South Korean companies help RI in reducing unemployment

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.