A KF-21 fighter jet engages in a test flight over Sacheon, South Gyeongsang Province, Feb. 16, 2025. Courtesy of ROK Air Force

The state-run Export-Import Bank of Korea (Eximbank) should tread carefully in extending financing support to Indonesia as the Southeast Asian nation moves to finalize a deal to purchase Korea's first domestically developed KF-21 fighter jet later this month, industry officials said Tuesday.

Indonesia plans to purchase 16 fighter jets in its initial order, with the deal likely to be signed during President Prabowo Subianto's March 31 visit to Seoul for a summit with President Lee Jae Myung, according to sources. The deal would mark the first export of the fighter jet.

Jakarta is considering securing export financing from Eximbank, the sources said. In defense deals, such financing is typically provided by the exporting country's policy bank, which extends loans to the purchasing government.

"The Indonesian government typically decides whether to use export financing at the final stage of a deal and then requests financial proposals," an Eximbank official said. "We have not received any official request, but we will actively provide support if it is made."

Indonesia is a co-developer of the KF-21 program, but the project has been marred in controversy due to Jakarta's delayed payments and alleged technology leaks, raising questions about its reliability as a partner. Jakarta had initially planned to acquire 48 KF-21 jets, but is now expected to purchase only 16 at first due to budget constraints.

Military commentator Kim Dae-young said concerns over Indonesia's reliability have persisted since the early stages of the joint project.

"There have long been questions about whether Indonesia is a reliable partner, so financing support needs to be handled with extra care," Kim said. "While the size of the loan remains unclear, the finance authorities will need to carefully assess factors such as the country's creditworthiness."

President Lee Jae Myung shakes hands with Indonesian President Prabowo Subianto during their summit on the sidelines of the Asia-Pacific Economic Cooperation summit in Gyeongju, North Gyeongsang Province, Nov. 1, 2025. Courtesy of presidential office

A defense industry official said on condition of anonymity that financing support should be structured cautiously with contractual safeguards.

Source: Korea Times News