[Column] Expecting an Indonesian 'Corporate Hallyu'

Indonesia's 40 Trillion Won New Capital Relocation Project
50th Anniversary of Diplomatic Relations This Year... Expecting a Wave of K-Company Success

Nusantara, located in the eastern part of Kalimantan Island (Borneo Island), 1200 km away from Jakarta, the capital of Indonesia. When visiting this place on the 18th, heavy machinery such as excavators and tower cranes were busy preparing the ground and laying the foundation for buildings on a vast open field in the middle of dense tropical rainforest. Covering a total area of 2,561 km², which is 4.2 times the size of Seoul, this site is the planned location for Indonesia’s new capital city, being constructed by the Indonesian government with a total project cost of 40 trillion won.

The concept is a ‘Smart Forest City.’ However, the presidential palace site built on the uneven terrain and the surrounding environment, where infrastructure facilities such as roads, water supply and sewage, gas, and electricity have yet to be established, made it clear that development is a challenging task. Additionally, the need to present a vision within a short period in line with Indonesia’s unstable political schedule (next year’s presidential election) is another variable.

Nevertheless, our government, led by Minister Won Hee-ryong of the Ministry of Land, Infrastructure and Transport, formed a bid support team and visited the site, emphasizing a mutually beneficial stance for Korean companies, which has raised concerns in some quarters. This is because the project must proceed while bearing the political risk that the new capital construction plan could be canceled if the Indonesian regime changes. Since most of the funding depends on Public-Private Partnership (PPP) projects or Official Development Assistance (ODA), there are many uncertainties.

However, the reason why both the government and domestic companies are entering Indonesia is not simply for this construction but from a long-term partnership perspective. Indonesia, the world’s largest island country, is so rich in resources that when digging the land for construction, minerals such as coal and nickel are found. While the world struggles with population decline issues, Indonesia’s population, currently 280 million (4th largest in the world), is expected to reach 300 million by 2030. Last year, its economic growth rate was 5.3%, the highest in nine years. Indonesia is literally ‘hot’ in the international community, with global economic outlook reports forecasting it as the 8th largest economy by 2036. Among Southeast Asian countries, Korean Wave culture such as K-POP and dramas is the most popular.

In this situation, Indonesia, a huge production and consumer market, is thirsty not only for manufacturing but also for future knowledge industries. Korean companies could be the ones to quench this thirst. This year marks the 50th anniversary of diplomatic relations between Korea and Indonesia. We look forward to a wave of K-companies, not just culture, sweeping through Indonesia.