South Korea highlights investment hurdles in Indonesia amid partnership push

South Korea is drawing attention to significant hurdles that are impeding the investment climate in Indonesia, even as both nations strive to deepen their strategic partnership. Kim Gi-hyeon, chairman of the Korea-Indonesia Friendship Committee in South Korea's National Assembly, noted that economic relations have faced difficulties in recent years, with bilateral trade value declining from a high of $25.5 billion in 2020.

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There are more certification provisions in Indonesia that increase non-tariff barriers, making it difficult for Korean companies to enter the Indonesian market, and the removal of electric vehicle incentives has made Hyundai hesitant to make additional investments.

Kim specifically pointed to Indonesia's extensive certification requirements, which create non-tariff barriers and complicate market entry for Korean firms. Furthermore, the revocation of electric vehicle incentives has reportedly made Hyundai hesitant to make additional investments. Hyundai Motor Company had previously pioneered EV production in Indonesia with models like the Kona EV and IONIQ 5, marking the first electric vehicles manufactured in the country.

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However, after the incentive system was abolished, the benefits available tend to be enjoyed more by Chinese companies.

"However, after the incentive system was abolished, the benefits available tend to be enjoyed more by Chinese companies," Kim observed, suggesting a shift in market dynamics. Despite these concerns, Kim expressed confidence that South Korea can remain a partner driving mutual growth through mutually beneficial cooperation, hoping for increased opportunities in economic investment, technology transfer, and talent development.

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I hope there will be more opportunities for economic investment, technology transfer, and talent development between Indonesia and Korea.

Jung Ga-yeon, Deputy Director-General of the Southeast Asia and ASEAN Affairs Bureau at South Korea's Ministry of Foreign Affairs, separately emphasized the strength of the special comprehensive strategic partnership between Seoul and Jakarta. She stated that both countries share common interests in bolstering mutually beneficial cooperation amidst rising global uncertainties. Jung highlighted potential collaboration in defense, supply chains, energy, digital technology, AI, and the cultural and creative industries, viewing the bilateral relationship as a bridge for broader cooperation between South Korea and ASEAN.

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Through this momentum, Korea and Indonesia will continue to work closely to deliver tangible benefits to our people by expanding cooperation in various sectors, including cooperation in the defense industry, supply chains, energy, digital technology and AI, and the cultural and creative industries.