Indonesia hopes to entice Korean companies to its futuristic new capital

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Indonesia hopes to entice Korean companies to its futuristic new capital

Published: 18 Sep. 2023, 18:45

LEE JAE-LIM
lee.jaelim@joongang.co.kr

Korea International Trade Association’s Vice Chairman Jeong Marn-ki speaks at the forum to discuss future business partnerships between Korea and Indonesia at Hotel Mulia Senayan on Friday. [JOINT PRESS CORP]

JAKARTA — Nusantara will be inaugurated next year as the capital city of Indonesia and it wants more Korean companies to help build the city, according to Mohammed Ali Berawi, the head of green and digital transformation for the new capital project at a forum on Friday.

Nusantara will replace Jakarta as Indonesia’s capital from August 2024 while its development into the country’s futuristic sustainable city is expected to take place until 2045. The new capital is four times larger than Jakarta and twice the size of New York City. The site is situated on the east coast of the island of Borneo and construction began in July 2022.

“The Indonesian government is already working closely with Korean companies like LG and Hyundai Motors in terms of digitalizing and creating the traffic system for urban air mobility,” Berawi said at the forum to discuss future collaboration of Korea-Indonesia industry at Hotel Mulia Senayan on Friday.

The forum, organized by the Korea International Trade Association (KITA), was attended by some 80 businesspeople from Korea and Indonesia to bolster cooperation between the two countries on startups, electric vehicles, secondary batteries and the new capital project.

“We want to establish Nusantara as an iconic, green city with net-zero emissions, and we welcome more Korean companies to participate to help reach that initiative,” Berawi said.

Indonesia sits as the emerging manufacturing hub for Korean companies due to its geographical advantages and abundance of natural resources essential to making EV batteries.

Indonesia has the world’s largest nickel reserves estimated at 21 million tons, which accounts for 22 percent globally.

Indonesia created a policy research team in 2019 to form policies related to nickel production for EV batteries, which will be a crucial growth factor in the growing economy. According to Indonesia’s Ministry of Energy and Mineral Resources, the formation of the EV battery ecosystem will add $25 billion in gross domestic product by 2027 and create 23,000 new jobs.

Hyundai Motor, the No. 1 EV maker in the Indonesian market based on sales from January to July, aims to further expand its market presence within the country through a variety of businesses such as in urban air mobility and recycling used EV batteries.

“Hyundai Motor began EV production last year at the Indonesian plant in Bekasi, West Java, and is preparing to produce battery cells at the joint battery plant formed with LG Energy Solutions,” said Tri Wahono, deputy manager of Hyundai Motor’s Indonesian subsidiary.

KITA’s Vice Chairman Jeong Marn-ki emphasized the need for the Indonesian government to relax regulations on imports.

“According to a survey of 205 Korean companies, they still found the process to acquire business license difficult, with a lack of information related to the matter,” Jeong said. “The administrative process should be simplified alongside relaxation for import quotas set by the Indonesian government. The two countries should work more closely to bolster more business partnerships.”

BY LEE JAE-LIM [lee.jaelim@joongang.co.kr]