Indonesia has attractive conditions for prospective Korean investors
Indonesia has attractive conditions for prospective Korean investors
  • 이경식 기자
  • 승인 2015.08.27 10:43
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Making an upwards of 5% GDP growth in average

The Republic of Korean and the Republic of Indonesia share the 70th anniversary of their independence, Korea on Aug. 15, 1945 and Indonesia two days later on Aug. 17 the same year.
Indonesia is a very attractive country for the prospective Korean investors in the country. Indonesia has been making an average of over 5% GDP growth annually, which is one of the most important conditions in the country--as well as a vast population, some 220 million people.

During the ASEAN-ROK Summit Conference last December, President Park Geun-hye and President Joko Widodo of Indonesia had a summit meeting and discussed to enhance bilateral cooperation.
At the meeting President Park expressed her gratitude that President Widodo was able to attend the ASEAN-ROK Commemorative Summit despite such a busy schedule, as it had been less than two months since he was inaugurated.
"On December 1, a Korean deep-sea fishing vessel sank in the Bering Sea in Russian waters, killing Indonesian sailors onboard. I would like to deliver sincere words of condolence to President Joko Widodo and to the bereaved families," said President Park. "Indonesia is one of Korea`s key trading partners and an important cooperative partner," said President Park.
Then she said, "Our two sides have deepened their bilateral strategic partnership with active cooperation on the defense industry and with the exchange of high-level officials. I hope that our bilateral relations will be further developed."
In response, President Joko Widodo said he is glad to attend the ASEAN-ROK Commemorative Summit." I hope that our bilateral relations will develop even further and I hope that the foreign ministers of our two nations will quickly hold a joint meeting."
Since the establishment of diplomatic relations between Korea and Indonesia in 1973, according to the Indonesian Embassy in Seoul, both countries have maintained a close relationship in the fields of politics, economics, culture and others. The friendly bilateral relations between the two countries are indeed admirable which is marked by the frequent visits of both Presidents and their high ranking officials.
The bilateral relations between Korea and Indonesia has been gaining a greater momentum since the last ten years. The two countries established Joint Commission chaired by its Foreign Ministers on 9 June 2006. This is further strengthened by the signing of "The Joint Declaration on Strategic Partnership to Promote Friendship and Cooperation between the Republic of Indonesia and the Republic of Korea" by the two leaders on 4 December 2006 during the visit of President Roh Moo-hyun to Indonesia.
It is well-recognized that the two countries complementary each other. The Indonesia's abundant of natural resources and rich of biodiversity coupled by labor forces and market potential will bear fruit shall they be well-managed by the Korean high-technology, capital and skilled-management. This condition has indeed shown by the increasing trade, investment and economic cooperation as well as the strengthening of political and socio-cultural cooperation between the two countries.
The diplomatic relations between Indonesia and Republic of Korea was established in September 1973. The two countries believe that continuous and consistent efforts in strengthening relations and cooperation through concrete cooperation in various sectors are their best interests. The two countries share many similarities such as both are democratic country, having strategic geographical location, and active in contributing and addressing global and regional challenges.
Despite similarities, Indonesia and Republic of Korea have many complementarities in various aspects which become "opportunities window" for furthering bilateral relations and cooperation. As an illustration, Indonesia has abundant natural resources, sizeable market with increasing number of middle class societies, and manpower. On the other hand, Republic of Korea has strengths in capital, technology, IT, etc. Areas of cooperation of mutual benefit are wide-open.
Indonesia and the Republic of Korea has entered a strategic partnership in their relations through the signing of "Joint Declaration on Strategic Partnership to Promote Friendship and Cooperation between Republic of Indonesia and the Republic of Korea" by the Presidents of Republic of Indonesia and Republic of Korea. The two countries have a number of forums or modalities for bilateral relations such as
- Working Level Task Force (WLTF);
- Joint Task Force on Economic Cooperation (2007);
- Working Level Task Force Meeting/WLTFM (2008);
- Joint Secretariat RI-ROK di Jakarta (2012);
- Joint Economic Committee (WLTFM) at Economic Ministerial Level
How close the relations of the two countries probably could be seen in the frequent and quite regular exchange of visits of high dignitaries including the Presidents. Among others are visits of President Lee Myung-bak attending BDF V in November 2012, state visit of President Park Geun-hye to Jakarta, Oktober 2013, visits of President Susilo Bambang Yudhoyono attending the Nuclear Security Summit, Maret 2012, and visit of President Jokowi to Busan attending 25th ASEAN-ROK Commemorative Summit and for Bilateral Meeting on 10-12 December 2014.
During the meeting between President Jokowi and President Park Geun-hye, the two Leaders among others agreed:
- to conduct Annual Joint Commission Meeting at the Ministerial level,
- Republic of Korea will participate in shipyard development to support maritime development in Indonesia
- To resume IKCEPA negotiation
- To enhance cooperation in defense industry particularly technology transfer related with Submarine and air force planes.
Relations and Cooperation between Indonesia and Republic of Korea have also been strengthened through joint programs and activities under ASEAN-Korea Centre AKC) as well as MIKTA (Mexico, Indonesia, Korea, Turkey and Australia).
With regard to AKC, 7th Annual Meeting of Council of Directors ASEAN-Korea Center took place in Seoul on 5-6 February 2015. During the Meeting, Indonesia as Chairman of the Executive Board of ASEAN Korea Center has reported among others programs and activities implemented by AKC covering inter alia special commemorative activities in celebration of the 25th Anniversary of the ASEAN-ROK Dialogue Relations, namely, ASEAN Trade Fair, and the Best of ASEAN, which comprised of ASEAN Film Festival, the first-ever film festival in Korea, if not the whole world, that featured ten films from ASEAN Member States; Jewels of ASEAN, a large-scale public art installation symbolizing the cultural significance of the ten representative landmarks of each ASEAN Member State; ASEAN on Wheels, a road show based project with ten buses wrapped with photos illustrating the culture and tourism of ASEAN Member States that travelled through various provincial and metropolitan cities in Korea; ASEAN-Korea Youth Forum, a program which gathered 200 university students and young professionals of Korea and ASEAN Member States.
On MIKTA, several meetings have been organized by the Government of the Republic of Korea. They are:
- 1st MIKTA Senior Official Meeting (SOM) has been conducted in Seoul on 26 ? 27 February 2015 chaired by Mr. Lee Kyung Soo, Deputy Minister for Political Affairs, Ministry of Foreign Affairs Republic of Korea. Delegation of the Republic of Indonesia was headed by Director General for Multilateral Affairs.
- 5th MIKTA Foreign Ministers Meeting (Retreat) in Seoul on 22 May 2015. The meeting was chaired by Mr. Yun Byung-se as MIKTA coordinator 2015, and attended by Minister of Foreign Affairs of Meksiko, Dr. Jose Antonio Meade Kuribrena, Minister of Foreign Affairs of Turky, Mr. Mevlut Cavusoglu, Minister of Foreign Affairs of Australia, Julie Isabel Bishop, MP and Director General for Multilateral Affairs Republic of Indonesia as Special Envoy of the Minister of Foreign Affairs.
- MIKTA Speakers Consultation in Seoul on 2 July 2015, attended by more than 50 delegates from MIKTA countries (Mexico, Indonesia, Korea, Turkey, Australia). Indonesian Delegation was headed by Irman Gusman - Chairman of DPD RI. On that the occasion, Minister of Foreign Affairs Yun Byung-se, attended and deliveried the outcomes of 5th MIKTA Foreign Ministers Meeting (MIKTA FMM).
During these meetings, Embassy of the Republic of Indonesia in Seoul actively participated as members of Delegation of the Republic of Indonesia.
Economic relations:
Indonesia today is an emerging global powerhouse in Asia, it is an attractive investment destination as well as a manufacturing hub. After the reform in 1998, Indonesia’s 250 million people have enjoyed a widening range of political freedoms, and participation in the political process is high. Joko Widodo, former businessman and governor of Jakarta, won a tight race for the presidency in 2014, pledging to end corruption and promote economic reform. As a member of the G-20 and a driving force within the Association of Southeast Asian Nations, Indonesia plays a growing role at the multilateral level. Its increasingly modern and diversified economy has recovered from the 2009 global recession.
The Gross Domestic Product (GDP) in Indonesia was worth 888.54 billion US dollars in 2014. The GDP value of Indonesia represents 1.43 percent of the world economy. GDP in Indonesia averaged 214.72 USD Billion from 1967 until 2014, reaching an all time high of 917.87 USD Billion in 2012 and a record low of 5.98 USD Billion in 1967. Indonesia's GDP contracted 2.06 percent in the last quarter of 2014, following a revised 3.16 percent growth in the previous quarter. The slow expansion was due to an increase in government spending, investment and exports were unable to offset a rising imports and a plunge in private consumption.
Indonesia is the largest economy in Southeast Asia and grew by 6.2% in 2012 and in 2014, stronger economic growth is expected around the lower end of the 5.8-6.2% range. Much less affected by the global financial crisis compared to its neighboring countries, Indonesia’s economy grew by 5% in 2014, making “The World’s Most Stable Economy in the Last Five Years” according to The Economist Magazine.
Indonesia's GDP contracted by 0.18 percent in the first quarter of 2015, following a 2.06 percent contraction in the previous quarter, as a small increase in private consumption was unable to offset a decline in government consumption, investment and exports. On the expenditure side, private consumption rose 0.11 percent, accelerating from 0.03 percent growth in the fourth quarter. Government consumption contracted by 48.68 percent, following a 43.28 percent expansion in the December quarter. Non-profit institutions serving households spending also declined by 1.19 percent from 1.46 percent growth in the preceding quarter. Investment contracted by 4.72 percent, after registering a 2.99 percent growth in fourth quarter. Exports in the first quarter of 2015 declined by 5.98 percent from a 4.32 percent expansion in the previous quarter. Imports also fell by 9.98 percent, following a 8.17 percent growth in the preceding period.
Nevertheless, Investment in Indonesia is still very much attractive because labor is considered relatively affordable: the average manufacturing job pays a base salary of $253 per month, compared with $369 in Thailand and $403 in China. Demography is in Indonesia’s favour: its median age, 29.2, is well below those of Thailand (36.2) and China (36.7). With a total population of around 250 million as of 2013, Indonesia is the fourth most populous country in the world after China, India, and the USA. During 2011-2013, the Indonesian population grew by 6%. In addition to being the fourth-most-populous country in the world, Indonesia has a huge, fast-urbanising domestic market and rising middle consumer class. A rapid expansion in the middle class has helped to transform the country's consumer market. Businesses in a wide range of industries can expect to capitalize on both the strong purchasing power and the high labor skills of the middle class.

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