Indonesia delaying payments for KF-X, submarines
The first KF-X advanced multirole fighter prototype is being assembled at a Korea Aerospace Industries facility in Sacheon, South Gyeongsang Province, in this Sept. 3 photo. Yonhap
By Jung Da-min
Concerns are rising over Indonesia's delayed payments for its share of the cost of a Korea-Indonesia joint fighter project.
Indonesia is actively seeking to purchase other advanced fighters from countries such as France, Russia or the United States according to recent media reports, while delaying the payment of hundreds of billions of dollars for the fighter project, called the KF-X (Korean Fighter eXperimental) in Korea and the IF-X (Indonesian Fighter eXperimental) in Indonesia
Defense watchers said the fact that the KF-X development project will take at least six more years, while Indonesia wants to deploy advanced fighter jets as soon as possible, could have caused Jakarta to have second thoughts about the joint project.
Officials from the Defense Acquisition Program Administration (DAPA) and Korean Aerospace Industries (KAI) ― the maker of the KF-X aircraft ― visited Jakarta for renegotiations with officials there in late September, but the results of the meeting have not been disclosed, with officials merely noting that the project is “still ongoing.”
According to DAPA data submitted to People Power Party (PPP) Rep. Kang Dae-sik, a member of the National Assembly National Defense Committee, the Indonesian government has paid 227.2 billion won ($208 million) from 2016 to 2020, but has delayed payment of 604.4 billion won or 73 percent of the 831.6 billion won it had promised to pay by this year. The country initially agreed to pay 1.7 trillion won in total.
The data showed Indonesia paid 50 billion won in 2016 for that year's full share, but only paid 45.2 billion won out of 184.1 billion won in 2017. In 2018, it failed to pay its entire share of 198.7 billion won. Last year, it paid 132 billion won out of 190.7 billion won, but has again delayed payment of its share of 201.8 billion won for this year.
Indonesia initially planned to receive one prototype of the fighter jet along with technical data and locally produce 48 aircraft in the country. But its repeated delay of payments, citing economic difficulties, is adding to concerns that it could pull out of the joint project.
The development of the fighter is going smoothly, with KAI set to roll out a prototype in the first half of 2021. Government officials said the project would proceed regardless of Indonesia's delay in payments.
Defense watchers say, however, the real problem with Indonesia's possible withdrawal from the project is about building price competitiveness. They said the Korean government would be able to lower the price of the KF-X jet if it is purchased by many countries and Indonesia is an important customer as it was the first among other Southeast Asian countries to sign on to the project.
Also of concern over arms purchase deals between the two countries, is Indonesia's delayed payment for three 1,400-ton submarines from Korea's Daewoo Shipbuilding and Marine Engineering through a deal signed in April 2019. Indonesia has yet to pay a 160 billion-won deposit for the construction of the submarines.
Among fighters and submarines mentioned in media reports as competitors for Korea were French aircraft manufacturer Dassault Aviation's Rafale multirole fighter and French defense contractor Naval Group's Scorpene class submarines.
Indonesia's Defense Minister Prabowo Subianto, who took office last October, has yet to visit Korea after taking office, while putting off resuming talks on arms procurement projects. But he has visited other countries such as China, Japan, Russia and European countries including France.