Indonesia signed a $1.3 billion deal with South Korea Thursday to jointly develop Seoul's next-generation fighter jets, the South's aircraft manufacturer said.

Under the deal signed with Korea Aerospace Industries (KAI), Indonesia's defence ministry will invest about 1.6 trillion won ($1.3 billion) in the Korean Fighter Experimental (KF-X) programme.

The programme is aimed at producing new, homegrown fighter jets to replace the South's aged fleet of F-4 and F-5 fighters imported from the US.

A consortium of KAI and the US aerospace giant Lockheed Martin last March won a 8.6 trillion-won contract to provide 120 fighter jets to Seoul's air force.

The investment from Indonesia will account for about one fifth of the total cost of the project, with up to 100 Indonesian workers taking part in development and production, KAI said in a statement.

Indonesia will be given one prototype plane and gain access to some technical data and information involving the project, it added.

The South Korean military plans to put the new fighter jets into service by 2025 to guard against threats from the nuclear-armed North Korea.