The Jakarta Post
Along with all the fanfare and praise that President Joko “Jokowi” Widodo is likely to receive from his visit to Busan, South Korea, this week, officials will want to point out how his government concluded negotiations for a comprehensive trade pact with Seoul in record time and how it clinched a US$2.5 billion investment deal from the Hyundai Motor Group.
However, structural challenges remain a big concern for others keen on investing in Indonesia and only in its absence will investors pick Southeast Asia’s largest economy over its more competitive neighbors like Singapore and Vietnam.
On the back of President Moon Jae-in’s New Southern Policy, South Korea has emerged as a growing player in the region, having shifted much of its foreign direct investments away from China and into ASEAN countries despite the economic uncertainty, according to the United Nations Conference on Trade and Development.
Last year, South Korea was ASEAN’s fifth-largest trading partner and sixth-largest investor, having posted two-way trade worth $160.8 billion and funneled $6.6 billion in investments.
In spite of this, Jokowi has repeatedly expressed disappointment about losing out to Vietnam, which is already a regional investment hub for South Korea. Key to this is the gripe of Korean investors about Indonesia’s rigid labor laws, with some labor-intensive companies threatening to leave. A solution for these regulations — included in one of the so-called omnibus bills — is already in the works, but it would be an oversight if Jokowi continues to lure investors with promises instead of a tangible investment climate.
Constructive engagement by ASEAN on the Korean Peninsula, as it relates to the deadlock over negotiating denuclearization, also remains a very important issue for Indonesia to follow up on. Over the past few years since tensions between North and South Korea came into wider view, ASEAN has shown little interest in taking up the mediation role that Seoul expected of it.
The commemorative summit saw the palpable absence of North Korean leader Kim Jong-un, who firmly rejected an offer by Moon to partake in the meetings last week. In spite of three inter-Korean summits and two further meetings between Kim and United States President Donald Trump, Pyongyang has become more hardened toward the efforts of Seoul and Washington to restart the stalled denuclearization talks.
In the end, Jokowi’s gambit in Singapore last year did not yield any discernible results, as several ASEAN member states privately hoped the summit would keep the spotlight on them. That said, the leaders of ASEAN and South Korea did meet for a closed-door retreat session to specifically discuss Korean Peninsula issues, but they customarily refrained from making any public overtures.
One can only imagine what the leaders meant when they proclaimed in a joint vision statement that they agreed to “promote and facilitate dialogue and cooperation, including through ASEAN-led mechanisms, to support complete denuclearization and the establishment of permanent peace on the Korean Peninsula in a peaceful manner”.
Back home, if Jokowi wants to make the best of his relationship with South Korea, he should gently remind his aides to act quickly and not wait until Seoul loses interest.