South Korean President Moon Jae-in, Defense Minister Suh Wook and Defense Acquisition Program Administration (DAPA) Minister Kang Eun-ho inaugurated the rollout of the first Korean-made prototype last week after a decade in the making. 

The ceremony was attended by Indonesian representatives, most notably Defense Minister Prabowo Subianto, indicating that Indonesia is still fully committed despite uncertainty over the renegotiation process. Joining the ceremony virtually was President Joko “Jokowi” Widodo, who wished its success would further benefit the partnership between the two countries amid the persisting uncertainty.

The joint jet fighter development was initiated in 2010, with the South Korean aircraft manufacturer Korea Aerospace Industries (KAI) having been chosen to helm the project and Indonesia having agreed to contribute 20 percent of the project's total investment fund. Under this agreement, Indonesia is expected to invest US$1.3 billion in exchange for access to its technology that will allow state-owned aircraft maker PT Dirgantara Indonesia to produce one of six total KFX/IFX prototypes. 

But Indonesia has been seeking renegotiations to reduce its share of the development cost to 15 percent since 2018 in order to ease the burden on the state budget. To date, the renegotiation remains unclear.

“We are currently looking for the option that best serves Indonesia’s national interest,” Defense Ministry spokesperson Dahnil Anzar Simanjuntak told The Jakarta Post.

The KFX/IFX 4.5-generation aircraft project is currently the biggest project of the South Korean military with a total development budget of about 8.6 trillion won ($7.6 billion), Korean media outlets report.

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Foreign Ministry director for East Asia and Pacific affairs Santo Darmosumarto said that while Prabowo attendance in South Korea was an indication that Indonesia “would like to continue maintaining this particular area of cooperation”, there were problems in the financing on Indonesia's part and the transfer of technology. He did not reveal the details.

Citing Indonesia as South Korea’s indispensable partner, a professor at the Korea National Diplomatic Academy (KNDA), Choe Wongi, is optimistic that the payment issue would be settled down the road, considering the two countries’ previous successful experience in defense cooperation.

For instance, the procurement of three South Korean Daewoo Shipbuilding and Marine Engineering (DSME) submarines in 2018, which also included a technology transfer agreement allowing state-owned shipbuilder PT PAL Indonesia to domestically assemble one of the three submarines. The submarine, named KRI Alugoro 405, was completed in June 2019, marking a milestone for Indonesia in its dream of empowering the country’s domestic defense industry amid demand for modernization of its primary weaponry system (alutsista).

Defense analyst Curie Maharani of Binus University encouraged Jakarta to continue the KFX/IFX project that would help create similar milestones for Indonesia’s indigenous jet fighters and encourage a positive spillover effect to other manufacturing industries.

“The project must continue under the condition that South Korea accepts the renegotiation terms, which include providing more transparent cooperation and allowing Indonesia to share a lower burden of cost and procurement,” she told the Post, fearing the project might become a forgotten sunk cost.

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Indonesia’s renegotiation terms were reasonable enough, she said, partly because there had been “doubt over the output of” the joint development program, which is aimed at building the so-called 4.5-generation jets almost equal to the United States-built Lockheed Martin F-35 Lightning II fifth-generation fighter. South Korea is seen as inexperienced in developing core technologies for the 4.5-generation jets, an example of which is F-16-class fighter’s active electronically scanned array (AESA) technology.

Purchasing proven 4.5-generation fighters like American F-15EX Eagle and French Rafale heavy fighters rather than gambling on the KFX/IFX project would therefore be more favorable to Indonesia, Curie said.

As the sole foreign partner in the program, Indonesia has “the leverage to renegotiate because it is Indonesia’s participation in the joint program that enables South Korea to secure their export markets”, she said.

Reuters reported that Moon said South Korea would have at least 40 of the new jets combat-ready by 2028, and 140 by 2032. "A new era of independent defense has begun," he said, according to a transcript released by his office.

When deployed by the South Korean military the aircraft will be known as the KF-21 Boramae.