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[HERALD INTERVIEW] Indonesia’s $5b infra project opportunity for S. Korean battery makers: ambassador

By Park Ga-young

Published : March 14, 2021 - 18:38

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Umar Hadi, the Indonesian ambasador to South Korea, speaks to The Korea Herald at Front 1, in Seoul, Wednesday. (Park Ga-young/The Korea Herald) Umar Hadi, the Indonesian ambasador to South Korea, speaks to The Korea Herald at Front 1, in Seoul, Wednesday. (Park Ga-young/The Korea Herald)


South Korean companies, from startups to big companies, could benefit from Indonesia’s latest infrastructure initiatives and trade deals, the country’s ambassador to South Korea told The Korea Herald in a recent interview.

The ambassador was referring to Indonesia’s first sovereign wealth fund worth $5 billion, to be managed by Indonesia Investment Authority.

The first phase of the fund’s investment will focus on toll roads, airports and seaports, but the focus will be expanded to cover other sectors and industries such as smart grids and renewable energy. This is where the ambassador sees opportunities for Korean companies. 

He expects the current efforts by several companies such as LG Energy Solution to be expanded to the overall battery and electronic vehicle industries at an infant stage in Indonesia, which accounts for 25 percent of the world’s nickel reserve.

A South Korean consortium that includes LG Energy Solution and four Indonesian state-owned companies is developing the battery industry ecosystem, taking it from upstream to downstream, the ambassador said. 

When Hyundai entered the Indonesian market in 2019, many other companies followed suit. The same is expected for the battery industry, he added.

LG Energy Solution is already mulling to build joint ventures in Indonesia with other Korean companies -- Hyundai Motor, LG International and Posco -- in Indonesia.

He also expects recent trade agreements to further advance bilateral ties. 

“The new trade deals (the Regional Comprehensive Economic Partnership and the Comprehensive Economic Partnership Agreement) will help create new supply chains for new industries, bolstering trade,” he said at an interview held at Front1, an innovation hub run by non-profit startup accelerator D.Camp on Wednesday.

In November, South Korea signed RCEP, a trade deal among nations within the Association of Southeast Asian Nations (ASEAN), along with its dialogue partners -- South Korea, China, Japan, Australia and New Zealand. The RCEP creates an economic bloc representing roughly a quarter of global trade and a third of the global population.

In December 2020, South Korea and Indonesia jointly agreed to the CEPA. The CEPA is equivalent to a free trade agreement but focuses on a broader scope of economic cooperation.

He also encouraged Korean startups to enter the Indonesian market through collaboration with local startups or relevant institutions there.

He said his country is offering legal policies and legal frameworks aimed at creating a favorable environment for startups.

Umar Hadi has been Indonesia’s ambassador to South Korea since May 2017. After taking on that position he said that he has observed that the bilateral relationship is shifting into a more meaningful one ever since he came to Asia’s fourth-largest economy.

“The cooperation between the two countries became special because when focus moved from labor-intensive industries to more capital intensive ones, going beyond a transactional relationship to include more elements of sharing principles regarding the market and our shared interest in overall peace,” he said.

Hadi was leading an Indonesian delegation last week to meet Korean startups interested in expanding in the Southeast Asian country, which has a population of 280 million. 

By Park Ga-young (gypark@heraldcorp.com)