Korea Aerospace Industries has signed a tentative deal with Indonesia to jointly develop a new South Korean fighter jet, the country’s sole aircraft-maker said Sunday.

Under the deal, the Indonesian government will shoulder 20 percent of the cost for the 8.6 trillion won ($7.4 billion) project called KF-X to develop the KF-16-class warplane to replace aging F-4s and F-5s by 2025.

“Korea Aerospace Industries has completed negotiations and reached an agreement with the Indonesian counterpart over the KF-X development,” KAI vice president Jang Seong-seop said during a signing ceremony held at the firm’s office in Seoul.

Selected as a preferred bidder for the project by the government in March, KAI has been negotiating with the U.S. defense firm Lockheed Martin and Indonesia’s state-run aircraft manufacturer PT Dirgantara Indonesia over technological and financial partnerships.

On Oct. 30, Indonesian parliament approved a 1.7 trillion won budget for investment in the program in exchange for some new technologies and a prototype plane. 

KAI expects to kick off the project after signing a formal contract with the Defense Program Acquisition Administration by the end of this year.

By Park Han-na (hnpark@heraldcorp.com)