Veeramalla Anjaiah, The Jakarta Post, Jakarta
A true friend thinks of you when all others are thinking of themselves. South Korea is not only a true friend of Indonesia, the world's fourth most populous country, but also a strategic partner.
Ten years ago, when the Asian financial crisis devastated Indonesia's economy and lacerated its sociopolitical set up, many foreign investors fled Indonesia in panic. As a true friend, South Korea -- which was also a victim of the 1997 crisis -- never left Indonesia and even increased its investments in labor-intensive industries during the difficult times.
Ever since the establishment of diplomatic relations in 1966 -- followed by ambassadorial level in 1973 -- Indonesia and South Korea have enjoyed 42 years of uninterrupted progress in their political, economic, security and cultural relationship.
The year 2007 was not only the "busiest" ever but was also a milestone in the bilateral relationship.
"I say the year 2007 was the busiest ever in our relationship," South Korean Ambassador to Indonesia Lee Sun-jin told The Jakarta Post recently in Jakarta.
The most significant event this year was President Susilo Bambang Yudhoyono's state visit to South Korea in July.
Both Yudhoyono and his South Korean counterpart, Roh Moo-hyun, agreed in Seoul to further deepen and widen the scope of bilateral economic relations. They also set the goal of doubling bilateral trade and investment value by 2012.
There was also an agreement on strengthening the task force mechanism, which was established to effectively monitor the implementation of agreements and action plans.
Numerous memorandums of understandings and letters of intent for business deals, involving up to US$8.6 billion in investment in energy and infrastructure projects, were signed during the visit.
"These business agreements are quite important for Indonesia because, if they are implemented, they will have a significant impact on the economy, which will in turn help us overcome the unemployment problem," Yudhoyono had said at that time.
This is true. South Korean companies, now numbering up to 1,200 in the country, operate in labor-intensive areas and employ more than a half a million Indonesians. More companies are predicted to come to Indonesia in the future.
There are around 30,000 Indonesian workers in South Korea. In fact, South Korea wants to recruit more Indonesian workers -- but red tape is hampering the process.
"There are delays in the recruitment process. Our companies can't afford these delays and red tape. We hope the government will take measures to speed up the process," Lee said.
According to the agreements signed during Yudhoyono's visit, South Korean companies will build a $5.5 billion coal liquefaction plant and a $2 billion railway line in East Kalimantan.
These big projects, as well other agreements, were the result of a strategic partnership agreement signed by the two countries during President Roh's state visit to Indonesia in December 2006.
"Both presidents' visits really provided a big boost to our bilateral relations. In a period of just seven months, our president visited Indonesia and your president came to South Korea. It was very rare," Ambassador Lee said.
There was also a large South Korean business delegation consisting of 190 people that visited Indonesia to explore business opportunities. Similarly, around 300 Indonesian businesspeople and officials visited South Korea in August to attract South Korean investors.
There were also more than a dozen smaller delegations which visited each other's countries during the year.
In recent years, South Korea has emerged as an important trading partner for Indonesia as well as one of the biggest foreign investors.
"Based on last year's statistics, South Korea is the fifth-biggest trading partner as well as the fifth-biggest foreign investor," Lee said.
Indonesia is South Korea's tenth-largest trading partner.
The bilateral trade value jumped to $13.8 billion in 2006, an increase of 2.7 percent from $13.23 billion in 2005. But the biggest increase in trade will be this year.
"In the first 10 months of this year, our exports to Indonesia had already reached $4.9 billion, a 23-percent increase compared to the same period last year. Our imports from Indonesia had reached $12.2 billion by the end of October," Lee said.
So, the two-way trade in the first 10 months of 2007 stood at $17.1 billion. If this trend continues in November and December, perhaps South Korea will become Indonesia's second-biggest trading partner.
Indonesia mainly exports crude oil, gas, rubber, timber and other raw materials to South Korea, while it imports textile products, vehicles, cigarettes, chemical products, electronic products, leather, mechanical appliances and machinery from South Korea.
There is a new trend in Indonesia's imports from South Korea.
"Though we are heavily dependent on Indonesia for oil and gas and other natural resources, our exports to Indonesia have been growing at a faster rate (23 percent in 2007). This is mainly because now we are reexporting refined oil products to Indonesia. It's a new trend," Lee said.
On the investment side, South Korea invested some $887 million in 2006, an almost 100-percent increase from over $400 million in 2005. This year, it had already invested $622 million in Indonesia in the January to October period.
The cumulative South Korean investments in Indonesia since 1967 have reached some $13 billion.
Another trend that was clearly visible in 2007 was that South Korea's conglomerates were coming in a big way to invest in heavy industries like chemicals, automobiles, shipping, steel, mining and energy, with Hyundai establishing an automobile assembling line in Indonesia.
"South Korean companies in Indonesia mostly consist of small and medium companies and they mainly operate in labor-intensive industries. The new trend is that our companies are moving toward big industries in Indonesia," Lee said.
South Korean companies, however, need Indonesia to solve red tape, labor, taxation and legal certainty problems in order to improve the business climate.
On the defense side, cooperation between the two countries has been growing in the last three years.
South Korea, Asia's third-largest economy which is known for its technological advancements, is willing to transfer its modern technology to Indonesia.
"We have been training Indonesian experts in various technologies, including nuclear technology," Lee said.
On the cultural side, 2007 witnessed a tremendous increase in cultural exchange programs and people-to-people contacts.
South Korean dramas have been shown on local television channels regularly and scores of South Korean artists have performed in Indonesian cities. But the most important one is in the education sector.
"We provide various types of scholarships to Indonesian students each year. On average, we send more than 250 Indonesians to South Korea under various programs," Lee said.
With the election of new South Korean President Lee Myung-bak, whose main election plank was to revive the South Korean economy, and Indonesia aiming for a 7-percent growth next year, the ties between Indonesia and South Korea are poised to take off in 2008.
