Korea Inc. descends on Indonesia as business ties blossom

Industry

Published: 06 Sep. 2023, 17:40

Korea Inc. descends on Indonesia as business ties blossom

Lotte Group and Korea Trade-Investment Promotion Agency hold "Korea Brand Expo" in Jakarta, Indonesia through Friday. [LOTTE GROUP]

Chiefs of Korea's major conglomerates are gathering in Jakarta, Indonesia on Thursday to look for new business opportunities in the Southeast Asian giant, a potential manufacturing hub as the companies seek to diversify their supply chains.

Hyundai Motor Group Chair Euisun Chung

Hyundai Motor Group Chair Euisun Chung, LG Corp. Chairman Koo Kwang-mo, Lotte Group Chairman Shin Dong-bin and LS Group Chairman Koo Ja-eun are slated to hold a business round table in Jakarta on Thursday with leaders of some 20 Indonesian companies in search for new opportunities.

The event comes as Korean President Yoon Suk Yeol visits Indonesia to attend the ASEAN summits.

Indonesia's presence in the global supply chain has risen rapidly in recent years due to its resilient labor market and abundant natural resources as businesses shift out of China.

Indonesia is the world's fourth populous country with 277 million people, after India, China and the United States. It also has the biggest nickel reserve and the second-biggest cobalt reserve, both of which are essential resources in making electric vehicle batteries.

Last year, Indonesia's production of nickel accounted for 37 percent of global production.

The country's recent project to move its capital city from Jakarta to Nusantara is also expected to create plenty of new business opportunities.

LG Corp. Chairman Koo Kwang-mo

Korea's ties with Indonesia have been strong. The Southeast Asian nation was Korea's first overseas investment location in 1968. The amount of Korean investment in Indonesia has grown 19.6 percent annually for the past 10 years. Trade volume reached $26 billion last year, a 140-fold increase since diplomatic relations were established in 1973.

Hyundai Motor opened its first Southeast Asian factory in Indonesia in 2021. The plant can produce 150,000 vehicles per year with plans to expand that to 250,000 units in the future. It also built a battery plant jointly with LG Energy Solution in Indonesia with a target of starting production by next year.

LG Electronics built a joint factory in Indonesia in 1990 to manufacture TVs, refrigerators, washing machine and air conditioners. It also opened earlier this year its first overseas TV R&D center in the country.

Lotte Group, which has been hit hard by geopolitcal tensions with China, picked Indonesia early as its next target for expansion.

Since 2008, Lotte Mart has established some 50 supermarket outlets in the country, including some that sell only Korean products. Lotte Department Store opened a shopping complex in Jakarta in 2013. The retail segment of Lotte generated 1 trillion won in revenue last year from Indonesia, according to the company.

Lotte Group Chairman Shin Dong-bin

As part of its effort, Lotte Group joined forces with the Korea Trade-Investment Promotion Agency to hold the "Korea Brand Expo" in Jakarta, where it helps Korea's small and midsized enterprises enter the Southeast Asian country. The expo is scheduled to run through Friday.

The event also helps local Indonesian companies to enter Korean markets, mostly utilizing Lotte's retail channels.

Korea's exports of consumer goods decreased by 0.7 percent overall, but exports to ASEAN countries increased 7.2 percent last year to $5.6 billion last year.

Korea Zinc Chairman Choi Yun-beom and SK enmove CEO Park Sang-kyu will also participate in the business round table on Thursday.

BY JIN EUN-SOO [jin.eunsoo@joongang.co.kr]