Jakarta. The chief of South Korea’s financial watchdog revealed on Friday that Indonesia might see more of K-finance in the future with Seoul’s banks and insurance firms now seeking to expand to the Southeast Asian country.

Financial Supervisory Service (FSS) Governor Lee Bokhyun earlier today spoke with B Universe journalists, among others, on South Korean investment in Indonesia's financial industry. 

According to Bokhyun, the growth potential of the Indonesian market made the country's financial sector attractive in the eyes of South Korean investors. The Indonesian market is also forecast to top that of South Korea within five or ten years. 

“So many Korean banks, as well as insurance and securities firms, are looking to enter the Indonesian market,” Bokhyun said, although he did not disclose the names of the businesses that plan on making the expansion.

During the interview, Bokhyun called Indonesia’s geographical conditions of a vast archipelago —with the regions having their own characteristics— to be a challenge for South Korean financial firms. 

“And there are many financial institutions, including banks, here in Indonesia. If Korean financial firms wish to penetrate the Indonesian market, they have to work more on localization and make the investment with a long-term perspective. Still, Indonesia is a very attractive market,” Bokhyun said.

“And when it comes to the entry of Korean firms [to Indonesia], I hope you do not see it as just a capital injection or inflow, but take a more strategic perspective [by looking at it as an] industry or economic cooperation,” the FSS chief also told reporters.

One of the major Korean investments in Indonesia’s financial industry is banking giant KB Kookmin Bank’s acquisition of the majority shares in Bank Bukopin, a local medium-sized bank. Kookmin Bank today has a 67-percent stake in KB Bukopin.

Bokhyun is making stops in three Southeast Asian countries —Thailand, Singapore, and Indonesia— to promote K-finance.  

This year marks the fifth decade of Indonesia-Korea diplomatic relations. 

According to the Trade Ministry, Indonesia-South Korea's trade grew from $18.4 billion in 2021 to $24.5 billion the following year.

Government data shows foreign direct investment (FDI) inflows from South Korea to Indonesia reached $623.4 million in the first quarter of 2023. They invested in a total of 3,071 projects. This placed South Korea the seventh-largest foreign investor in Indonesia during that period. The FDI data, however, excludes investment in banking, non-bank financial institutions, and insurance sectors.