The Indonesian Investment Coordinating Board (BKPM) will team up with the Korea International Trade Association (KITA) to attract more South Korean companies to do business in Indonesia
he Indonesian Investment Coordinating Board (BKPM) will team up with the Korea International Trade Association (KITA) to attract more South Korean companies to do business in Indonesia.
The cooperation is stipulated in a memorandum of understanding (MoU) signed in Jakarta on Friday by BKPM deputy chairman for investment cooperation Achmad Kurniadi and KITA executive vice chairman Ahn Hyunho.
“KITA has a wide community base in South Korea. By partnering with the association, we will be able to reach a large number of businesspeople,” he said.
Based on data from the BKPM, South Korea’s investments reached US$1.9 billion in 2012, placing the country as the third largest foreign investor in Indonesia after Singapore and Japan.
The investment amount was also the highest investment realized by South Korea in Indonesia in the last seven years. A big chunk of the investments were made by electronics and base-metal companies.
Korea’s investments, which accounted for 7.9 percent of total foreign direct investments in Indonesia 2012, rose more than 55 percent from about $1.22 billion in 2011.
“Their investments are actually well-diversified in Indonesia, from timber processing to electronics, but we hope businesses in other sectors will soon follow, such as in oil,” Achmad said.
At present, the South Korean community is also the largest foreign community in Indonesia with around 2,000 businesses operating in the country.
The BKPM does not have a specific target in terms of South Korea’s investment figure in 2013, but it hopes it will be higher or at least at the same level as last year. “As long as we are able to maintain a positive business climate, I am sure Indonesia will continue to attract foreign investors,” he added.
According to Achmad, the MoU will help BKPM facilitate the needs of Indonesian businesspeople wanting to invest in South Korea as well, as mandated in the 2007 Capital Investment Law. However, it has not yet developed a detailed database regarding the number of interested Indonesian investors.
Meanwhile, Ahn said that Indonesia, with its stable investment climate and growing economy amid the global crisis, has become even more attractive to South Korean firms. “Indonesia has rich natural resources and a big population. With its economy, it has the potential to become the leader in the region,” he said.
KITA groups more than 70,000 companies, making it the largest private business organization in South Korea. Some of its members that already operate in Indonesia include electronics firms Samsung and LG, food seasoning company Miwon, retailer Lotte Group, tire maker Hankook Tire and steel giant Posco.
As a follow-up to the MoU, Ahn said he invited his Indonesian counterparts to attend the Premium ASEAN 2013 business meeting in Seoul on March 26. This year’s meeting will focus on Indonesia and Myanmar.
“Business players and economy-related officials will be at the meeting. We hope we can exchange views on doing business in Indonesia,” he said.
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