Indonesia remains favorable for Korean investment

Indonesia remains favorable for Korean investment

South Korean President Roh Moo-hyun is scheduled to attend
this year's Association of Southeast Asian Nations (ASEAN) summit
in Bali on Oct.7-8. The following is an excerpt of an interview
with South Korean envoy Yun Hai-jung with The Jakarta Post's
Kornelius Purba.

Question:How can South Korean companies benefit from the ASEAN
Free Trade Area (AFTA) and boost their presence in the
Association of Southeast Asian Nations, especially in Indonesia?

Answer: Given the need for the companies of nonmember ASEAN
countries to locate their production facilities in ASEAN in order
to benefit from AFTA, many Korean companies have been increasing
their presence in ASEAN countries in recent years, either through
direct/joint investment or business cooperation with local
companies. South Korea will also explore the possibility of
concluding a free trade agreement with ASEAN.

As the Korean and Indonesian economies greatly complement each
other, we have looked and shall continue to look to Indonesia as
the best destination for our investment in ASEAN.

Indonesia is already the third-largest recipient of our
overseas investment after the United States and China.

Q: South Korea's interest in Indonesia remains high, despite our
domestic problems. Why have Korean firms chosen to stay here, and
what do they expect in terms of boosting foreign investment?

A: Since I arrived in Jakarta in July, I have been impressed with
the country's macroeconomic stability, which has gradually
recovered from the 1997 economic crisis. With its regained
political and economic stability, Indonesia will remain one of
the favored areas for Korean overseas investment, shown by the
many Korean businesspeople who have worked here for years and who
have become familiar with the local culture and customs.

I think that Korean investors find most attractive Indonesia's
potential, given its vast territory, large population and wealth
of natural resources. However, in the short term the Indonesian
government's continued commitment to reform is the most important
factor for them to remain in Indonesia.

The recently published White Paper of the Indonesian
government has confirmed its commitment in this regard ...

We hope that the Indonesian government's efforts will bear
fruit with its reform measures, notably in upholding the rule of
law and in improving overall economic efficiency.

Q: What is the future of South Korean investment in Indonesia?

A: The country's rich natural resources have long attracted
Korean investment since the late 1960s. The investors initially
focused their attention on developing natural resources such as
forests and minerals for export to Korea and other countries.

But as Korean labor-intensive manufacturing became less
competitive, many Korean companies relocated their light
industrial factories, such as textiles, garments, toys, footwear,
furniture and electric appliances, to Indonesia.

In line with the progress of Indonesia's economic development,
Korean investors are expanding their interest to medium- and
high-tech areas such as telecommunications.

Electronics and telecommunications are the most promising
sectors for our future industrial cooperation, as Korean
companies possess world-class technology in these fields.

I hope that our bilateral trade may continue to grow in line
with development of our economic relations, reaching an annual
volume of US$10 billion during my term here in Indonesia.

Q: Indonesia has tried to mediate in the Korean peninsula nuclear
crisis, though so far without concrete results. Your comment?

A: The Korean government highly appreciates the initiative taken
by President Megawati Soekarnoputri and her government to defuse
the potential tension on the Korean Peninsula arising from North
Korea's nuclear weapons development program. President Megawati's
visit to both Koreas last year and the visit of her special
envoy, Ambassador Nana Sutresna, to Seoul and Pyongyang (reflect)
the seriousness and interest of Indonesia toward this end.

The recent, six-party talks on the North Korean nuclear issue
between South and North Korea, the United States, China, Russia
and Japan, held in Beijing last August, marked a meaningful step
toward achieving a peaceful resolution of the issue.

They were the result of persistent and laborious attempts by
the international community to bring the concerned parties to the
negotiating table. The Indonesian initiative has also contributed
to restarting a multilateral dialog process.

I believe the international community, including Indonesia,
shares the view that North Korea must fulfill its
responsibilities in implementing the safeguards of the
International Atomic Energy Agency and comply with all its
obligations under the NPT nuclear nonproliferation regime.

The six parties shared in principle the ultimate goal of
establishing a nuclear weapons-free Korean peninsula and agreed
to achieve that goal by peaceful means, through dialog.

Our government's view is that, if North Korea abandoned its
nuclear program, the international community would be prepared to
deal seriously with its specific concerns, which would promise a
more peaceful and prosperous future for all Koreans. I hope your
government continues to encourage North Korea to respond
positively to our common appeal for a peaceful and comprehensive
solution of the nuclear issue without further delay.

Q: What is your government's position at the next ASEAN summit?

A: I would like to congratulate Indonesia's hosting of the Ninth
ASEAN summit and the ASEAN+3 (South Korea, China, Japan) summit
meeting. It is the first multilateral summit that President Roh
Moo-hyun will participate in since his inauguration in February.
His visit to Bali is also his first-ever trip in his current
capacity to the Southeast Asia region.

South Korea places great importance in the promotion of its
relationship with ASEAN. The geographical proximity, cultural
affinity and the growing sense of common identity between Korea
and ASEAN have contributed to the enhancement of our relations.

At the ASEAN-Korea summit meeting this time, we shall be able
to engage in an earnest exchange of views on ways to consolidate
ASEAN-Korea cooperation. The ASEAN+3 summit will be a good
opportunity to accelerate the promotion of East Asia Cooperation.
Korea will make more effort to institutionalize the cooperation
for peace, stability and prosperity in East Asia to build upon
the results attained so far through the ASEAN+3 summits.

Q: As a member of the Organization for Economic Cooperation and
Development, what is your government's stance in providing
financial aid for developing countries?

A: As a responsible member of the international community,
Korea's official development assistance (ODA) to developing
countries aims to contribute to their economic and social
development as well as international peace and stability.

Korea has achieved rapid economic growth and development with
the cooperation and support of the international community. So
Korea is well aware of the importance of ODA to many developing
countries to achieve their economic and social development.

Since the late 1980s, Korea began actively providing ODA to
developing countries in a bid to reciprocate for the assistance
it had received in the past and to share its experience of
economic and social development.

Korea has cumulatively provided Indonesia with $20 million in
grants and $160 million in soft loans. At the last meeting of the
Consultative Group on Indonesia in Bali in January, Korea pledged
$3.1 million in grant assistance and $20 million in soft loans to
Indonesia.