Indonesia had begun negotiations with the U.S. for the purchase of up to 36 F-15EX heavy fighters, for nearly USD 14 billion, but it is unclear where the financing would come from.
According to a Bloomberg story, Boeing Co. executives flew to Jakarta last week to discuss the transaction with Indonesian officials, but hit a financing roadblock.
Boeing is concerned about the ability of Southeast Asia’s largest economy to finance the planes, as Indonesia insists on paying in installments, said insiders who asked to remain anonymous. The meetings ended without a conclusive outcome, meaning plans to sign the deal before the end of this year are likely to be delayed.
From a geopolitical point of view, the order is vital for US interests, as it would strengthen its ties with one of its key partners in the region. The US State Department approved in February the possible sale of 36 F-15EXs (to be called F-15IDs) and associated equipment for $13.9 billion. And the Indonesian Air Force (TNI-AU) Chief of Staff, Air Chief Marshal Fadjar Prasetyo, had earlier commented that he intended that the first eight aircraft could be received during 2024.
See also: U.S. authorized sale of F-15EX Eagle II to Indonesia
Late last month, Indonesian Defense Minister Prabowo Subianto said negotiations with Boeing are ongoing. He also hinted at challenges around financing.
«We clearly ask that we must be able to buy on installment terms; we cannot do it all at once,» Prabowo told a briefing with local journalists at the time. «The government always prioritizes economic development and so on.»
It should be recalled that Indonesia not only wants the F-15IDs, but also confirmed the acquisition of 42 Dassault Rafale in February. However, for now it only signed the contract for the first 6 units of the French fighter.
See also: Indonesia prepares first batch of pilots to be sent to Rafale conversion course
Moreover, Jakarta, which had committed to pay 20% of the development cost of the KF-X program (which resulted in the KF-21 Boramae) in exchange for the technology transfer needed to produce 60 units of the fighter in its country, decided to stop honoring its commitments in 2019 because of COVID19. Only at the beginning of the month, payments were resumed and according to the information transcended, part of these contributions will be paid in «in kind», that is, Indonesian-invoiced commodities, and not in currency.
Doubts about Indonesia’s financing capacity are reasonable, considering that the country is already committed to the Rafale and KF-21, and especially taking into account the history of delayed payments for its commitments to the KF-X program.
