Indonesia fails to execute KF-21 cost-sharing agreement

Indonesia had agreed to pay 20 percent of the cost for the development of South Korea’s KF-21 Boramae Korean fighter jet project, the biggest weapons development program in the history of the nation’s military history, but would not make payment. While Indonesia had signed a final agreement on cost sharing with the South Korean government, it has not taken steps to put the agreement into practice for more than five months.

According to materials that Rep. Kang Dae-shik of the main opposition People’s Power Party received from the South Korean Defense Acquisition Program Administration on Sunday, Indonesia completed the drafting of the final agreement through working-level consultations with the DAPA after Indonesian Defense Minister Prabowo Subianto’s visit to South Korea in April. The agreement calls for a reduction of Indonesia’s portion of the contributions to the project, adjustment of payment method and extension of payment period. Five working-level consultative meetings between the two countries were followed after Indonesian President Joko Widodo demanded negotiations for adjusting Indonesia’s contributions to the project by citing economic difficulties in 2018. Indonesia originally agreed to pay 1.7338 trillion won (about 1.45 billion U.S. dollars), but has yet to pay 704.1 billion won (589 million dollars) of its total due amounting to 931.3 billion won (779 million dollars) until the first half of this year.

The DAPA plans to hold a sixth working-level meeting to start implementation of the finalized agreement, but Indonesia is postponing approving the agreement by citing the COVID-19 pandemic and internal working-level review process. The South Korean agency has sent five letters requesting the convening of working-level talks since April. Indonesia sent a reply to inform the agency of its intention to hold a working-level consultative meeting late July, but has yet to take action.

According to a contract between the Korea Aerospace Industries and Indonesia, the agreement includes a provision suggesting that if a party fails to pay scheduled contributions more than twice, each party shall have its technical staff’s participation and access to development materials denied, but Indonesia, which has failed to pay its share of contributions since 2016, has been dispatching technical staff to the KAI since last month.

The opposition party said the South Korean government is only engaged in passive negotiation due to concern over possible obstacles or possible delay in the development of the fighter jet resulting from non-payment of contributions. In line with principle and common sense, one side should not be forced into unilateral concessions. We have to bring about a win-win situation,” Rep. Kang said.


Kyu-Jin Shin newjin@donga.com