Jakarta. Indonesia is trying to attract more South Korean investors into the country by promising business profitability. 

The government data shows that South Korea became Indonesia’s seventh-largest foreign investor in 2022. Foreign direct investment (FDI) from South Korea totaled $2.3 billion that year. South Korean investment amounted to almost $2 billion in the first 9 months of 2023, still in 7th place just behind Malaysia ($2.4 billion). The Korean money went to 5,215 projects in January-September.

Seoul’s massive FDI took center stage in a forum commemorating the 50th anniversary of Indonesia-Korea diplomatic ties on Thursday. The attending Chief Economic Affairs Minister Airlangga Hartarto also took the opportunity to promote Indonesia as an investment destination.

“I can say that the South Korean companies, including Posco, are doing great here. They are making a profit,” Airlangga told the Korea-Indonesia Economic Cooperation Forum in Jakarta on Thursday. 

Posco is a Pohang-based steelmaker that established a joint venture with its Indonesian counterpart Krakatau Steel in 2010. The Krakatau Posco joint venture is seeking to boost its annual production capacity to 10 million tons. According to Investor Daily, Krakatau Posco posted a $415 million profit and a $2.35 billion revenue in 2021. 

“And take a look at Daewoo Engineering & Construction which is taking part in more projects. … This shows how we can share the gains and the [economic] growth,” Airlangga said.

In 2020, Daewoo Engineering & Construction scored the contract for the piping works of the BP-operated liquefied natural gas facility in the Tangguh gas field. Daewoo is currently partnering with a state-owned construction firm Hutama Karya on a study for immersed tunnels in Indonesia’s new capital city Nusantara.

“A Jetro [Japan External Trade Organization] survey shows that Indonesia offers higher profitability to corporations compared to other countries,” Airlangga said.

A 2022 Jetro survey shows that Japanese businesses operating in Indonesia are more confident about their profitability compared to those in other ASEAN countries. About 73.2 percent of the surveyed Japanese-affiliated companies in Indonesia are expected to generate an operating profit in 2022. This is higher than Malaysia (63 percent) and Thailand (63.8 percent). 

However, what Indonesia recorded is still slightly lower than Singapore. About 73.5 percent of the Japanese-affiliated businesses in Singapore expect to generate operating profits in 2022, according to the report.