force. While it is comparable to the latest models of the F-16, it is less stealthy than fifth-generation fighters like the F-35 Lightning II developed by Lockheed Martin. Korean engineers have localized several critical technologies in the KF-21's development, including active electronically scanned array (AESA) radar, infrared search and tracking systems, electro-optical targeting pods, and radio frequency jammers.