The amount Jakarta will shoulder has now been reduced from the initially agreed 1.6 trillion won (approximately US$1.2 billion) to 600 billion won ($450 million).
The project was initially estimated to cost around 8.1 trillion won, but DAPA now expects the cost to decrease to about 7.6 trillion won.
Launched in 2015, the lengthy project for the KF-21, an advanced multirole fighter, is being developed with Jakarta, which aims to bolster its air force and acquire aerospace technology.
Korea agreed to cover 80 percent of the project, while Indonesia initially agreed to shoulder the remaining 20 percent by 2026 in return for technology transfers and one prototype model, among other conditions.
But Indonesia recently asked a reduction in its payment to 600 billion won due to financial constraints. Concerned that delayed payments could impact the project's timeline, Korea decided to accept the request.
"We considered various factors, including the potential for further cooperation with the Southeast Asian country in the future," said a DAPA official.
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