Rp 574 Trillion Investment Commitments from Japan and South Korea Should Not Remain Just MoUs

The Indonesian government has secured a jumbo investment commitment from Japan and South Korea, with a total value of around Rp 574 trillion. Although this is seen as reinforcing Indonesia’s attractiveness amid global uncertainties, economists warn that the biggest challenge lies in the realisation phase. Economist from Paramadina University, Wijayanto Samirin, stated that the investment commitments still face significant challenges in implementation. According to him, investments from Japan and South Korea generally enter high-quality manufacturing sectors that are crucial for Indonesia’s economic transformation. Nevertheless, he emphasised that MoUs are merely an initial step. “What is more important and challenging is realising these MoUs, considering the global economic uncertainties, the still unconducive investment climate, and recent disappointments for South Korean investors, including Hyundai due to government policy inconsistencies,” Wijayanto told Kontan on Thursday (2/4/2026). “In the current world situation, these MoUs will be more of a political act than an economic one. Investment realisation heavily depends on real conditions full of uncertainties, so they could potentially stop at the commitment stage,” he added. Despite this, economists agree that these investment commitments remain a positive signal for Indonesia. The government is expected to guide the implementation of the projects so they do not stop at paper agreements. It should be noted that Coordinating Minister for Economic Affairs Airlangga Hartarto stated that Indonesia’s investment commitments with South Korea and Japan are the result of a series of bilateral meetings and cooperation forums between the governments and businesses of the two countries. In the Indonesia-Korea Partnership for Resilient Growth forum, Indonesia signed 10 memoranda of understanding (MoUs) with South Korea worth US$10.2 billion or around Rp 173 trillion. The cooperation covers the energy and green transition sectors, such as solar power, carbon capture and storage, and renewable energy. Additionally, the cooperation extends to the industrial and manufacturing sectors, including steel, batteries, and eco-friendly transportation. Investments also target the digital sector and artificial intelligence (AI), property, as well as infrastructure like the development of the Bumi Serpong Damai area. Several major South Korean companies are also expanding their commitments, including POSCO in the battery supply chain. Meanwhile, Lotte Group is opening new investment opportunities by partnering with Danantara as a potential investor partner. On the other hand, the President’s visit to Japan resulted in 9 MoUs with an investment value of US$23.6 billion or around Rp 401 trillion. This cooperation covers the energy sector, including the Masela gas project, industrial downstreaming, to the financial sector. “This means the President’s visit to both countries has resulted in investment commitments of Rp 574 trillion. This is a very significant figure because Indonesia, in an uncertain geopolitical situation, remains attractive to Japanese and Korean investors,” said Airlangga. He added that Japan is currently Indonesia’s third-largest investment and trade partner, while South Korea ranks seventh. Moving forward, the government is also encouraging the role of Indonesia’s sovereign wealth fund, Danantara, as a co-investor to strengthen project realisation.