Jakarta, 1 August - Turkey’s aerospace industry achieved a historic milestone in June 2025 when Indonesia signed a $10 billion contract to acquire 48 KAAN fifth-generation fighter jets, marking the aircraft’s first export order. Developed by Turkish Aerospace Industries (TAI), the KAAN, previously known as the TF-X, is a twin-engine, stealth-capable multirole fighter designed to replace Turkey’s aging F-16 fleet and compete with global heavyweights like the U.S. F-35 and China’s J-20. The agreement, formalized during the Indo Defense Expo in Jakarta, includes technology transfers and co-production using Indonesia’s local industrial capabilities, with deliveries scheduled over a 10-year period starting in 2028.
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The deal positions Turkey as an emerging player in the global defense market, where it ranked as the world’s 11th-largest arms exporter in 2024, boasting a 106 percent export increase over the past four years. For Indonesia, the acquisition represents a bold step toward modernizing its air force, but it raises questions about the nation’s financial capacity to sustain such an ambitious procurement alongside existing commitments. Indonesia’s air force currently operates a diverse but aging fleet of fourth-generation aircraft, necessitating urgent upgrades to counter evolving threats in the Indo-Pacific region. The KAAN deal complements Jakarta’s earlier $8.1 billion purchase of 42 French Rafale jets in 2022, with deliveries set to begin in 2026. Additionally, Indonesia remains a partner in South Korea’s KF-21 Boramae program, a 4.5-generation fighter project, despite reducing its financial stake from 20 percent to 7.5 percent in 2025 after years of delayed payments.
Initially committed to funding $1.2 billion, Indonesia has paid $290 million and restructured its remaining obligation to $440 million, aiming to acquire 50 KF-21s. The KAAN, priced at approximately $208 million per unit, offers stealth features and advanced avionics, outpacing the Rafale’s capabilities and aligning more closely with fifth-generation standards than the KF-21. However, integrating three distinct fighter types, KAAN, Rafale, and KF-21, poses significant logistical challenges, including increased training, maintenance, and infrastructure costs. Indonesia’s defense budget, consistently below 1 percent of GDP, strains under these commitments. The nation’s 2025 defense spending saw a 6 percent decline, and its low revenue-to-GDP ratio limits fiscal flexibility. Past financial struggles, such as missed payments in the KF-21 program, suggest potential risks of defaulting on the KAAN deal.
Jakarta has also explored other acquisitions, including a Memorandum of Understanding for 24 U.S. F-15EX jets and discussions for Chinese J-10 fighters, further complicating its procurement strategy. While the KAAN deal includes technology transfers to bolster Indonesia’s domestic industry, the immediate financial burden may outweigh long-term industrial gains. Critics argue that Indonesia’s pursuit of a diverse fighter fleet reflects a non-aligned foreign policy but risks overextension. Turkey, meanwhile, leverages the deal to enhance its defense export credentials, with Azerbaijan, Pakistan, and Egypt expressing interest in the KAAN. For Indonesia, balancing affordability with strategic ambitions will determine whether this landmark acquisition strengthens its air force or becomes a costly misstep.