Wed, 29 Nov 2000

Kim supports Indonesia's national car project

JAKARTA (JP): Visiting South Korean President Kim Dae-jung said his government would give full support to Indonesia's efforts to revive its national car project, a joint venture with South Korea's Kia Motors Co.

Kim said he agreed with Indonesian President Abdurrahman Wahid that Indonesia's national car project, which faltered following the fall of former president Soeharto, should be resumed.

"The Korean government will be doing whatever it can to ensure that the resumption is successful," he told journalists after meeting with Abdurrahman.

Indonesia's national car program, run by former president Soeharto's youngest son, Hutomo "Tommy" Mandala Putra, was suspended in 1998 in line with economic reforms required by the International Monetary Fund in exchange for billions of dollars in loans to Indonesia.

Tommy is currently at large after being convicted for corruption.

The project has since been taken over by the Indonesian Bank Restructuring Agency (IBRA).

Kim also said economic ties between the two countries should be boosted. Both countries were badly hit by the Asian financial crisis.

"We agreed to work out measures to further expand trade and investment between the two countries which dwindled during the financial crisis in 1997," Kim said.

Trade between the two countries, which plummeted from US$ 7.7 billion to US$ 4.8 billion during the downturn, is expected to reach precrisis levels this year.

Kim, who arrived on Monday for a two-day state visit, said his visit "has provided an opportunity to raise the friendship between Korea and Indonesia to a higher level".

In the meeting, the South Korean and Indonesian leaders also agreed to expand cooperation not only in the business sector, but also in political and cultural fields.

"President Wahid requested for Korea's expanded investment and assistance in human resources development in Indonesia ... to this, I requested the Indonesian government's attention and assistance to improve the trade and investment environment including the provision of conditions for Korean companies to engage in stable business activities here," Kim told the journalists after the meeting.

The two leaders earlier witnessed the signing of bilateral agreements on cultural cooperation and extradition by Foreign Minister Alwi Shihab and his South Korean counterpart Lee Joung- binn.

Separately, president of the state-owned Korea National Oil Corporation (KNOC) Ra Byung Sun said his country was interested in importing more gas from Indonesia.

He said that Korea needed more gas to fulfill the surge in the demand for gas from the country's power plants. At present, he said, Korea was spending some $700 million and $1.3 billion to import oil and gas respectively.

About one tenth of the country's domestic oil and gas needs was supplied by Indonesia, he explained.

Byung Sun added his company had plans to invest in Indonesia's oil industry.

"We would like to invest directly in exploration and development in terms of production of oil blocks that we can operate directly," Byung Sun told The Jakarta Post after a business forum on Indonesia's investment opportunities, held by the Indonesia-Korea Economic Cooperation Committee (Inkorecom).

He said KNOC was looking at several projects in Indonesia to invest in the operation of oil blocks as well as engage in exploration activities.

Chairman of the Korea Indonesia Economic Cooperation Committee (Korinecom) Lee Soo-ho said Indonesia remained an attractive investment destination because of the country's abundant natural resources and its vast population.

However, he said Korean investors were concerned over the rapid growth of the Indonesia labor unions.

"Your labor movement is one of the issues that we are paying attention to, it has become stronger and stronger," he said.

Soo-ho said that investors feared unruly labor movements could disrupt business activities.

"Unreasonable (labor movements) will hurt the circumstances to invite foreign investors," he explained.

Moo-Young Lee, director at Korea Export Insurance Corporation said that despite Indonesia's high country risk, his company enjoyed a relative profitable trade relation with Indonesian importers.(byg/bkm)