South Korean companies help RI in reducing unemployment

Veeramalla Anjaiah, The Jakarta Post, Jakarta

Eight years ago, when the Asian financial crisis struck Indonesia like a tsunami, many foreign investors left Indonesia in panic. But the companies from South Korea -- which was also a victim of the 1997 financial crisis -- never left Indonesia and even increased their investments during the difficult times.

"Yes, it's true. Even Indonesian foreign minister Hassan Wirayuda personally conveyed to me that South Korea has remained in Indonesia during difficult times. This compliment from the host country (Indonesia) made me happy and proud," South Korea's new ambassador to Indonesia Lee Sun-jin, who submitted his credentials to President Susilo Bambang Yudhoyono on June 29, 2005, told The Jakarta Post recently in an exclusive interview at his residence in South Jakarta.

Since South Korea established diplomatic ties at the consular level (ambassadorial level in 1973) with the world's fourth-most populous nation, Indonesia, in 1966, the relations -- both economic as well as political -- between the two countries have been growing at a tremendous pace.

"Our trade relations with Indonesia are increasing. For example, the total value of the bilateral trade jumped to US$10 billion in 2004 from a mere $5.29 billion in 1998.," Ambassador Lee, a distinguished career diplomat, said.

South Korea, whose economy ranks in the top 10, is the fifth largest trading partner of Indonesia, while Indonesia is the 9th largest trading partner of the "Land of the Morning Calm".

This year, bilateral trade -- which has been always in favor of Indonesia (see table) -- is expected to grow more than the previous year. Up until June 2005, bilateral trade had already reached $5.58 billion.

Indonesia, a country with abundant natural resources and the Southeast Asia's only member of the Organization of Petroleum Exporting Countries (OPEC), mainly exports crude oil, gas, rubber, timber and other raw materials to south Korea, while imports textile products, vehicles, cigarettes, chemical products, electronic products, leather, mechanical appliances and machinery.

As far as the South Korean investments are concerned, the situation is not much different from trade.

"Our investments in Indonesia are very stable. South Korean investors have so far (between 1967 to 2004) invested $10.2 billion in this country. Most of these investments are made in the manufacturing sector," Lee said.

Actually, South Korea wants to invest more in Indonesia given the vast natural resources, huge population and particularly the cheap labor. But Indonesia has yet to formulate the policies needed to improve the investment climate

According to Lee, Korean companies contribute much to the local economy as most of these companies are labor intensive and small and medium in nature.

"South Korean companies contribute to the Indonesian economy in two ways: job creation and technology transfer. We have some 570 Korean companies in Indonesia and they employ around half a million Indonesian workers. Our high-tech companies are ready to transfer technology to their Indonesian counterparts," Lee said..

Despite the contribution Korean companies have made to the Indonesian economy, the companies, according to Lee, have one important grievance.

"Korean companies have one complaint about the labor laws in Indonesia. Most of these companies are small and medium scale and operate in the labor intensive sector. The owners should have the freedom to hire and lay off the workers in their factories according to the market situation. If the market demand increases the owners can recruit more workers and if demand slows down they can retrench them. But the compensation for layoffs is so high, these small companies can't afford to do so," Lee said.

But this problem, according to Lee, was already brought to the notice of Minister of Manpower and Transmigration Fahmi Idris and he is optimistic that the government can do something to address this problem.

Not only that, the Korean community -- one of the biggest foreign communities -- in Indonesia has also grown significantly. Currently, around 30,000 Koreans live in Indonesia. The Jakarta International Korean School is the biggest overseas Korean school with 1,500 students. In South Korea, 30,000 Indonesians -- mostly workers and a small group of businessmen -- live in various cities.

On the political front, South Korea has virtually no problems with Indonesia. Right from the beginning, Indonesia's relations with South Korea have been traditionally warm and friendly.

" Our political relations with Indonesia are very good. Our President Roh Moo-hyun met President Susilo Bambang Yudhoyono last year in Chile during the APEC (Asia Pacific Economic Cooperation) meeting. Our Prime Minister Lee Hae-chan came to Jakarta twice -- to attend the tsunami summit in January and the Asian African Summit in April this year. The Indonesian President will visit South Korea in November to attend the APEC meeting. These high-level meetings and visits have strengthened our relations,' Lee said.

South Korea, which has so far focused more on China, now wants to increase its interaction with ASEAN, including Indonesia.

"That's why, the South Korean government appointed one of its top diplomats as ambassador to Indonesia. Ambassador Lee is an influential man in the foreign ministry. So both Indonesia and South Korea must utilize Lee's diplomatic skills and experience to strengthen bilateral ties," Prof. Kim Soo-il from the Busan University of Foreign Studies told the Post recently.

Kim, who recently visited Jakarta, is the honorary consul of Indonesia in Busan.

Based on continuity, trust, personal rapport among the leaders and confidence, South Korea considers boosting the relations with Indonesia a foreign policy priority and it will not be subject to political vicissitudes.

Indonesia, one of the key leaders of the Non-Aligned Movement and the founding member of several regional bodies such as ASEAN, APEC and Asia-Europe Meeting (ASEM), maintains good relations with South Korea's foe North Korea.

"We don't have any problem with that (Indonesia' ties with North Korea). We appreciate Indonesia's role in facilitating some of the important meetings between leaders of both Koreas in Jakarta," Lee said.

It seems Lee, who is an expert on Chinese affairs, is very happy about his new job in Indonesia.

"Perhaps, I am the happiest ambassador in town because we don't have any problems in our relations with Indonesia. But I will work hard to improve the existing relationship and cooperation between the two countries to forge a strategic partnership," Lee said.