(KPL/Yonhap) Republic of Korea and Indonesia have finalized a deal to slash Jakarta's contribution to the joint KF-21 fighter jet project to 600 billion won (US$443 million), about one-third of the original amount, Seoul's defense procurement agency said Friday.

The two sides signed the agreement at an arms exhibition in Jakarta on Wednesday, the Defense Acquisition Program Administration (DAPA) said, clearing uncertainties over the financing of the 8.1 trillion-won project.

Indonesia's payment will shrink from the initially agreed amount of 1.7 trillion won. The project, launched in 2015, is designed to develop an advanced supersonic fighter jet.

Indonesia had originally agreed to shoulder about 20 percent of the project's cost as a partner country through June 2026 in return for Seoul's technology transfers, a KF-21 prototype and other conditions.

But Jakarta failed to keep up with payment deadlines and has so far contributed about 400 billion won. In May last year, it proposed lowering its total contribution to 600 billion won and reducing the level of technology transfers.

While Seoul approved the cut to Jakarta's contribution last August, the two sides had struggled to sign a revised agreement amid tensions over a police investigation into alleged technology theft by Indonesian engineers at Korea Aerospace Industries Ltd., the KF-21's manufacturer, earlier that year.

This week's signing appears to indicate the two sides have moved past the issue.

A DAPA official said the level of technology transfers and other conditions in exchange for Jakarta's revised contribution will be up for negotiations after the development project is complete but noted that it will not exceed the 600 billion-won value.

"Indonesia's defense ministry has said it has begun administrative procedures to pay the remaining contribution amount, and if the payments are made as planned, defense industry cooperation between the two countries is expected to gain momentum," DAPA said in a release.

On the sidelines of the exhibition, DAPA officials met Indonesian Defense Minister Sjafrie Sjamsoeddin and Deputy Defense Minister Donny Ermawan Taufanto and agreed to expand defense industry cooperation beyond fighter jets to land-based and maritime systems.

The KF-21 project is currently in its final stages, with the first production model set to be delivered to the Air Force in the second half of next year.

KPL