Korea Aerospace Industries agrees KFX investment deal with Indonesia

                                  A model of KAI's KFX concept at ADEX 2015 in Seoul

Korea Aerospace Industries (KAI) and the Indonesian government signed an agreement on 22 November to formalise proposed investment and workshare arrangements to support the development of the Korean Fighter Experimental (KFX) 4.5-generation fighter aircraft.

The agreement is framed by an accord signed by the governments of South Korea and Indonesia in October 2014 under which South Korea will pay 80% of the costs associated with the joint engineering and development phase of the KFX, with Indonesia paying the remaining 20%.

The newly signed deal, which in essence reaffirms Indonesia's investment in the project, will become operational once KAI formally secures the contract with South Korea's Defense Acquisition Program Administration (DAPA) to complete the development of KFX aircraft. KAI was named preferred developer of the KFX in March, and a contract to undertake the work is expected to be signed before the end of the year.

Under the terms of the newly announced agreement, Indonesia has agreed to invest about KRW1.7 trillion (USD1.5 billion) of the total KRW8.7 trillion in KFX development costs.

KAI said that in return for its investment, Indonesia's state-owned aerospace manufacturer, PT Dirgantara Indonesia (PTDI), will participate in the design phase of the aircraft and produce unidentified components. PTDI will also secure rights to some areas of intellectual property involved in developing the KFX and have access to one of six planned prototypes.

KAI plans to commence manufacturing the KFX from 2025. Company officials have previously suggested that about 250 KFX fighter aircraft could replace the Republic of Korea Air Force's ageing F-4E Phantom and F-5E Tiger II aircraft and, ultimately, its F-16 Fighting Falcon platforms. KAI also expects to export several hundred KFX fighters to countries that include Indonesia.

The KFX is envisaged as a single-seat, twin-engine, multirole aircraft equipped with stealth features, active electronically scanned array radar, and internal weapons carriage. Jon Grevatt, Bangkok - IHS Jane's Defence Industry