Indonesia and South Korea Bolster Bilateral Economic Cooperation

Seoul, INTI – South Korea has become Indonesia's seventh-largest investor, with total Foreign Direct Investment (FDI) reaching approximately USD 2.5 billion in 2023, an increase of over USD 200 million (8.7%) from the previous year. As Indonesia and South Korea enter their fifth decade of bilateral partnership, the total bilateral trade value between the two countries hit USD 20.8 billion in 2023.

"We believe our cooperation will continue to grow and develop. I hope Minister Ahn can help further strengthen and deepen our industrial, trade, and energy transition cooperation between Indonesia and South Korea," said Coordinating Minister for Economic Affairs Airlangga Hartarto during a bilateral meeting with South Korea's Minister of Trade, Industry and Energy, Ahn Duk Geun, in Seoul on Wednesday, May 22.

In July 2023, the second Joint Committee on Economic Cooperation (JCEC) meeting was held in Seoul, yielding several important agreements. These included cooperation on downstream nickel investment for electric vehicle (EV) batteries, market access for Indonesian fruit products to South Korea, the expansion of Lotte's petrochemical plant, the development of the Krakatau Steel-Posco steel cluster, the expansion of market access for Indonesian SMEs through South Korean e-platforms, and collaboration on energy transition and global climate change mitigation. This includes technologies such as Carbon Capture and Storage (CCS), hydrogen/ammonia energy production, and hydroelectric power plant development.

"I am proud and extend my congratulations on the conferment of the Honorary Doctorate from Gyeongsang National University (GNU). Hopefully, as an alumnus, it will positively impact the increase of collaborative activities with Korea," said Minister Ahn.

Minister Airlangga highlighted several ongoing collaborations, such as the expansion of Lotte's petrochemical plant and the Krakatau Steel-Posco steel cluster development. However, he noted that some agreements still need to be pushed for immediate implementation. The two ministers also discussed building an EV ecosystem through investments by Hyundai and LG Energy Solution in Indonesia.

"I hope the EV ecosystem can deepen, and with Korea's assistance, we can negotiate with the United States to open the market for products resulting from the cooperation between LG and Hyundai under the IRA law," Minister Airlangga added.

South Korea also presented opportunities for cooperation in developing nuclear power plants through the Korea Atomic Energy Research Institute (KAERI). KAERI has developed Small Modular Reactor (SMR) technology designed to be safe and produce a lower carbon footprint than conventional reactors. Small modular nuclear reactors are seen as an alternative solution for supplying electricity, particularly in remote or isolated areas.

"This year, Indonesia will host the third JCEC meeting, and we invite Minister Ahn to join us for the JCEC meeting in July in Jakarta," Minister Airlangga concluded.

The meeting marks a significant step in further solidifying the economic ties between Indonesia and South Korea, setting the stage for enhanced cooperation in various sectors, including trade, energy, and technological innovation.