Indonesia-Korea Relation For The Better Future By H.E. MR. Nicholas T. Dammen

5/15/2009

 

INDONESIA-KOREA RELATIONS FOR THE BETTER FUTURE
BY H.E. MR. NICHOLAS T. DAMMEN

AMBASSADOR OF THE REPUBLIC OF INDONESIA
TO THE REPUBLIC OF KOREA

AT THE 12TH ASEAN FORUM

JEJU ISLAND, 15-16 MAY 2009
ORGANIZED BY KOREA INSTITUTE OF SOUTHEAST ASIAN STUDIES

 

Prof. Yoon Hwan Shin, Chairman of Korean Institute of Southeast Asian Studies,
Prof. Dr. Hong-koo Kim, Director-General, KISEAS,
Mr. Chairman,
Excellencies My Colleagues, Ambassadors of ASEAN Member States who present here,
Dear Participants,
Ladies and Gentlemen,

It is indeed a great honour for me to speak before you on the occasion of the 12th ASEAN Forum organized by the Korean Institute of Southeast Asian Studies. I wish to congratulate Prof. Dr. Hong-koo Kim for successfully organizing this momentous event.

As the organizer has allotted the topic for this session namely Korea-ASEAN Partnership for the Future, I have the liberty to confine myself to touch upon the issue that close to my previous involvement within the ASEAN Secretariat. I would like to share with you from the view point of Indonesian Embassy on the ASEAN-Korea Economic Cooperation in general and I will focus more on the bilateral relations between Indonesia and the Republic of Korea.


ASEAN-KOREA ECONOMIC COOPERATION

 

As you may be aware, this year marks the 20th Anniversary of the ASEAN-ROK dialogue relations. ASEAN and the Republic of Korea (ROK) first established sectoral dialogue relations in November 1989. The ROK was accorded full Dialogue Partner status by ASEAN at the 24th ASEAN Ministerial Meeting (AMM) in July 1991 in Kuala Lumpur. Economic cooperation is one of the pillars of ASEAN-ROK partnership.

In order to enhance the ASEAN-ROK economic cooperation, and after series of meetings and consultations, the Leaders of ASEAN and the ROK expressed commitment to develop a comprehensive partnership which concluded by the establishment of ASEAN-Korea Free Trade Agreement recently.

 

ASEAN-Korea Trade in Goods Agreement


To achieve the objective of the Framework Agreement, the ASEAN-Korea Trade in Goods Agreement was signed on 24 August 2006 in Kuala Lumpur, Malaysia, by nine ASEAN Member States except Thailand, and Korea. Thailand joined the Agreement on 27 February 2009. The ASEAN-Korea Trade in Goods Agreement aims to eliminate tariffs maintained by each country on almost all products. Korea is scheduled to complete the tariff elimination by 2010. The tariff elimination schedules for Brunei Darussalam, Indonesia, Malaysia, Philippines, Singapore and Thailand will be completed by 2010, with flexibility for 5% of products to have their tariffs eliminated in 2012. Viet Nam and Cambodia, Lao PDR and Myanmar are scheduled to finalise their tariff elimination by 2016 and 2018, with flexibility or 5% of products to have their tariffs eliminated in 2018 and 2020, respectively.

 

ASEAN-Korea Trade in Services Agreement


Following the Trade in Goods Agreement, the ASEAN-Korea Trade in Services Agreement was concluded on 21 November 2007 in Singapore by nine ASEAN Member States except Thailand, and Korea. Thailand finally joined the Agreement on 27 February 2009. This Agreement aims to liberalise trade in services among ASEAN Member States and Korea in various services sectors. In many instances, the level of liberalisation commitments under this Agreement are higher than the commitments that the participating countries made under the General Agreement on Trade in Services (GATS) of the World Trade Organisation (”GATS Plus” Principle).

ASEAN and Korea are currently finalizing the negotiation on an agreement on investment. The investment Agreement is scheduled to be signed during the ASEAN-ROK Commemorative Summit in Jeju Island on 1-2 June 2009.

 

Trade, Investment and other Economic Relations between ASEAN and Korea


Distinguished participants, Ladies and Gentlemen,
Economic and trade relations between ASEAN and Korea have been further strengthened. ASEAN and Korea are important trading partners to one another. Total trade between ASEAN and Korea in 2008 amount to US$90.2 billion which grew 25.9% compare to 2007 which amounted US$71.9 billion. Exports of ASEAN to Korea increased from US$33.1 billion in 2007 to US$40.9 billion in 2008, or a growth of 23.6%. Imports of ASEAN from Korea grew by 27.2%, from US$38.7 billion in 2007 to US$49.3 billion in 2008.


From the Korean point of view, In 2008, Korean export to ASEAN represents 27.2% of Korean total exports to the world and Korean import from ASEAN represents 23.6% of Korean total imports from the world.


According to the Exim Bank of Korea, Korean FDI into ASEAN in 2007 has more than doubled than the level in 2006 to reach US$2.8 billion, from US$1.3 billion in 2006. Korean investment in ASEAN accounted about 16.7% of total foreign direct investment (FDI) outflows of Korea amount to US$27.3 billion on period of 1968-2008. Meanwhile, ASEAN’s cumulative investments in Korea amount to US$12.8 billion, which accounts for 18.3% of total FDI in Korea.


Besides, ASEAN and Korea have deepened and enlarged their collaboration in economic field, among others, training and education program for capacity building, SMEs development, trade facilitation, and intellectual property rights.


There were nineteen (19) projects for implementation under the Framework Agreement, nine (9) of which are to be implemented in 2008. In this regard, the ASEAN expressed their appreciation to Korea for offering a Special Fund of 500 million Korean won, equivalent to US$531,915 to implement these projects in 2008.


In addition, the ASEAN-ROK Centre had been launched on 13 March 2009 after all ASEAN Member States and Korea ratified the MOU on the Establishment of ASEAN-ROK Centre. The main objective of the Centre is to help promote trade, investment and tourism, and strengthen economic cooperation activities between ASEAN and Korea.

 

Opportunities and Challenges for Indonesia

 

The establishment of ASEAN-Korea FTA will provide the opportunity for Indonesia to expand its economic of scale, reducing poverty and socio-economic gap within its people, increase Indonesia’s attractiveness as destination of investment and tourism, reducing the transaction cost of trade, improving the trade facilitation for business and increasing the competitiveness of small and medium enterprises of Indonesia.
In the other hand, ASEAN-Korea FTA would also introduce new challenges for Indonesia, among others to increase public awareness, to enhance competitiveness, creating good governance, determining priority sectors to be liberalized through a sound and consistent industrial and trade policy, and to harmonize its position in various bilateral, regional and multilateral negotiations.

With the investment negotiation reached its conclusion under the ASEAN-Korea FTA negotiation, ASEAN and Korea has finally established a comprehensive free trade agreement which encompassing the trade in goods, trade in services and investment. Through these agreements, Indonesia and Korea could make their way toward a new stage of economic relations and international trade.
Indonesia and Korea basically have complementary interests where Indonesia needs capital or investment and technology, while the South Korea needs natural resources and minerals along with Indonesia’s vast market. With the elimination of such trade barriers, the implementation of ASEAN-Korea FTA is envisioned to stimulate economic growth and development in the Asia Pacific region and thus between Indonesia and Korea.

 

INDONESIA-KOREA BILATERAL RELATIONS

 

Distinguished participants, Ladies and Gentlemen,
Indonesia and the Republic of Korea have so far enjoyed close and friendly cordial relations since its inception in 1966. Since the establishment of diplomatic relations between Korea and Indonesia in 1973, both countries have maintained a close relationship in the fields of politics, economics, culture and others. The friendly bilateral relations between the two countries are indeed admirable which is marked by the frequent visits of both Presidents and their high ranking officials.
The bilateral relation between Indonesia and Korea has been gaining a greater momentum since the last three years. The two countries established Joint Commission chaired by its Foreign Ministers on 9 June 2006. This is further strengthened by the signing of “The Joint Declaration on Strategic Partnership to Promote Friendship and Cooperation between the Republic of Indonesia and the Republic of Korea” by the two leaders on 4 December 2006 during the visit of President Roh Moo-hyun to Indonesia.
It is well-recognized that the two countries complementary each other. The Indonesia’s abundant of natural resources and rich of biodiversity coupled by labour forces and market potential will bear fruit shall they be well-managed by the Korean high-technology, capital and skilled-management. This condition has indeed shown by the increasing trade, investment and economic cooperation as well as the strengthening of political and socio-cultural cooperation between the two countries.

 

Distinguished participants, Ladies and Gentlemen, Let me briefly refresh you with a general profile of Indonesia. Indonesia is an archipelagic state located in the crossroad of major international sea routes in Southeast Asia which bridging Indian Ocean and the Pacific Ocean as well as the Asia Continent and Australia and the rest of South Pacific Islands. More than 80 per cent of international trade shipped through Indonesian territorial water.


With population more than 240 million comprising of more than 300 ethnic groups, Indonesia is a multicultural, multi-ethnic and multi religious nations. The majority of the population is moderate Muslim, living together in harmony with other religions and beliefs existed in the country. To this extend, Indonesia fully understands the complexities and challenges in realizing democracy.


Democracy has flourished strongly in Indonesia following the fall of the President Suharto regime. We have conducted 3 free and fair elections in 1999, 2000 and 2004 and the latest election for legislative at national and regional levels had also been held on 9 April 2009. Next Presidential election will be conducted on 8 July 2009. Those elections were observed by many to be the most complex elections anywhere in the world. To attain a workable democracy is by no means automatic. One has to work very hard for that purpose.
Those successful elections have been a concrete proofs that Islam and Democracy are compatible one with another. With the democratic values and respect to human rights could be traced back from the early days of the country, Indonesia is considered as the world’s third largest democracy.

Distinguished participants, Ladies and Gentlemen,
The threats of global financial crisis will still be with us, and may seem to trigger global economic recession—even depression. Most likely, we will feel the real stun of the crisis by mid-2009. Indonesia enjoyed a relatively stable economic performance throughout 2008. Despite the global crisis, our economic resilience was considerably elastic as the economy still grew by 6.1% on the year 2008.


We could safely maintain the reserve for US$68.5 billion which adequate to secure 6 months import. The total GDP in 2008 reach around US$460 billion. When the world was faced with severe food crisis, Indonesia did not suffer from any food shortage. On the contrary, we produced enough food for everyone, and even scored some surpluses. Indonesia is now in a better position to call for global concerted efforts to deal with the food crisis.


Even though in the early months of the crisis Indonesia seems have managed to limit the impact of the crisis to a minimal level compared to other countries in the region, the bleak prospect of the global economy which is currently learned from the statistics of the 4th quarter of 2008 has prompted Indonesia to adjust the strategy to manage the impact of the global crisis.
With recent developments amidst the crisis, Indonesia expects that its economy in 2009 will still grow at the moderate level of 4.5 per cent. As a country with sizeable domestic market and the relatively small export-to-GDP ratio compared to other countries, the reinforcement of domestic demand is considered as a priority compared to increasing export performance. Therefore, the government of Indonesia has prepared a IDR 76 trillion or more than US$6.5 billion fiscal stimulus package focused on reenergizing the real sector of the economy, intensify infrastructure development and to boost domestic demand.

Distinguished participants, Ladies and Gentlemen,
Allow me now return to bilateral relations between Indonesia and Korea.

 

Bilateral Diplomatic and Political Relationship


In the diplomatic and political areas, the two countries have strengthened their cooperation in the field of anti-corruption, combating terrorism and transnational crimes, inter-parliamentary, defence industry, youth and sport, education, health and natural disaster just to name a few.


Against this background, on December 4, 2006, during the visit of President Roh Moo-hyun to Indonesia, the two leaders had signed a Joint Declaration on Strategic Partnership to Promote Friendship and Cooperation in the 21st Century. Both countries agreed to enhance and develop the existing bilateral relations into 32 (thirty two) fields of cooperation encompassing political and security; economy, trade and investment; and socio-culture.


This commitment has been reaffirmed by the two leaders during the state visit of President Dr. H. Susilo Bambang Yudhoyono to the Republic of Korea on 23 to 26 July 2007 as stipulated in the Joint Statement signed by the Foreign Ministers of the two countries, and the latest visit of President Lee Myung-bak to Jakarta on 6-8 March 2009.


The two leaders also stressed the importance of greater partnership between the Republic of Indonesia and the Republic of Korea in strengthening multilateralism as well as promoting regional and international peace, stability and economic development. The two countries have also established a solid roadmap for promoting mutually beneficial ties as recommended by the Eminent Persons’ Group (EPG) which was established to further chart out the strategic partnership in a more action oriented plan.


Until today bilateral relations and cooperation between the two countries have gone well without any serious obstacles. The two countries continually strive to enhance and promote their relationship by expanding the existing forms of cooperation, in the bilateral, regional as well as international field. The Korean government has always supported Indonesian government on its efforts to maintain its national integrity. At the same time, the Indonesian government has offered its continuous support to the Korean government to build peace and prosperity in the Korean Peninsula.


Indonesia’s stance on facilitating peace and stability on the Korean Peninsula has always been very clear and consistent. In April 2005, the Indonesian government facilitated a dialogue between senior officials of the Republic of Korea and the DPRK. It goes without saying that Indonesia played an important role of breaking the impasse in the relationship of the two Koreas.

Indonesia also extended its support to the Korean government when the Korean missionaries were kidnapped in Afghanistan. Indonesia played a key role in mediating a successful negotiation between the Taliban and South Korea, leading to the release of Korean hostages on August 29, 2007. Indonesia decided to assist the Korean government to release the hostages for the humanitarian reason.

 

Bilateral Economic Relationship


Economic relations between Indonesia and Korea have been further strengthened with cooperation which covers many fields: economic development; information technology; foreign workers; energy; maritime and fisheries; forestry; tourism; small and medium enterprises; as well as science and technology.


On bilateral trade, Indonesia and Korea are important trading partners to one another. Total trade between Indonesia and Korea in 2008 amount to US$19.25 billion which grew 29.4% compare to 2007 which amount to US$14.89 billion. Exports of Indonesia to Korea increased from US$9.1 billion in 2007 to US$11.3 billion in 2008, or a growth of 24.2%. Imports of Indonesia from Korea grew by 37.5%, from US$5.8 billion in 2007 to US$7.9 billion in 2008.


According to the Exim Bank of Korea, Korean FDI to Indonesia in 2007 has more than doubled than the level in 2006 to reach US$604 million, from US$257 million in 2006. For 2008, Korean investment in Indonesia amounted US$719 million while the cumulative value of approved Korean investment in Indonesia for the period of 1967-2008 accounted for US$6.3 billion.


However, from the Indonesian point of view, the value of those investment projects involving Korean capital would be much bigger since most of the projects are in the form of joint ventures which involving Indonesian or other countries companies. According to Indonesia Investment Coordinating Board, there are some 3,000 projects involving the Korean investment since 1968-2008 with the total value about US$13 billion.


At present, there are more than 2,500 Korean companies operating in Indonesia and more than 30 thousand Korean people domicile in Indonesia which count the biggest foreign community living in the country. It ranked Korea the 7th biggest foreign investor in Indonesia and the 1st biggest in terms of number of projects. Most of the Korean investors are small-medium sized companies working on manufacturing such as textile, garment, foot ware, toys, plastic ware, etc.


Such complementarities between the two countries has also been proven by the fact that the Republic of Korea is hosting quite number of migrant workers originally from Indonesia. Both the workers and their employers have been contributing to the economy of their respective countries.


Indonesia sent its workers to Korea since 1994 through Industrial Trainee and from 17 August 2004, it sent workers based on the MOU between RI-ROK on sending workers under the EPS framework. On October 2008 this MOU has been renewed for the second time and Indonesian workers to be employed in Korea are enjoying better assurance from the government of Korea. As of March 2009, more than 95% of 30,361 Indonesian citizens in Korea are workers.

 

Bilateral Social and Cultural Relationship

Distinguished participants, Ladies and Gentlemen,
Cooperation between the two countries also occurred in social-cultural fields. Exchange visits of cultural missions have been organized between the countries. The number of Indonesian students attending universities in Korea is also increasing either to master specific subject or to learn Korean language.


The number of Indonesian exchange students in Korea increased gradually every year. In 2004, there were only 70 Indonesian students, which later increased to be 260 students in March 2009. On the contrary, Korean student’s interest to study in Indonesia is also increasing. Most of Korean students are studying Indonesian language at various universities in Indonesia. A number of Korean Students also participate in recent Art and Cultural Fellowship program by the Ministry of Education and The Ministry of Foreign Affairs. Korean students participate also in Darmasiswa Program, scholarship program provided by Ministry of Education of the Republic of Indonesia to study Indonesian language and culture in various universities in Indonesia. The two countries is trying to boost the cooperation in the educational field by signing MOU on the Educational Field during the state visit of President Lee Myung Bak to Indonesia in March 2009.


In the field of culture, Indonesia had been participating actively in various international annual events which held in Korea such as International Wedding Exhibition (WEDDEX) in Seoul, Korea Tourism Fair (KOTFA) in Seoul, Hi Seoul Festival, International Children Book Fair (Nami Island), International Bazaar Seoul International Women Association (SIWA) in Seoul, Pusan International Film Festival (PIFF) in Busan. Several groups of Indonesian traditional cultural performers had also contributed for the promotion of Indonesian culture in Korea, although the Embassy in Seoul also has a cultural performance group, consists of Indonesian community in Korea.


Indonesian Embassy in Seoul also promotes actively Indonesian culture to Korea, through many activities, such as Indonesia Day, Indonesian Speech Contest, Indonesia Cultural Night, and Journalist Familiarization Trip.

 

CONCLUSION

 

Excellencies, Distinguished participants, Ladies and Gentlemen,


One shall agree with me that this remarkable achievement might not just complacent us. There are challenges ahead us to deal with. As a matter of fact, both countries are required to do their utmost in order to materialize the objectives stipulated in the Joint Declaration of Strategic Partnership.
I believe that to make these commitments effective, the full participation and support of all stake holders are deemed necessary. Similarly, I am confident that there are plenty of opportunities to make it real. Indonesia and the Republic of Korea share their commonalities in term of historic patriotism in gaining their independence and democratic values, vision toward maintaining of international peace and stability, as well as in achieving our nations’ prosperity in a globalized world economy.

 

Excellencies, Distinguished participants, Ladies and Gentlemen,


 To conclude, I am convinced that this momentous event will bear fruit to the already well-established engagement and close cooperation between the two countries for the continuity of cordial relations and the prosperity of our peoples.

Thank you.