Indonesia's commitment in KF-21 project faces growing skepticism

A prototype of the KF-21 fighter jet under development bearing the flags of Korea and Indonesia moves out of a hangar at the headquarters of Korea Aerospace Industries (KAI) in Sacheon, South Gyeongsang Province, May 9, 2023. Yonhap

A series of brouhahas surrounding the KF-21 fighter jet joint development program with Indonesia has triggered calls to terminate Korea's partnership with the Southeast Asian nation. This comes in the wake of recent alleged attempts by Indonesian engineers to leak confidential data about the aircraft.

Both governments seem to be treading cautiously to prevent the suspected issue from escalating into diplomatic conflicts and derailing the joint development project of Korea's first homegrown fighter jet.

However, Korean defense industry insiders believe Seoul could leverage this incident to sever its partnership with Jakarta, which has struggled to provide a clear-cut solution to its overdue payment problem.

Last month, Korea Aerospace Industries (KAI), the KF-21 developer, caught Indonesian employees trying to take a USB flash drive containing confidential data from its manufacturing plant in Sacheon, South Gyeongsang Province.

A joint probe team comprising officials from the National Intelligence Service, the Defense Counterintelligence Command and the Defense Acquisition Program Administration (DAPA) has been investigating the issue for a month but has not yet announced any results.

"We are conducting an investigation with related authorities," a DAPA official told The Korea Times, Thursday. He declined to comment on how many engineers are under investigation, among around a dozen Indonesian technicians working at KAI's manufacturing plant.

KAI said the information discovered on the flash drive so far does not contain any military secrets or data that violates the Defense Security Technology Act.

Following the probe's launch, Indonesia's defense ministry reiterated its commitment to maintaining cooperation with Korea despite the leakage allegations, as reported by the Indonesian daily Kompas on Feb. 5.

However, industry insiders say that the latest incident has heightened skepticism about Indonesia's commitment to the joint project.

"The suspected leakage, regardless of whether the USB contained confidential data, raises questions about Indonesia's reliability as a partner. This incident could potentially serve as a motive for Korea to sever ties with Indonesia and seek a new partner, especially considering Indonesia's unfavorable attitude toward the cost-sharing deal," an industry official said.

"Sooner or later, the government and KAI should make the decision given the worsening public sentiment about the joint project," he added.

In 2016, Korea and Indonesia inked a deal to cooperate on the joint development project, under which Jakarta would fund 20 percent of the total development cost of 8.8 trillion won ($6.59 billion) in exchange for 48 planes that would be manufactured there for the Indonesian Air Force, as well as for technology transfer.

A prototype of the KF-21 Boramae flies over Sacheon, South Gyeongsang Province, March 28, 2023, during a test flight. Courtesy of Defense Acquisition Program Administration

But cost-sharing problems have emerged as Indonesia had only paid 227.2 billion won until 2019, citing financial difficulties. Multiple rounds of talks between the two sides were held to address the overdue payment issue, resulting in an additional payment of 50 billion won between 2022 and 2023.

As of last October, overdue payments were estimated to be nearly 1 trillion won.

Another industry official was cynical that Jakarta would be able to pay the remainder within the timeline. Mass production of the KF-21 fighter jets is set to begin this year, with a goal of entering service in 2026.

"Frankly speaking, the primary reason Korea teamed up with Indonesia is not because it needed Indonesia's money in the development process. The main objective through the deal was to simultaneously produce the fighter jets in the Southeast Asian country, contributing to weapons export and promoting the KF-21 in the overseas market," the official said.

With Korea solidifying its position as a major player in the global arms market, Indonesia may not be the sole partner option.

Several nations have expressed willingness to collaborate with Korea in joint weapons development.

Earlier this month, Korea's DAPA and Saudi defense ministry signed a memorandum of understanding, paving the way for cooperation in joint weapons development. The two sides plan to establish a joint committee for research and development of weapons systems.

The Korean government has recently hinted at the possibility of cooperating on the KF-21 project with Poland, with which Seoul signed its biggest-ever weapons deal in 2022.

"Polish defense companies may be invited to participate in projects for KF-21 if Poland considers adopting KF-21," DAPA chief Eom Dong-hwan was quoted as saying during an interview with Polish media Defence 24, Feb. 8.

Regarding such speculation, the state arms procurement agency said it currently does not have plans to terminate the deal with Indonesia.

"Our top priority is to continue cost-sharing discussions with Indonesia, and we will do our best to achieve a positive outcome," DAPA spokesperson Choi Kyung-ho said.

Indonesian Defense Minister and presidential frontrunner Prabowo Subianto greets supporters after visiting his father's grave in Jakarta, Indonesia, Thursday. AP-Yonhap

However, some critics project a more uncertain outlook for the partnership with Indonesia, influenced by the future decisions of Indonesian President-elect Prabowo Subianto.

Prabawo, a former defense minister and retired general, claimed victory in the presidential election last week, putting him on track to lead the Southeast Asian nation for the next five years.

During his tenure as the defense minister in 2019, he called for a halt to Indonesia's joint development project payments and more technology transfer. Despite citing budget constraints, the Indonesian defense ministry, also during Prabowo's term, made a decision to purchase 42 Rafale fighter jets from France.