Why Korea Is Keen on Economic Cooperation with Indonesia

Amid reports that Indonesia has decided to purchase 16 T-50 trainer jets from Korea, Seoul and Jakarta plan to hold a ministerial meeting in June or July to discuss ways in which Korea can take part in Indonesia's economic development. It will be the second of its kind following one in February.

Why is Seoul so keen on economic cooperation with Jakarta? A Strategy and Finance Ministry official cited three reasons: high growth potential, friendly investment environment and influence in the G20.

Indonesia is a young country with high growth potential, with 60 percent of its population of 240 million under 40 years old. With a growing young middle-class thanks to economic development, the consumer market is burgeoning. Rich in natural resources, Indonesia is also the biggest oil producer in Southeast Asia and ranks fourth in the world in coal production, second for tin and third for copper. The World Bank and Goldman Sachs project that Indonesia, currently the 15th or 16th largest economy in the world, will emerge among the top 10 by 2030  and rise to sixth in 2050.

With regulatory reforms in 2004 and newly modified investment laws, Indonesia has become a friendly market to foreign investors. There is room for investment in infrastructure and facilities such as railways, ports, airports and plants. The only G20 member in Southeast Asia, Indonesia enjoys a relatively high status in the international community and is also the only country included in three acronymic groups of fast-growing emerging economies which investment banks and the press believe will lead global development -- MIKT (Mexico, Indonesia, Korea and Turkey), MAVINS (Malaysia, Australia, Vietnam, Indonesia, Nigeria and South Africa) and CIVETS (Columbia, Indonesia, Vietnam, Egypt, Turkey and South Africa).

"Indonesia is formulating a mid- and long-term economic development plan to become the seventh largest economy in the world by 2050," said the official. "We need to establish a strategy for expanding economic cooperation."

The ministry is also keen on a free trade agreement with Jakarta that is more open than the already established Korea-ASEAN FTA.