Indonesia will seek foreign funds up to US$1.2 billion to finance the construction of three submarines as part of the nation's minimum essential force (MEF) program.
While Korean Exim Bank is ready to finance the project, the Indonesian Finance Ministry perceives the loan obtained from the bank earlier to build the first batch of such submarines as “expensive.”
"The Finance Ministry views Indonesia as currently having a good investment rating, so the price (cost of funds) would hopefully be lower than that of the first such batch of submarines," PT PAL Finance Director Irianto Sunardi told journalists at the company's office in Surabaya, East Java, on Wednesday.
Indonesian shipbuilding company PT PAL and South Korea's Daewoo Shipbuilding and Marine Engineering (DSME) had signed an agreement in April this year to construct three type 209-1400 submarines, as a follow-up program to three submarines constructed earlier.
The submarine construction will start before the year-end based on DSME's readiness, the official remarked." Similarly, PT PAL is also ready with all its agreements, especially which of the sections are made here (in Indonesia) and those that are to be developed there (In S Korea) until the sixth submarine is fully built here," he was quoted as saying by Antara News.
Indonesia has received the first batch of submarines built in cooperation with South Korea. Two of the submarine, Nagapasa 403 and Ardadedali 404, were developed in South Korea and are currently operated by the Indonesian Navy. The other submarine -- Alugoro 405, is undergoing a sea trial north of Bali Island.