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ndonesia is expecting to welcome investment totaling up to US$12 billion from Korean firms working on various industrial, infrastructure and metal processing projects, a minister says.

Industry Minister MS Hidayat said on Friday in Jakarta that the largest part of the investment, totaling $5 billion, would come from Asia’s second-biggest petrochemical producer, Honam Petrochemical Corp., which plans to build a petrochemical complex later this year.

“We are also anticipating several investment projects in infrastructure and smelters,” he told reporters after meeting South Korean business leaders at his office.

Hidayat did not specify the firms in these projects, but according to the Investment Coordinating Board (BKPM), several of Korea’s major firms are expected to invest in infrastructure projects, including a power plant and a cruise terminal.

On Tuesday, POSCO Energy Co., an affiliate of Korea’s steel giant POSCO, kicked off the construction of a 300-kilowatt fuel cell power plant at Ancol Dreamland Resort in Pademangan district, North Jakarta. The power plant is estimated to cost $3 billion and is funded by the Korea International Cooperation Agency (KOICA).

Meanwhile, Samsung reportedly will be involved in the construction of infrastructure at Benoa cruise terminal in Bali and is seeking the opportunity to build a mineral-processing smelter in Indonesia.

Hidayat said that Indonesia anticipated much higher inflows of investment from South Korean firms following the completion of ongoing negotiations on the comprehensive economic partnership agreement (CEPA), the agreement is due to be concluded in the next year or two.

“We expect investment will hit $50 billion within the next five years, boosted by the planned agreement,” he explained.

Investment from Korea jumped significantly in the past year, up by 422 percent to $1.2 billion from 2010, along with the entry of several major firms, including the world’s third-largest steel maker POSCO and the world’s seventh-largest tire maker, Hankook Tires.

POSCO is constructing its $6 billion plant jointly with Indonesia’s biggest steel producer Krakatau Steel in Cilegon, Banten, while Hankook is developing its plant in Bekasi, West Java, with a total investment of $1.1 billion by 2018.

Bilateral trade also expanded greatly, up by 43.84 percent last year to $29.39 billion from a year earlier. However, Indonesia has seen imports of manufactured goods from Korea grow steadily from 2007 to 2011, when the rate grew by 39 percent compared to four years earlier.

On the other hand, Indonesia’s export of manufactured goods to Korea grew by only 15 percent in the past four years, according to industrial statistics.

Indonesia and Korea would conduct a bilateral meeting next month in Seoul to discuss strategies to boost future trade and investment in both countries, Hidayat said.

Among the big plans was the joint production of eco-friendly vehicles, including hybrid and electric cars, agreed by both by President Susilo Bambang Yudhoyono and President Lee Myung-bak of Korea, he added.

Indonesia is gearing up to develop low-emission vehicles to help it reduce greenhouse emissions by 2020. Already Japanese automakers have expressed interest in developing eco-cars in Southeast Asia’s largest automotive market.

Newly appointed Indonesian ambassador to Korea John A. Prasetio said that a number of Korean firms had reiterated their willingness to set up manufacturing activities in Indonesia amid the current global slowdown, but expected the government to address key issues, such as labor disputes and fiscal incentives, through clear regulations.