Indonesia has finally signed a contract to acquire 48 KAAN fighter jets from Turkey, adding momentum to Ankara’s export campaign. However, there is a catch: Indonesia has no clear means to fund this purchase.
The Indonesian Ministry of Defense (MoD) announced in a statement on 28 July that a ceremony to ink the contract was held on 26 July at the International Defence Industry Fair (IDEF) 2025 in Istanbul, Turkey. Indonesian Defense Minister Sjafrie Sjamsoeddin and Air Vice-Marshal Yusuf Jauhari, who leads the Defense Facilities Agency of the Ministry of Defense, represented Indonesia at the ceremony.
Notably, the announcement comes over a month after the Turkish President, Recep Tayyip Erdoğan, announced a government-to-government agreement for the sale of 48 KAAN fighters on June 11, 2025.
The delivery of the 48 aircraft will be conducted in phases over ten years.
The agreement covers extensive collaboration in manufacturing, technology transfer, and engineering. Moreover, it includes the establishment of a local aerospace infrastructure in the Southeast Asian country in collaboration with Indonesian PT Republika Aero Dirgantara and PT Dirgantara Indonesia.
The MoD said that in addition to the aircraft, the country will get a “great opportunity to ramp up the capacity of the local defense industry.” “This collaboration reflects the strong ties between Indonesia and Türkiye, not only in defence diplomacy but also in the transfer of technology and a strengthening of our local defence industry,” the statement added.
The ministry did not disclose the financial details. However, a local Indonesian publication, Jakarta Post, reported that speculation is rife that the deal is worth around $10 billion.
On the face value, the deal seems to be a win-win for both countries. However, there is currently no indication about how Jakarta will fund the acquisition, and no allocation has been made for this purchase, as pointed out by Janes.
The purchase is likely to raise eyebrows because the Southeast Asian country reels with budgetary constraints. Indonesia’s proposed defense budget for 2025 saw a 6% decline from the previous year, and its overall defense spending remains below 1% of its GDP, even lower than many smaller nations like Singapore.
In the past, Indonesia’s budgetary constraints had put its role in the co-development of the KF-21 with South Korea under the scanner. After repeatedly failing to honour its financial commitments to the program, South Korea and Indonesia signed a restructured agreement in June 2025 to reduce Jakarta’s share of payments.
Indonesia’s MoD is “currently initiating administrative procedures to pay the remaining share for the joint development of the KF-21,” the South Korean Defense Acquisition Program Administration (DAPA) said last month.
In addition to its commitment to KAAN and the KF-21, Indonesia has already signed a deal for 42 Rafale fighter jets with French Dassault Aviation. It could acquire an additional batch of Rafales from France, as indicated by the letter of intent (LoI) signed by the government recently. In fact, some reports indicated that the Indonesian government was also exploring the purchase of the Russian Su-35.
Not just that, in 2022, Indonesia signed a Memorandum of Understanding (MoU) with American aerospace giant Boeing for the potential purchase of up to 24 F-15EX fighters.
Though it is evident that Indonesia wants to modernize its ageing air force and seek non-alignment by diversifying its arms purchases, it lacks the budget for ambitious acquisitions.
Adding the KAAN to this diverse mix could strain resources, as operating multiple fighter types increases logistical, training, and maintenance costs. Additionally, local production could initially put extra financial strain on the setting up of production infrastructure.
This has prompted some analysts to say that the commitment to KAAN could result in Jakarta defaulting on payments, as it has done with KF-21 since 2016.
The EurAsian Times has contacted the Indonesian Ministry of Defense to inquire about the funding plan. This story will be updated as and when more information is received.
KAAN Contract Is Great News For Turkey
Turkey has been exuberant since it “finalized” an export deal for its KAAN fighter jet with Indonesia, which is likely to add a fresh impetus to its campaign to sell the indigenously developed aircraft to other interested buyers.
Mehmet Demiroglu, CEO of Turkish Aerospace Industries (TAI), the company that manufactures the aircraft, told reporters at the Paris Air Show 2025 in June that negotiations for export are ongoing with multiple countries, adding, “I don’t want to name names, but I can say from the Gulf. Nothing is finalized yet. I hope we hear news as big as Indonesia this year or early next year.”
The CEO did not specifically mention which Gulf nations were involved, but prior reports have suggested that Saudi Arabia and the United Arab Emirates (UAE) have expressed interest in the Turkish aircraft as an alternative to the American F-35 Lightning II, which they have been unable to purchase because of the US administration’s reservations.
Local Turkish media reported last year that Saudi Arabia was considering acquiring at least 100 KAAN fighter jets. In December 2024, representatives from the two sides convened to deliberate on a variety of defense initiatives, including KAAN. On the other hand, the UAE showed interest in the IDEX 2025 defense exhibition in Abu Dhabi in February 2025.
Azerbaijan and Pakistan, two of Turkey’s closest allies, have also reportedly expressed interest in purchasing the plane. A potential agreement on Turkey’s fifth-generation fighter jet was among the topics of discussion between the two countries during the ninth Pak-Turk Industrial Expo Joint Working Group meeting in Pakistan earlier this year.
The TAI’s public messaging indicates that it is currently working to increase KAAN’s credibility and draw in customers by leveraging the Indonesian agreement.
Indonesia’s KAAN order is “a reflection of confidence in Türkiye, Turkish aviation, and KAAN,” Demiroglu stressed during the Paris Air Show. “What we have done in the past and what we have delivered to our security forces showed that they can trust us. The fact that the Turkish Air Force has decided to purchase the aircraft also shows that everyone can trust this aircraft,” the CEO added.
The twin-engine multirole/air superiority fighter, developed by Turkish Aerospace Industries (TAI), made its first flight in February, catapulting Turkey into a small clique of countries that have indigenously developed a fifth-generation fighter.
The aircraft is meant to feature standard 5th-generation features such as improved aerodynamics and propulsion, super-cruise, sufficient combat radius (undefined), advanced and internal multi-spectral sensors (EW and RF/IR), low observability, sensor fusion and autonomy, improved data-link capabilities for network-enabled warfare, internal bays, and high-precision stand-off weapons.
Further, it will be equipped with a sophisticated, active electronically scanned array radar using gallium nitride (GaN) technology, which the Turkish company Aselsan developed. An encrypted data link will connect the aircraft to TAI Anka for manned-unmanned teaming.
The aircraft will use upgraded variants of Aselsan’s radar warning receiver (RWR), missile warning system (MWS), laser warning system (LWS), chaff and flare management, dispensing system, and digital radio frequency memory (DRFM)-based jamming system, which is already deployed with the other air platforms.
KAAN is expected to enter flight testing early next year. “Our goal is to finish the prototype in the first quarter of next year and to start flight tests,” said Demiroglu. Following that, a second prototype is expected to take to the air in mid-2026, and a third is scheduled to follow early in 2027. It will enter serial production in 2028, and the first deliveries to the Turkish Air Force are planned for 2029.
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