Indonesia has agreed to invest KRW1.7tn ($1.47bn) in South Korea's Korean Fighter Experimental (KF-X) programme.
The KF-X is a KRW8.6tn ($7.5bn) project being developed by Korean Aerospace Industries (KAI), under a contract with the government. It is the second fighter development programme for the country after the FA-50.
KAI has signed a contract with the Indonesian Government and with the state-run defence company Dirgantara Indonesia (PTDI).
Under the contracts, Indonesia will bear 20% of the project cost in return for a prototype and transfer of technical data to PTDI.
The investment, cleared by the Indonesian parliament in October, will entitle the country to obtain 50 fighters.
The project involves construction of six prototype aircraft. The plan is to produce 120 jets with a total investment of KRW18tn.
The local media quoted a Defense Acquisition Program Administration (DAPA) official as saying that a formal contract will be signed after receiving approval from the DAPA Executive Committee.
Production is scheduled between 2025 and 2028.
The multirole fighter will be around 15m long and have a wing span of 10.7m. Its maximum speed will be Mach 1.97.
The jets will replace the aging F-4D/E Phantom II and F-5E/F Tiger II aircraft in South Korea's fleet.
The country previously sought to obtain certain core technologies that Lockheed Martin is implementing in the F-35 stealth fighter, but in April the US denied permission to share them.
In September, KAI has signed a $110m contract with Thailand to supply T-50 four multi-purpose advanced trainer jets.