South Korea Shares Investment Challenges in Indonesia
South Korea Shares Investment Challenges in Indonesia
Reporter
June 23, 2026 | 02:32 pm
TEMPO.CO, Jakarta - South Korea outlines a number of obstacles affecting the investment climate in Indonesia, as the two countries seek to advance their strategic partnership.
The chair of the Korea-Indonesia National Assembly Friendship Committee, Kim Gi-hyeon, cited challenges in the economic relations between both countries in recent years. Reaching $25.5 billion in 2020, bilateral trade between Indonesia and South Korea is on a downward trend.
“Certifications required [for exports] in Indonesia raise the non-tariff barriers that make it difficult for Korean companies to enter the market,” he said during ‘The Indonesian Next-Generation Journalist Network on Korea’ discussion held by the Korea Foundation and Foreign Policy Community of Indonesia at the National Assembly on June 9.
“And the elimination of electric vehicle incentives has made Hyundai hesitant to make additional investments,” he said.
Kim explained that Hyundai Motor Company has produced electric vehicles in Indonesia, such as the Kona EV and IONIQ 5. “These are the first electric cars manufactured in Indonesia,” Kim said.
But Kim said the Indonesian EV incentives are now geared towards benefiting Chinese companies. Nevertheless, Kim believes that South Korea is keen to explore more mutually beneficial cooperation with Indonesia.
“I hope there will be more opportunities for economic investment, technology transfer, and talent development between Indonesia and Korea,” said Kim.
Strategic Partnership Amid Global Uncertainties
Separately, Deputy Director-General of the ASEAN and Southeast Asia Affairs Bureau at the South Korean Ministry of Foreign Affairs, Jung Ga-yeon, stated that the comprehensive special strategic partnership established by both countries reflects the highest level of trust and determination.
According to Jung, Seoul and Jakarta share the goal to bolster mutually beneficial cooperation amid increasing global uncertainties.
“Through this momentum, Korea and Indonesia will continue to work closely to provide tangible benefits for our people by expanding cooperation in various sectors, including defense industry cooperation, supply chains, energy, digital technology and AI, as well as the cultural and creative industries,” said Jung.
Jung added that South Korea’s relationship with Indonesia bridges a broader cooperation between South Korea and ASEAN. “Seoul is endeavoring to be a contributor to dreams and hopes, a foundation for growth and innovation, and a partner for peace and stability,” she said.
Indonesia Claims Investor Interest Remains Positive
The Indonesian Ambassador to South Korea, Cecep Herawan, said South Korean businesses still view Indonesia positively. According to him, there are no significant issues impeding communication or investment plans of Korean companies in Indonesia.
“There are certainly questions or requests for clarification from them. However, we have sufficient data and information, so communication with South Korean business players has been going well,” said Cecep when met at the Indonesian Embassy in Seoul, Tuesday, June 9, 2026.
He mentioned that investors not only consider a country’s domestic conditions when making business decisions. The global economic and geopolitical situation also factors into realizing investment commitments.
According to Cecep at the time, South Korea’s investment realization target in Indonesia of $10.2 billion is still ongoing. Several projects have progressed rapidly, while others are still under discussion.
“The investment realization target of $10.2 billion, some can be expedited, some are still awaiting the process,” said Cecep, citing the phase II investment plan of PT Krakatau Posco to produce specialized steel for the automotive industry, which is currently still under intensive discussion.
Read: Indonesia, South Korea Seal US$102 Billion Cooperation Deals Across Key Sectors
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