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.