Jun Ji-hye, a reporter at the finance desk of The Korea Times, focuses primarily on economic policy and government agencies, mainly covering the Ministry of Finance and Economy, the Ministry of Budget and Planning, the National Tax Service and the Korea Customs Service. She previously covered financial authorities, including the Financial Services Commission and the Financial Supervisory Service, and earlier worked on the political, city and business desks, reporting on a wide range of issues.
F-X, KF-X projects hinge on budget issue
By Jun Ji-hye
There are growing concerns over funding following the recent announcements of the purchase of 40 F-35 stealth fighters as the nation’s next-generation fighters (F-X), and the development of an indigenous fighter, the KF-X.
Some analysts wonder whether the plans will strain the government budget.
The two programs will likely cost a total of 15.8 trillion won ($15 billion).
The government plans to spend 7.3 trillion won to purchase 40 Lockheed Martin radar-evading combat planes, and 8.5 trillion won to develop indigenous “F-16 class” fighter jets scheduled to be put into service from 2025.
The Defense Acquisition Program Executive Committee, which was presided over by Defense Minister Han Min-koo, approved the plans Wednesday.
Concerns are flaring up because the military already changed its plan last year due to a difficulty in securing funds ― Korea initially planned to introduce 60 high-tech combat planes with a budget of 8.3 trillion won, but it later decided to buy 40 due to the high cost of the F-35, 120 billion won each.
The Defense Acquisition Program Administration (DAPA) said the government would decide later on whether to buy 20 more based on changes in the national security situation.
Skeptics wonder if the government may have to pay more than the set price as the F-35 is still under development. If the development cost rises, Seoul needs to pay the difference under the government-to-government foreign military sales (FMS) process, which requires it to pay an amount specified by the U.S. at the time of delivery.
In response to the concerns, a DAPA official said, “We have reviewed various reports and found that the price of the F-35 has decreased since 2011. If the final price falls compared to the time of signing, Korea will get the difference back.”
However, the Ministry of National Defense was embroiled in fresh controversy Thursday, after it was learned that Seoul also needs to pay an additional 200 billion won to the U.S. to cover “administrative expenses” that will be required in processing the contract between the two countries. This is part of the FMS rule.
The media reported that DAPA has been trying to reduce that amount, but to no avail.
The KF-X project to replace aging F-4 and F-5 jets is also creating anxiety about how the ministry will secure the astronomical amount needed.
The ministry is already facing a bumpy road in budget issues. It has proposed that 100 billion won be invested in the KF-X project next year, but the Ministry of Strategy and Finance is moving to cut that amount to 30 billion won.
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