Jakarta: South Korea and Indonesia have finalized a deal to significantly reduce Jakarta's financial contribution to the joint KF-21 fighter jet project, bringing it down to 600 billion won (US$443 million), which is about one-third of the originally agreed sum, as stated by Seoul's defense procurement agency.

According to Yonhap News Agency, the agreement was signed between the two nations at an arms exhibition held in Jakarta on Wednesday, as announced by the Defense Acquisition Program Administration (DAPA). This development resolves uncertainties surrounding the financing of the 8.1 trillion-won project, which is aimed at developing an advanced supersonic fighter jet.

Initially, Indonesia had agreed to cover approximately 20 percent of the project's costs, amounting to 1.7 trillion won, in exchange for technology transfers, a KF-21 prototype, and other benefits. However, Jakarta was unable to meet payment deadlines, contributing only about 400 billion won thus far. In May of the previous year, Indonesia suggested reducing their contribution to 600 billion won and requested a decrease in technology transfer levels.

Although Seoul consented to the reduction of Jakarta's contribution last August, finalizing the revised agreement was delayed due to tensions arising from a police investigation into alleged technology theft by Indonesian engineers at Korea Aerospace Industries Ltd., the manufacturer of the KF-21.

The recent signing suggests that the two parties have moved beyond these issues. A DAPA official mentioned that while the level of technology transfers and related conditions will be renegotiated post-project completion, they will remain within the 600 billion-won cap.

DAPA further stated that Indonesia's defense ministry has initiated administrative procedures to pay the outstanding contribution. Successful payments are anticipated to enhance defense industry cooperation between the two countries. On the sidelines of the exhibition, DAPA officials met with Indonesian Defense Minister Sjafrie Sjamsoeddin and Deputy Defense Minister Donny Ermawan Taufanto, agreeing to broaden defense industry cooperation to include land-based and maritime systems.

The KF-21 project is nearing completion, with the first production model expected to be delivered to the Air Force in the latter half of the upcoming year.