[Herald Interview] 'Indonesia's political stability, regulatory reforms offer new opportunity for Korea Inc.'

Indonesia is on a historic transition from a natural resource-dependent economy to a modern one by fostering manufacturing and service industries as drivers of future growth. During this ongoing transformation, political stability and regulatory reforms are poised to create a business-friendly environment, according to Moeldoko, Indonesia's chief of staff to President Joko Widodo. And the country wants Korean businesses, in particular, to be a part of its journey, he said.

In an interview with The Korea Herald, Moeldoko urged Korean companies to take the advantage from Indonesia's new law on jobs and investment that streamlines business regulations in the bureaucracy-heavy country and facilitates easier procedures for companies and investors. Calling it a "liberal regulation," he also addressed its policy drive Vision 2045 which aims to turn Indonesia into the world's fifth-largest economy by 2045. Under its vision, the country wants to build an economy with a gross domestic product of $7.3 trillion and a per capita income of $29,000 in the next 22 years.

Indonesia has not only made significant changes to eliminate legal uncertainties in its market, but has also experienced rapid growth in its middle class, bolstering its domestic economy. As a Group of 20 member and the largest economy in the Association of Southeast Asian Nations, Indonesia's international profile has risen.

Indonesia is considered a sovereign, advanced and sustainable maritime state with abundant natural resources, tech-savvy workforce, political stability, efficient logistics, public trust and a consistent annual growth rate of five to six percent, he said. The country offers a welcoming environment for Korean investors.

“We guarantee certainty for foreign investors,” said Moeldoko, highlighting Indonesia as the fourth largest population after India, China and the US.

When asked about the effect of upcoming election results on Korean investment, Moeldoko lauded Indonesia's political stability, assuring the economy to remain robust during and after election periods.

“Prudent fiscal policies and well-established systems in Indonesia ensure economic stability, regardless of the election outcome,” he said, suggesting that 82 percent of Indonesian people are satisfied with the government performance.

Moeldoko, who was in Seoul last week to attend a forum, underlined 50 years of bilateral ties between Indonesia and South Korea as a big responsibility and a stepping stone to achieving prosperity over the next 50 years.

“There were no adversities (between) Indonesia and Korea in the last 50 years," he said. "Culture, digitalization, future technology and farming will drive future bilateral relations.”

A recent visit by South Korean President Yoon Suk Yeol to Indonesia demonstrated firm ties between the two countries and reaffirmed their shared goal of achieving a prosperous future.

Moeldoko believes that these ties will evolve with extensive exchanges in education, health and employment.

“President Yoon’s visit was stimulating for Korean and Indonesian people,” he said, recalling a summit held between the two leaders on the sidelines of the 43rd ASEAN Summit in Jakarta.

There, Yoon emphasized South Korea's commitment to ASEAN during the ASEAN-Korea summit and highlighted the launch of the Korea-ASEAN Solidarity Initiative in 2022, expressing support for ASEAN's central role. Indonesia currently serves as the chair of ASEAN.

Key areas of investment, culture as a bridge

Key areas for Korean investment in Indonesia in the long run include an electric vehicle ecosystem, digitalization, technology and green economy, according to Moeldoko. He highlighted Korean companies' growing role in transforming Indonesia's energy transition -- especially in the EV sector.

“Korea has a pivotal role in supporting this transformative journey,” said Moeldoko, referring to Korean companies' plans to manufacture lithium batteries in Indonesia as part of a collaborative effort to bolster the EV ecosystem.

In a push to accelerate economic transformation, create more jobs and shift from fossil energy to electric energy, the Indonesian government is offering a value-added tax incentive for purchasing EVs and buses to attract more investment in the EV ecosystem.

The government also minimized the value-added tax on EVs with at least 40 percent domestic parts, from 11 percent to 1 percent on electric cars manufactured.

According to the Indonesian Embassy in Seoul, President Widodo recently visited PT Hyundai LG Industry Green Power's EV battery factory in West Java province, which is set to produce an impressive 30 million battery cells for 180,000 EVs by 2024.

The production site would be the largest EV battery production site in Southeast Asia, realizing the government's strategy to build an EV ecosystem to make Indonesia a key player in the global EV supply chain, said the embassy.

“The EV ecosystem is the future of mobility,” Moeldoko, who also serves as president of the Indonesian Electric Vehicle Industry Association, told The Korea Herald.

He introduced President Widodo's roadmap to achieve zero emissions by 2060 and Indonesia's target to transition to a digital green economy, in order to realize the Paris Agreement.

The development of hydroelectric infrastructure in North Kalimantan is also expected to generate a remarkable 9,000 megawatts of power.

When asked of a possible solution to mitigate the rising geopolitical tension that affects both Indonesia and South Korea, Moeldoko suggested "budaya," the Indonesian word for culture, as a medium to bridge differences.

“Culture is a buffer zone for Indonesia and Korea that would bridge geopolitical tensions and political adversities,” he said.

A strong commitment to collaboration, sustainable development and culture as a bridge will pave the way for Indonesia, South Korea and the world to reshape the economic landscape, Moeldoko said.

Profile:

Moeldoko is a retired general and politician who currently serves as the chief of staff to Indonesian President Joko Widodo. He also serves as president of the Indonesian Electric Vehicle Industry Association and chairman of the Indonesian Farmers Association. Earlier, Moeldoko held various high-ranking positions in the Indonesian military, including chief of the Indonesian National Armed Forces.