Surabaya, E Java (ANTARA) - Indonesian shipbuilding company PT PAL and South Korea's Daewoo Shipbuilding and Marine Engineering (DSME) reached an agreement to construct three more submarines as part of the nation's minimum essential force (MEF) program.

Under the agreement inked in Bandung, West Java, on April 12, 2019, the cost to build the three submarines will reach US$1.2 billion to be sourced from foreign loans, PT PAL Finance Director Irianto Sunardi remarked while receiving the Defense Ministry press corps at the company's office in Surabaya, East Java, on Wednesday.

The loan proposal is still being processed at the Finance Ministry, he noted.

Sunardi expressed optimism that construction of the type 209-1400 submarines will start before the year-end based on DSME's readiness.

"Similarly, PT PAL is also ready with all its agreements, especially which of the sections were made here and those that were developed there in the past until the sixth submarine is fully built here," he explained.

All agreements between both sides have been in place. They currently await a decision from the Finance Ministry, he stated.

Currently, Korean Exim Bank is ready to finance the project. According to the National Development Planning Agency (Bappenas), the bank is categorized as an Export Credit Agency (ECA).

Nonetheless, the Finance Ministry still perceives the loan obtained from the bank to build the first batch of such submarines as expensive.

"The Finance Ministry views Indonesia as now having a good investment rate, so the price would hopefully be lower than that of the first such batch of submarines. However, an agreement had yet to be reached. If everything is alright, Insya Allah (God Willing), we can start the project at the end of this year," he remarked.

Construction of the second batch of submarines will be aligned with Indonesia's requirements, including weaponry and convenience.

Indonesia has received the first batch of submarines built in cooperation with South Korea. Two of the submarines -- Nagapasa 403 and Ardadedali 404 -- were developed in South Korea and are currently operated. The other submarine -- Alugoro 405 -- is undergoing a sea trial north of Bali Island.

Indonesia is currently the only Southeast Asian nation that is capable of building submarines.

Chief of the Public Relations Service of the Defense Ministry Secretariat General Brigadier General Totok Sugiharto affirmed that Indonesia is the first Southeast Asian nation to build submarines.

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Translator: Syaiful Hakim/Suharto
Editor: Sri Haryati
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