South Korea KIND Explores Potential Investment in Indonesia

JAKARTA (TheInsiderStories) – The Indonesian Investment Coordinating Board (ICB) signed an agreement with Korea Overseas Infrastructure & Urban Development Corporation (KIND) to explore the potential investment in the field of infrastructure and urban areas, said the agency.

The agreement was signed by ICB’ deputy Ikmal Lukman and KIND EVP Han Kyu Lim in Seoul on Friday (09/20), witnessing by coordinating minister for maritime affairs Luhut Binsar Pandjaitan and Chairman of the Korea-Indonesia Economic Cooperation Committee under the Korea Chambers of Commerce and Industry (KCCI) Yoon Chun-sung.

Currently KIND is exploring 48 projects in Asia, 15 of which are in Indonesia. KIND projects in Indonesia are spread across several regions of Java, Sumatra, Sulawesi, and Kalimantan. The sectors of interest include transportation, the environment, logistics, power generation, urban area development, and water treatment plants.

“For South Korean construction companies, Indonesia has become one of the most important markets in the world. KIND will make the best effort to increase the participation of South Korean companies in infrastructure projects and urban development in Indonesia in collaboration with BKPM,” said Lim.

Previously, responding to the request of Indonesia, Korean Eximbank intends to provide untied soft loans under the name of the Economic Development Partnership Facility (EDPF) to the country, said the minister at a bilateral meeting with President/Chairman of the Korean Eximbank Sung-soo Eun in Fiji, last July.

According to the minister of national development planning Bambang Brodjonegoro, the policy was the commitment of the two countries to enhance inter-government cooperation in developing alternative funding schemes that were suitable and feasible to apply to infrastructure and construction projects in Indonesia. At the same time, he continued, to encourage Korean investors to take part in facilitating infrastructure investment in Indonesia.

According to him, this step is in line with the policies of Korean President Moon Jae-in who launched the New Southern Policy in 2018 as a strategic policy to expand the commitment of the Korean Government in establishing cooperation with ASEAN countries, including Indonesia.

Brodjonegoro explained, Korean Eximbank is currently carrying out two important functions, one of which is ensuring the implementation of Official Development Assistance funding from the Korean Government through the Economic and Development Cooperation Fund in the form of binding soft loans or binding soft loans.

That means, he said, the Korean government must ensure the implementation of funding for development cooperation from the lender in Indonesia.

Therefore, he stressed that as the executor of development cooperation funding between Indonesia, South Korea, and commercial export-import funding institutions, the two countries could achieve Korean total funding commitments in the 2016-2020 period worth of $600 million.

“To date, $129 million has been allocated for the Engineering Service for Coastal and River project and the project of the Urgent Rehabilitation of Strategic Irrigation for Western Indonesia,” he said.

Meanwhile, there are two projects currently under preparation under the agreement, namely the $150 million e-Government or data center project and $68 million Aid to Navigation.

Indonesia and South Korea, he suggested, must optimize all available cooperation and funding schemes by combining both optimizations, such as the one valued at $75,89 million at the Karian Dam and Water Conveyance Project in Lebak, Banten, which was carried out by Daelim Industrial contractors Co., Ltd. with Indonesian contractors PT Wijaya Karya Tbk (IDX: WIKA) and PT Waskita Karya Tbk (IDX: WSKT).

According to ICB data, investment from South Korea is dominated by the machinery and electronics industry sector (15 percent); mining (13 percent); gas and water (9 percent); the footwear industry (8 percent); and the rubber and plastic industry (8 percent). Most of the investment is still in Java, followed by Kalimantan and Sumatra.

The total investment realization from 2014 to the second Quarter of 2019 reached $7.5 billion. With investment realization reaching $2 billion in 2017 and $1.6 billion in 2018.

US$1: Rp14,000

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