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S. Korea close to clinching Indonesia submarine deal

Defense Minister Kim Kwan-jin is to visit Indonesia early next month to seal a $1 billion deal that would result in South Korea’s first submarine exports.

If the deal is secured, Daewoo Shipbuilding and Marine, which is likely to be chosen as the preferred bidder by the Indonesian government, will sign a memorandum of understanding to sell three 1,400-ton submarines to the Southeast Asian country, ministry officials said.

Kim will accompany nine Korean defense contractors including Daewoo from Sept. 7-9 and hold talks with his Indonesian counterpart Purnomo Yusgiantoro on the country’s modernization project for their naval fleet.

The $1.08 billion submarine acquisition program, regarded as a goldmine for defense contractors, brought about a fierce bidding war in which Daewoo reportedly beat German and French firms.

“The Type 209 submarine, which the Indonesian government is willing to purchase, was first developed by the Germans in the early 1970s and Korea bought the technology license to produce it in the beginning stage. France is well known for its welding techniques. The fact that Korea has beaten such strong rivals in the preferred bidder race is significant in that the country will join the ranks of submarine exporters. It also will brighten the prospect of selling more subs to other East Asian nations,” the JoongAng Ilbo newspaper quoted a defense industry official as saying.

The submarine deal would further boost the bilateral defense industry cooperation, following on from a contract to export South Korea’s trainer jets to Indonesia.

Korea and Indonesia have expanded defense exchanges since President Lee Myung-bak and Indonesian President Susilo Bambang Yudhoyono agreed last year to collaborate on development of defense technologies involving tanks, trainer jets and submarines.

On Aug. 1, South Korea and Indonesia began their joint technological research to develop new fighter jets in accordance with their agreement signed in April. The project is aimed at replacing aging fighter jets such as the F-4 and F-5 with high-tech combat aircraft. After the mass production of the fighter jets begins, Indonesia is to purchase some 50 units.

In May, the Korea Aerospace Industries agreed a deal to export South Korea’s T-50 Golden Eagle supersonic trainer jets to the archipelagic country. In April, Indonesia selected South Korea as the preferred bidder for its jet trainer project and the two sides have been in negotiations on price and others. A final deal will allow South Korea to export its T-50 Golden Eagle supersonic trainer jets for the first time.

By Bae Ji-sook (