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​Cash-strapped Jakarta to renegotiate K-FX/I-FX involvement

Jakarta hopes to renegotiate its partnership with Seoul in the Korea Aerospace Industries (KAI) K-FX/I-FX fighter programme.

A team lead by Indonesia’s coordinating minister for political, legal and security affairs Wiranto will head to Seoul to discuss the issue, according the ministry’s website.

A major issue for the Indonesian side is cost, which stems from weakness in the Indonesia rupiah. The currency has lost a third of its value against the dollar in the last five years, and has performed nearly as poorly against the South Korean won.

This prompted Indonesian president Joko Widowo to dispatch Wiranto’s mission. Discussions are expected to take up to one year. The issue of renegotiation was raised during a visit by Korean president Moon Jae-in to Indonesia in September.

Under the terms of the original K-FX/I-FX deal, Jakarta would foot W1.6 trillion ($1.9 billion) of the programme’s W8.5 billion price tag.

In addition, Jakarta is concerned about areas such as cost sharing, production costs, the actual amount of technology transfer it will receive, and other areas.

Media reports from Indonesia have suggested that Jakarta is concerned about US export controls placed on certain K-FX technologies. Lockheed Martin is playing a critical role in the development of the twin-engined fighter under offset agreements for Seoul’s acquisition of 42 F-35As.

In a television interview in May, defence minister Ryamizard Ryacudu stated that Jakarta wanted to review its involvement, effectively pressing the pause button on the programme. He added that the development contract for the aircraft, signed between KAI and Indonesian Aerospace in early 2016, was somehow "incomplete", though he provided no details.

In 2016, KAI said that Indonesia Aerospace, also known as PTDI, was to send 100 staff to KAI’s Sachon factory to aide in the design of the new fighter, which is foreseen as being more advanced than the Lockheed Martin F-16, but not up to the standard as the F-35.

Original plans called for the South Korean government to foot 60% of the programme. KAI and its partners will cover the final 20%. Jakarta was to furnish 1% of the total budget by April 2016, and over 2% starting in 2017.

Jakarta’s presence in the programme has not been without controversy. Several observers have said that it would make the US government reluctant to provide export licenses for technologies related to the jet.

K-FX is destined to become Seoul’s biggest defence acquisition programme. It will see 120 twin-engined fighters delivered the country’s air force, and 80 to Indonesia.

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