South Korea Highlights Investment Barriers in Indonesia
South Korea has highlighted a number of barriers it considers disruptive to the investment climate in Indonesia, amid efforts by both countries to strengthen their strategic partnership. Kim Gi-hyeon, Chairman of the Korea-Indonesia Friendship Committee in the National Assembly of the Republic of Korea, said bilateral economic relations have faced challenges in recent years. According to him, the value of bilateral trade, which had reached 25.5 billion US dollars in 2020, has declined.
“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 said during a discussion of The Indonesian Next-Generation Journalist Network on Korea, organised by the Korea Foundation and the Foreign Policy Community of Indonesia at the National Assembly of the Republic of Korea in Seoul on Tuesday, 9 June 2026.
Kim detailed that Hyundai Motor Company has produced electric vehicles in Indonesia, such as the Kona EV and IONIQ 5. “These vehicles are the first electric cars produced in Indonesia,” Kim said. He stated that the change in incentive policy means the benefits currently available are mostly enjoyed by Chinese companies. “However, after the incentive system was abolished, the available benefits tend to be enjoyed more by Chinese companies,” he said.
Nevertheless, Kim believes South Korea can still be a partner that drives shared growth for both countries through mutually beneficial cooperation. “I hope there will be more opportunities for economic investment, technology transfer, and talent development between Indonesia and Korea,” Kim said.
Separately, Jung Ga-yeon, Deputy Director-General of the ASEAN and Southeast Asia Affairs Bureau at South Korea’s Ministry of Foreign Affairs, said the special comprehensive strategic partnership shared by the two countries reflects the highest level of trust and determination. According to her, Seoul and Jakarta have a shared interest in strengthening mutually beneficial cooperation amid increasing global uncertainty.
“Through this momentum, Korea and Indonesia will continue to work closely together to provide tangible benefits for our people by expanding cooperation in various sectors, including the defence industry, supply chains, energy, digital technology and AI, as well as cultural and creative industries,” Jung said. She added that the relationship between South Korea and Indonesia can also serve as a bridge for strengthening broader cooperation between South Korea and ASEAN. “Seoul seeks to be a contributor to dreams and hopes, a foundation for growth and innovation, and a partner for peace and stability,” she said.
Indonesian Ambassador to South Korea, Cecep Herawan, said South Korean business actors so far still view Indonesia positively. According to him, there are no major issues that significantly hinder communication or investment plans of Korean companies in Indonesia. “Questions or requests for clarification from them certainly exist. However, we already have sufficiently good data and information so that communication with South Korean business actors has been going well so far,” Cecep said when met at the Indonesian Ambassador’s Residence in Seoul on Tuesday, 9 June 2026.
He said investors do not only consider a country’s domestic conditions when making business decisions. The global economic and geopolitical situation is also a factor taken into account in realising investment commitments. According to Cecep, the target for South Korean investment realisation in Indonesia, valued at 10.2 billion US dollars, is still on track. A number of projects have moved faster, while others are still in the discussion stage.
“The investment realisation target of 10.2 billion (US dollars) has some that can be fast, some processes are still waiting,” Cecep said. He cited the phase II investment plan of PT Krakatau Posco to produce specialised steel for the automotive industry, which is currently still in the intensive discussion stage.