Indonesia has signed a $400 million contract with South Korea for 16 T-50 trainer jets, the first foreign order for the Golden Eagle.

The aircraft made by the state-run Korea Aerospace Industries will be delivered by the end of 2013, according to a report in The Seoul Times newspaper.

Last month South Korean media reported that KAI was chosen as preferred bidder, effectively pushing aside the T-50's main rivals, the Czech Republic's Aero Vodochody L-159 and the Russian Yakovlev Yak-130.

KAI said in April that it received a letter from the Indonesian government confirming that it had been chosen as preferred bidder for the advanced fighter trainer contract.

However, other reports said Korea's Defense Acquisition Program Administration hadn't received any notification from Indonesia regarding the purchase.

"We did not hear from Indonesia," a DAPA official said. "We hope that Indonesia would pick us as a preferred negotiator for the deal."

The contract win is a reversal of fortunes for KAI -- as well as its partners including Lockheed Martin -- to crack the highly competitive export market for low-cost but versatile jet trainers.

"The successful deal with Indonesia proves the tireless efforts and cooperation among Korea's government, military and civilian industry," KAI said. "With this sale, a green light is turned on for Korean arms exports."

In February KAI suffered a major public relations disaster in is discussions with Indonesia which suspected that several officers from South Korea's National Intelligence Service broke into their suite in the Lotte Hotel in Seoul.

Two men and one woman were accused of looking at an Indonesian delegate's laptop computer and downloading information relating to the T-50 discussions to a USB memory stick when they were disturbed by a returning delegate.

Some South Korean media reported that the computer belonged to an aide of Indonesian Economic Minister Hatta Rajasa.

The two-seater T-50 is from an early 1990s design, based on the Lockheed Martin F-16 Fighting Falcon, the trainer developed for future pilots of the F-16, which is used by South Korea.

The T-50 uses a General Electric F404 turbofan engine producing 17,700 pounds of thrust for a maximum speed of Mach 1.4 to 48,000 feet altitude. The range is around 1,150 miles.

Importantly, its training systems are designed to enable a smooth transition to more advanced fighters including the F-22 Raptor, F-35 Lightning II and the F-16 Fighting Falcon -- of which Indonesia has 10 and also which may be due for upgrades.

KAI also produces the TA-50 light armed fighter and the T-50B, aerobatic performance aircraft.

Lockheed Martin funded 13 percent of the aircraft's development, KAI put in 17 percent and the South Korean government financed the rest.

Lockheed Martin Aeronautical Systems and KAI created the T-50 International Company, known as TFIC, to pursue export markets outside South Korea.

The news of the T-50 sale comes as South Korea's Defense Ministry said it will retire 30 generals by the end of 2015.

"The ministry is planning to make a 15 percent cut in the number of general-grade officers by 2020 to make the top command structure the military slimmer, but more efficient," said the unnamed official.

"Another 30 general-grade officers will be reduced by 2020 when the ministry completes the changes in the organizational structure of the military units," he said.

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