President Joko Widodo start his visit to South Korea to Accelerates the Cooperation and Investment on Sept. 10 to 11 - Photo by President Office

JAKARTA (TheInsiderStories) – Indonesia and South Korea have a potential to strengthen cooperation in the economic sector, especially
increased investment in the manufacturing industry sector, said one senior official in written statement on Sunday (09/09).

Collaboration opportunities for these two countries will be realized in the series of Indonesia’s President Joko Widodo’s visit to South Korea in Sept. 10 to 11, 2018. A number of agendas have awaited President Widodo. The president is planned to meet with President Moon Jae-in at the Presidential Palace of South Korea.

“This year is also an important year for Indonesia-South Korea, because we commemorate 45 years of diplomatic relations between Indonesia and South Korea,” Foreign Minister Retno Marsudi told journalists.

This morning, President Widodo will begin a series of activities by meeting with a number of company leaders from South Korea, as well as opening a VIP session business forum at Seoul. Afterwards, the President and First Lady Iriana Joko Widodo will head to Changdeok Palace to attend the state welcoming ceremony and then head to National Cemetery to lay flowers.

From National Cemetery, the President and his wife will attend lunch at the Indonesian Embassy in Seoul. Here too, the President will launch an Information System for Service and Protection of Indonesian Citizens Abroad named Portal Peduli WNI.

After that, President Widodo will then head to the Blue House to hold a bilateral meeting with President Moon. A number of agreements will also be signed between the two governments.

In the evening, the President and Mrs. Iriana will return to Blue House to attend the state dinner and afterwards will return to the hotel where they stayed while in Seoul.

The Industry Minister Airlangga Hartarto explained in a written statement, the bilateral commitments have been marked through the signing of a memorandum of understanding conducted by him with the Minister of Trade, Industry and Energy of South Korea Paik Unyu at Bogor Palace on Nov. 9, 2017.

He continued some potential sectors, in including the metal, chemical, automotive, shipping, electronics, and small and medium industries. Its expected, the cooperation between Indonesian and South Korean companies can deepen the structure of the national manufacturing industry.

The minister conveyed, his side actively encourages investment realization from South Korean industry players who have committed to invest in Indonesia. For example, the Lotte Chemical Titan will invest US$3.5 billion in Cilegon, Banten to produce naphtha crackers with total capacity of two million tons per year. The plan, this project will open employment of 9,000 peoples.

“These chemical raw materials are needed to produce ethylene, propylene and derivative products others, so that later we will no longer need to import,” he said.

Furthermore Hartarto said that other manufacturing investments from South Korea showed sufficient progress well, namely Pohang Iron Steel Company (Posco) in collaboration with PT Krakatau Steel Tbk (IDX: KRAS) for  developing a new line of steel products through its subsidiary, PT Krakatau Posco.

“Krakatau Posco will work with Nippon Steel to build a cold-producing plant
rolling mill, because many end users are from Japan such as the automotive sector. The target is 2019 already starts, “he said.

The company is also accelerating the construction of a 10 million ton cluster project steel in Cilegon, West Java and is estimated to be reached in 2025. In the automotive sector, the Ministry of Industry has also pushed Hyundai Motor Corporation  in order to increase investment in Indonesia.

“We have recommended if the Hyundai wants to investing in Indonesia, can find a different strategy from its competitors, for example is filling the sedan market,” said the minister.

Indonesia and South Korea is also committed to supporting the activities and development of small medium industries. The efforts that have been carried out by both countries are cooperation in the creative industry sector, one of which is through Korean Creative Content Agency activities at Jakarta.

Last year during his visit to Indonesia, President Moon and President Widodo witnessed the signing of 12 investment MoUs covering various sectors including water supply, low-cost house and power plants potentially valued at up to $2 billion.

One major MoU covers financing of the Light Rapid Transit (LRT) project in Jakarta, between Korea Rail Network Authority (KRNA) and Jakarta’s construction firm PT Jakarta Propertindo. Based on the MoU, the KRNA has agreed to participate in financing Phase 2 of the Jakarta LRT project in Indonesia with a loan of $500 million.

The Jakarta LRT projects worth $4.35 billion, covering the construction of approximately 110 kilometers and seven rail lines. The LRT Stage 2 project will be implemented through public private partnership schemes and available payment methods, which guarantee returns on investment.

The other MoU was between Hanwha E&C Corporation of South Korea and Indonesian PT PP Tbk (IDX: PTPP), to develop Affordable Housing Construction in Indonesia.

Related to developments on the Korean Peninsula, He stressed that Indonesia is urging North Korea to comply with UN Security Council resolutions related to Denuclearization of the Korean peninsula and stop testing of ballistic missile launches.

South Korea’s investment value continues to increase, making it the fourth largest in Indonesia. Until the middle of this year, the value had reached $1.15 billion, while in 2017 it amounted to U$2.2 billion.

Meanwhile, Indonesia’s trade balance with South Korea all year round experienced a surplus of $78 million from the total trade value which reached $16 billion.

Email: linda.silaen@theinsiderstories