South Korea says fighter jet deal with Indonesia is on track, despite $200 million unpaid

SEOUL (Reuters) - South Korea said on Monday a project to develop a fighter jet with Indonesia was on track, and it will negotiate a way for Indonesia to pay its contribution, of which about $200 million is unpaid.

Indonesia and South Korea agreed in 2014 to develop the “KF-X” fighter jet.

The project is estimated to be worth about $7.9 billion, and Indonesia had agreed to pay 20 percent of the development costs, but a senior Indonesia official said on Friday it was seeking “lighter” financial terms.

South Korea’s arms procurement agency Defense Acquisition Program Administration (DAPA) told a press briefing the project was on track.

“During the South Korea-Indonesia summit in September, it was agreed to continue developing the KF-X,” the spokesman said.

“About the contribution, we plan to negotiate additionally.”

The spokesman confirmed that Indonesia’s unpaid contribution was about 230 billion won ($203.14 million), from between the second half of 2017 and the first half of 2018.

Indonesia’s request on the financial terms of the deal comes as it is trying to support the rupiah, which is trading near a 20-year-low, and to reduce the use of foreign exchange reserves.

The Indonesian finance ministry’s director general of budgeting, Askolani, told Reuters on Monday the government had decided to postpone a 2017 payment for the development of the fighter jet for “further review”. He did not elaborate.

Indonesia’s investment board chief Tom Lembong told reporters that Jakarta may seek to review its participation share in the project, the number of planes the military will buy, the delivery schedule and a “flexibility” for Indonesia to resell the aircraft.

Indonesia had committed to buy 48 of the fighter jets, Lembong said.

State news agency Antara reported in May that Indonesia was not allowed to sell the aircraft to other countries or produce components domestically, citing defense ministry spokesman Totok Sugiharto.

Sugiharto was not available for comment on Monday.

Reporting by Joyce Lee in SEOUL, Maikel Jefriando in JAKARTA; Editing by Robert Birsel