[Asian Economy] Minister of Defense Chung Kyung-Doo presided over a meeting to deal with contributions to the Korean-style next-generation fighter (KF-X) project on the 6th. The KF-X business held a working-level meeting this year, but this is the first meeting held by Minister Chung. This is because the KF-X project had an emergency as Indonesian co-participation in KF-X increased the amount of unpaid contributions.
The meeting was attended by key aides, including Deputy Minister of Defense Park Jae-Min, Director of Defense Affairs Wang Jeong-Hong, and Deputy Defense Minister Kang Eun-Ho. It was reported that Minister Chung pointed out the situation where KF-X's development cost was insufficiently short, and instructed them to find a way to cover the project cost.
KF-X has been in progress since 2016, and a total of 18 trillion won in development costs, including development costs (about 8 trillion won) and mass production costs (about 10 trillion won), will be invested. Upon completion of the KF-X development by 2026, the Air Force plans to mass-produce 120 aircraft and Indonesia 50 aircraft. The project cost was shared by the Korean government at 60%, Indonesia at 20%, and Korea Aerospace Industries (KAI) at a rate of 20%, to jointly invest the KF-X development project cost. In order for the project to proceed normally, Indonesia had to pay 6235 billion to the Korean government by last year, out of a total of 1.7 trillion won by 2026.
However, the amount paid by Indonesia until last year was only 2272 billion won. It is known that Indonesia hopes to pay in-kind contributions such as CN-235 transporters, ground equipment, and adult clothing. It also claims to extend the payment deadline and expand KF-X technology transfer. When President Joko Wido and Indonesia visited Korea in September 2018, he showed his willingness to renegotiate by asking President Moon Jae-In to reduce the share of KF-X project contributions from 20% to 15%.
The government is in trouble. In addition, reports that Indonesia is leaving the KF-X business and considering purchasing a French fighter, 'Rafale', led to France. If left unchanged, it is feared that the KF-X business with Indonesia will face difficulties. In the worst case, the export performance of Indonesia's 50s disappeared, which forced the production cost per fighter to increase, and the KAI and the Ministry of National Defense also had no sharp point to provide additional resources.
A government official said, "If Indonesia does not pay contributions this year, it may be inevitable that the development schedule will be disrupted."
(Asiae)