Indonesia Faces Budget Dilemma With F-15, KF-21, Rafale

As the international community continues to ramp up military assets and modernization efforts amid the ongoing Russia-Ukraine war, Indonesia is in a budget dilemma on funding its warplane acquisitions, including South Korea’s KF-21 Boramae, Boeing F-15 Eagle, and Dassault Rafale.

Earlier this month, the Indonesian Air Force (IDAF) announced that it would resume payments to South Korea for its part in the joint stealth fighter jet program that was previously stalled due to a financial crisis. An expert told Janes that Jakarta paid Seoul the KF-X (now known as KF-21 Boramae) development cost of KRW9.41 billion (USD6.63 million), the first repayment made by the former in three years.

After a series of bilateral talks South Korea and Indonesia finally settled in November 2021 on a recommitment funding of 20 percent development costs for the part of the latter until 2026 in addition to about 30 percent “in kind” contribution that would include “commodities and other goods,” Janes reported. This has been quite an adjustment from the original agreement between the two Asian countries in 2015, where Jakarta initially agreed to finance 20 percent of the total investment of KRW8.8 trillion (USD6.2 billion) for developing KF-21 until 2028 and, in return, would benefit “access ti technologies, expertise, and options to buy” the multirole fighter aircraft from Seoul.

But due to setbacks, including contract concerns and the COVID-19 pandemic, Indonesia has stopped paying its 20 percent commitment in 2019.

The KF-21 Boramae (“young hawk,” “fighter hawk”) is a joint fighter aircraft development program led by the South Korean government, shouldering 60 percent project funding. Manufactured by Korea Aerospace Industries (KAI), the KF-21 is set to become South Korea’s second indigenous fighter jet after the FA-50 light combat aircraft. KIA unveiled the first prototype of the fighter jet in April 2021 and held its first test flight in July 2022, with the manufacturing schedule announced to begin in 2026.

According to South Korea’s Defense Acquisition Program Administration (DAPA), the general characteristics of a KF-21 include a length of 16.9 m, a wingspan of 11.2 m, a height of 4.7 m, and a gross weight of about 11,800 kg. It is powered by two General Electric F414-GE-400K after-burning turbofans, generating 57.8 kN (13,000 lbf) thrust each and reaching a maximum speed of Mach 1.81 within a 2,900 km range. Moreover, the aircraft can be armed with air-to-air missiles, air-to-ground missiles, anti-ship missiles, and bombs (both standard and precision-guided bombs).

While Indonesia worked on resolving its KF-21 funding issue with South Korea, the former is facing another warplane acquisition that involves dozens of US-made fighter aircraft worth $14 billion.

According to a Bloomberg report, Boeing Co. has expressed concerns about Jakarta’s ability to finance the proposed sale of 36 new F-15 fighter jets plus equipment. As a result, Boeing Executives recently flew to Jakarta to personally discuss the Indonesian officials regarding the deal. While the latter has offered to pay in installments, an insider told Bloomberg that “the meeting ended without a conclusive outcome” and would possibly delay the signing of the contract on or before the end of the year.

Indonesian Defense Minister Prabowo Subianto, in late October, admitted in a press conference after he met with US Defense Secretary Lloyd J. Austin at the Pentagon the country’s “budgetary difficulties” but will, however, push through with the F-15 purchase that is slated to replace its aging fleet consisting of American F-16s and Russian Sukhois.

Despite Jakarta’s payment ability in question, the F-15 sale has been identified by experts as a crucial arms deal for US national interests as it involves geopolitics. The sale would boost one of the latter’s major regional allies and prevent Asian countries from acquiring military equipment from US adversaries.

In 2018, Indonesia signed a deal to purchase 11 Sukhoi Su-35 fourth-generation multirole fighter jets from Russia to replace its 1980 F-5 Tiger aircraft. Still, it was immediately halted and eventually scrapped months after the passing of the law of the Countering America’s Adversaries Through Sanctions Act (CAATSA). Under the law, countries involved in a “sizable arms deal” with Moscow could face severe sanctions from the US.

Then, in February 2022, the US State Department announced that it had approved the potential sale of F-15ID aircraft plus equipment to Indonesia—a day after Subianto revealed that Jakarta would be acquiring 42 Dassault Rafale fighter planes and two Scorpene-class submarines from France for $8.1 billion, making them one of the largest buyer of French weapons.

“We clearly asked that we must be able to buy in terms of paying in installments, we can’t do it all at once. The government always prioritizes economic development and so on,” Prabowo said. “We have quite an advanced [progress] with [France regarding the purchase of] Rafale [jets] and we are still negotiating with the other party, the F-15. But of course, this will continue to be negotiated later and hinges on the terms of finance and what they offer us.”

As France is among America’s allies, the sale with Indonesia would still be advantageous as it would hurt Russia’s defense industry, losing yet another valued customer in the Indo-Pacific region.