World News

Indonesia suggests barter to help cover cost of jet project with South Korea

JAKARTA (Reuters) - Indonesia is offering to pay South Korea its share of the cost of developing a fighter jet in the form of barter, state news agency Antara reported on Friday, as it tries to cut its exposure to the $7.9 billion project.

The two countries agreed in 2014 to jointly develop the mid-level “KF-X” fighter jet, but Indonesia last year sought to renegotiate to take pressure off its foreign exchange reserves.

Jakarta initially agreed to pay 20% of the cost.

Chief security minister Wiranto said Indonesia was making infrastructure spending a priority and did not have the budget to pay its share of the jet project, Antara said.

“We are adjusting, for instance so that in coming stages, we don’t have to pay in cash, but in other exchanges,” Wiranto was reported as saying.

He gave an example of offering CN-235 aircraft, built by state plane-maker PT Dirgantara Indonesia, as part of its contribution, because South Korean military already uses the medium-range transport plane in its fleet.

A spokesman for South Korea’s arms procurement agency last October said Indonesia’s unpaid contribution was about 230 billion won ($195.95 million) from between the second half of 2017 and the first half of 2018.

Indonesia had made successful deals in the past using similar barter scheme, Wiranto said, giving the purchase of Sukhoi SU-35s from Russia as an example.

In 2017, Indonesia said it would pay $570 million of the total of $11.4 billion payment to Moscow for 11 Sukhois in the form of commodities in addition to cash. [].

($1 = 1,173.7900 won)

Reporting by Gayatri Suroyo; Editing by Nick Macfie