South Korea and Indonesia Reinforce Cooperation

Tempo Interactive, Monday, 29 March, 2010 | 14:17 WIB

TEMPO Interactive, Seoul: The Coordinating Minister for the Economy, Hatta Rajasa, said that trade between South Korea and Indonesia will be reinforced after quite a deep slump caused by the global financial crisis. The total trade between both countries amounted to US$ 16 billion in 2008. But, because of the crisis, it declined to US$ 13 billion the following year.

Korean investment in Indonesia has also been increasing. From 2000-2004, Korean investment was ranked eighth from 10 countries with a value of US$ 596 million covering 287 projects. But from 2005 to 2009, Korea is ranked fifth with an investment value of US$ 2,46 billion covering 774 projects.

This was reported by Hatta in the closing session of the South Korea-Indonesia Task Force meeting in Seoul, South Korea, last weekend. Korea, according to Hatta, is one of Indonesia’s main business partners. “This year, if possible, investment can increase to 2008 levels,” said Hatta after the meeting held on March 25 and 26.

The Deputy Minister for Transportation, Bambang Susantono, who is part of the delegation, said that the government needs a huge capital for several sectors, especially electricity and infrastructure. In the power sector, for example, Indonesia needs 320 terawatt/hour until 2018 to build electricity generators in Java.

“Because of the big capacity, Indonesia needs new investment in the electricity sector,” said Bambang. He added that the power plant project with a total capacity of 10.000 MW is ongoing. The project needs an investment of US$ 1-1.2 billion per MW.

Besides electricity, the infrastructure sector also needs new investment. With a growth of 58 vehicles per kilometer in 2008, about 47 percent of Indonesian citizens spend 20 percent of their revenue for transportation.

The South Korea Chamber of Trade and Industry chairman, Khyung Shik-Sohn said that Korean entrepreneurs needsbusiness forum such as this is to choose the best industry offered by Indonesia. “We are looking (for new investment). Infrastructure and energy sectors are very attractive,” he said.

Bambang said that the Korean government promised to extend soft loans for infrastructure projects in Indonesia. “From around US$ 370 million promised, only US$ 82 million have been realized," said Bambang.

The Korea Exim Bank and Korea Expressway Corporation are still conducting feasibility studies on a plan to construct the Solo (Central Java) – Kertosono (East Java) highway. The 177 kilometer project with a value of US$ 380 million will be implemented by private companies and the government.

“The Korea Exim Bank and the Korea Expressway continue to conduct negotiations,” said the Director General of Construction Policy at the Department of Land, Transportation and Marine Affairs, Doh Tae-ho, in his presentation to the Deputy Minister of Land, Transportation and Sea, Kim Jung-han.

GRACE S. GANDHI