In 2019, the diplomatic relations between the Republic of Indonesia and the Republic of Korea will mark its 46 years. The diplomatic relations between the two countries was established in September 1973 but the consular-level relationship had already begun in August 1966. Since then, the two countries continued to improve relations and cooperation at the bilateral, regional and even multilateral-level. The relations and cooperation at bilateral-level entered a new phase on the state visit of the President of the Republic Korea Moon Jae-in to Indonesia on November 8-10 2017. Two leaders agreed to elevate the bilateral relations to a special strategic partnership through the “Korea-Indonesia Joint Vision Statement for Co-Prosperity and Peace" which focuses on four areas of cooperation, include: defense and foreign affairs, bilateral trade and infrastructure development, people-to-people exchanges, and regional & global cooperation.
Their robust relations and bilateral cooperation are supported by the resource complementarity and the remarkable process of economic and political progress of both countries which opens more widely the opportunity for cooperation in various sector. Furthermore, two countries also actively support each other in various forum at regional and international-level, such as the nomination of each candidature to the international organizations.
The close ties between Indonesia and Republic of Korea could also be seen from the intensity visit of the high dignitaries of both countries. Below are the number of important visits in the past few years:
- State Visit by the President of the Republic of Indonesia Joko Widodo to Busan to attend the 25th ASEAN-ROK Commemorative Summit and Bilateral Meeting, December 10-12 2014;
- State Visit by the Vice President of the Republic of Indonesia Jusuf Kalla, August 26-30 2015;
- State Visit by the President of the Republic of Indonesia Joko Widodo to Seoul, May 15-18 2016;
- State Visit by the President of the Republic of Korea Moon Jae-in to Indonesia, November 8-10 2017;
- Official Visit by the Prime Minister of the Republic of Korea Lee Nak-yeon to Indonesia, August 2018; and
- State Visit by the President of the Republic of Indonesia Joko Widodo to Seoul, September 8-10 2018
Republic of Korea adopts a multi-party system and the presidential government system, whereby the presidential system enables the President to be elected through the direct voting by the people for a five-year period. The President of the Republic of Korea is the Head of State with the assistance of the Prime Minister of the Republic of Korea. The government of the Republic of Korea is made up of three branches: executive, legislative, and judicial.
The National Assembly of the Republic of Korea consists of 300 members, 246 of which are selected through the single-seat constituencies and 54 members by the proportional representation. The main two political parties in the Republic of Korea are the liberal Democratic Party of Korea (DPK) and the conservative Liberty Korea Party (LKP).
The local elections and the parliamentary midterm elections were held in the Republic of Korea on 13 June 2018. The election results show the ruling party (Democratic Party of Korea/DPK) has won a landslide victory with 14 mayors/governors of 17 constested positions. They included the post of Mayor of Seoul and Busan. Meanwhile, the opposition party (Liberty Korea Party/LKP) only won two positions.
In a plenary session held on 13 July 2018, Moon Hee-sang from the ruling Democratic Party of Korea was elected as the new National Assembly Speaker by receiving 259 votes out of 275 lawmakers present. Lawmaker Lee Ju-young of the main opposition Liberty Korea Party (LKP) and Joo Seung-yong of the Bareunmirae Party (BP) were selected as vice speakers.
The legislative elections will be held in April 2020 and the presidential election is scheduled to be held in 2022.
Indonesia today is an emerging global powerhouse in Asia, it
is an attractive investment destination as well as a manufacturing hub. After
the reform in 1998, Indonesia’s 250 million people have enjoyed a widening
range of political freedoms, and participation in the political process is
high. Joko Widodo, former businessman and governor of Jakarta, won a tight race
for the presidency in 2014, pledging to end corruption and promote economic
reform. As a member of the G-20 and a driving force within the Association of
Southeast Asian Nations, Indonesia plays a growing role at the multilateral
level. Its increasingly modern and diversified economy has recovered from the
2009 global recession.
The Gross Domestic Product (GDP) in Indonesia was worth
888.54 billion US dollars in 2014. The GDP value of Indonesia represents 1.43
percent of the world economy. GDP in Indonesia averaged 214.72 USD Billion from
1967 until 2014, reaching an all time high of 917.87 USD Billion in 2012 and a
record low of 5.98 USD Billion in 1967. Indonesia's GDP contracted 2.06 percent
in the last quarter of 2014, following a revised 3.16 percent growth in the
previous quarter. The slow expansion was due to an increase in government
spending, investment and exports were unable to offset a rising imports and a
plunge in private consumption.
Indonesia is the largest economy in Southeast Asia and grew
by 6.2% in 2012 and in 2014, stronger economic growth is expected around the
lower end of the 5.8-6.2% range. Much less affected by the global financial
crisis compared to its neighboring countries, Indonesia’s economy grew by 5% in
2014, making “The World’s Most Stable Economy in the Last Five Years” according
to The Economist Magazine.
Indonesia's GDP contracted by 0.18 percent in the first
quarter of 2015, following a 2.06 percent contraction in the previous quarter,
as a small increase in private consumption was unable to offset a decline
in government consumption, investment and exports. On the expenditure side,
private consumption rose 0.11 percent, accelerating from 0.03 percent growth in
the fourth quarter. Government consumption contracted by 48.68 percent,
following a 43.28 percent expansion in the December quarter.
Non-profit institutions serving households spending also declined by 1.19
percent from 1.46 percent growth in the preceding quarter. Investment contracted
by 4.72 percent, after registering a 2.99 percent growth in fourth quarter.
Exports in the first quarter of 2015 declined by 5.98 percent from a 4.32
percent expansion in the previous quarter. Imports also fell by 9.98 percent,
following a 8.17 percent growth in the preceding period.
Nevertheless, Investment in Indonesia is still very much
attractive because labor is considered relatively affordable: the average
manufacturing job pays a base salary of $253 per month, compared with $369 in
Thailand and $403 in China. Demography is in Indonesia’s favour: its median
age, 29.2, is well below those of Thailand (36.2) and China (36.7). With a
total population of around 250 million as of 2013, Indonesia is the fourth most
populous country in the world after China, India, and the USA. During
2011-2013, the Indonesian population grew by 6%. In addition to being the
fourth-most-populous country in the world, Indonesia has a huge,
fast-urbanising domestic market and rising middle consumer class. A rapid
expansion in the middle class has helped to transform the country's consumer
market. Businesses in a wide range of industries can expect to capitalize on
both the strong purchasing power and the high labor skills of the middle class.
A large part of the Indonesia’s economic success is a result
of growing middle class and stable economic growth. Indonesia is in list
of MINT economies (Mexico, Indonesia, Nigeria and Turkey), namely those that
were the most attractive to long-term investors due to their favorable
Rising middle class in Indonesia has helped to transform the
country's consumer market, with major implications for consumer goods
companies. Companies in a range of industries including tourism, education,
healthcare and entertainment can expect greater business opportunities, as
middle-class Indonesians are spending increasingly on discretionary goods.
Although the bulk of consumer spending in Indonesia is still on essentials
(i.e. food, non-alcoholic beverages and housing), the proportion of
discretionary spending in total consumer expenditure has been gradually rising,
from 46.99% in 2006 to 52.29% in 2012.
Like many other Asian countries, the middle class in
Indonesia is characterized not only by their purchasing power, but also their
generally higher levels of skills and education. Many members of the Indonesian
middle class are educated at universities in the West. As a result,
multi-national consumer goods companies entering the Indonesian market can
capitalize on both the rising wealth and the high skills of the middle-class
The number of middle class households is set to increase
substantially in the future. Euromonitor International forecasts that by
2020, the number of households with an annual disposable income over US$10,000
(in constant terms) will reach 31.1 million, up from 13.7 million households in
2011. Over the period of 2012-2020, consumer expenditure per household will likely
grow by 39.2% in real terms whilst per household disposable income will
increase by 40.5% in real terms. Thanks to strong domestic demand driven by the
expansion of the middle class, the Indonesian economy is largely insulated from
external shocks of the global economic downturn.
B.2. PROJECTED ECONOMIC OUTLOOK
Political transition to the new government in Indonesia in October 2014 went smoothly and policy reform gathered momentum. Nevertheless, measures over the previous 2 years to restrain domestic demand and curb the current account deficit, coupled with sluggish exports, weighed on the economy. Growth in the gross domestic product (GDP) slowed to 5.0% in 2014, a fourth consecutive year of deceleration. In 2014, personal consumption remained buoyant, but government spending and fixed investment slowed and net exports fell.
Current President Joko Widodo is implementing policy reform to improve the investment climate that is expected to spur economic recovery this year and next year. Reform of fuel subsidies has already freed significant public funding for social and physical infrastructure. Inflation is seen subsiding to moderate rates through the forecast period, and the current account deficit to narrow. Challenges center on maintaining reform momentum, bolstering government revenue, and developing export-oriented manufacturing.
|Selected Economic Indicators (%) - Indonesia||2015||2016|
|Current Account Balance (share of GDP)||-2.8||-2.4|
Source: ADB estimates.
Projections for 2015 and 2016 assume that the new government's rapid reform momentum is maintained through both years and that the administration follows through on policies to accelerate infrastructure development, improve the investment climate, reduce logistic costs, and enhance budget implementation. On this basis, GDP growth is forecast to recover to 5.5% this year and 6.0% in 2016.
Cooperation in Tourism Sector
Both country have a high tourism potential. According to data from Korea Tourism Organization, the amount of tourist visiting the Republic of Korea in 2018 is 15,346,879 people. Most of the tourist came from East Asia and Pacific, China, and Japan. According to the statistic of Tourism Ministry, the amount of tourist visiting Indonesian in 2018 is 15,806,191 million people. Most of them came from China, Singapore, and Malaysia.
The amount of South Korean tourist visiting Indonesia in 2018 is 358,527 people, decreasing 15.28% compared to previous year, with total 423,191 people. Meanwhile Indonesian tourists visiting South Korea in 2018 is 249,067, increasing 7.9% compared to 2017 with total of 230,837 people.
The trend for the last five years (2013-2018) show the total amount of the tourist of Republic of Korea is always above 300,000 people. In the next 5 years, the amount of tourists of Republic of Korea are expected to increase. It occur because the media of Republic of Korea tend to make Indonesia where they shoot variety shows and coverage about Indonesian tourism and culture sites in Republic of Korea's local TV.
Indonesia and Republic of Korea has promote and advance tourists flow through the sky and the sea between two countries, exchanging experiences, field study visit, comparative study, and exchanging information regarding product development, education and training, or research and development, also encouraging cooperation in private sector.
Cooperation in Education Sector
Both countries has done exchange of teacher and teaching staff, exchange of expert in primary and secondary education sector, cooperation between university / school, recognition of degrees, human resources development, giving scholarship, joint research, and organizing seminar/conference/exhibition.
For now, two universities in Republic of Korea were noted giving a lecture about Indonesia, it is Hankuk University for Foreign Studies (HUFS) and Busan University for Foreign Studies (BUFS).
The data per February 28th 2019 shows that the amount of Indonesian college students studying in Republic of Korea is 1,685 people. Since 2009 until 2019, Indonesia has given 240 Darmasiswa scholarship and 19 BSBI Scholarship to students in Republic of Korea.
Inter-city / Inter-province Cooperation
The dimension of cooperation between Indonesia and Republic of Korea is not only in the central level, but also in regions. At least there are 22 forms registered of inter-city/inter-province cooperation in Indonesia and Republic of Korea city/province that consist of 14 sister cities and 8 cooperation.
Activity of promoting Art and Culture by the Embassy of the Republic of Indonesia in Seoul
The Embassy of the Republic of Indonesia in Seoul actively promote the Indonesian art and culture to every realm in Republic of Korea through periodic activity such as:
Indonesia Day in schools and Museum;
Traditional Indonesian Dance Group (Kelompok Tari Tradisional Indonesia/KTTI) practicing every Saturday in the Embassy of the Republic of Indonesia Seoul;
Opening of Gamelan class for the citizen of Republic of Korea;
Giving Gamelan class in Seoul Institute of the Arts;
Indonesian class in the Embassy of the Republic of Indonesia Seoul and institutions in Republic of Korea;
Making competitions such as scientific papers competition and speech in Indonesian;
Making activities that cooperate to Perpika and community groups;
Take part in festival or cultural exhibition (including culinary) or tourism;
Cooking demo with Indonesian chef;
Art stage during Eid al-FItr and;;
Some involvement of the Embassy of the Republic of Indonesia Seoul can be seen in Social-cultural activity through active participation in some forum, conferences, and exhibitions such as Seoul Friendship Fair, Seoul International Buddhism Expo, Itaewon Global Village, ASEAN Culinary Festival, Korean Travel Fair, Hanatour International Travel show, Modetour Travel Mart, Busan Global Gathering, ASEM Pendidikan and ASEM Budaya, also Busan Film Festival.
CONSULAR, IMMIGRATION AND LABOR
At present, there are more than 2,500 Korean companies
operating in Indonesia and more than 30 thousand Korean residence 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 and medium
sized companies working on manufacturing such as textile, garment, footwear,
toys, plastic ware, etc.
Such complementarities between the two countries has also
proven by the fact that the Korea is hosting quite number of migrant workers
from Indonesia. Both 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 Program. MOU on sending of Indonesian workers to Korea under
the Employment Permit System (EPS) was first signed on 13 July 2004. The MOU is
the basis for sending workers from Indonesia to Korea with the system G to G.
The extension of the MOU was signed on 9 September 2008 in
Seoul by the Ministry of Manpower and Transmigration of Indonesia and Ministry
of Labor of Korea. This MOU replaced the previous one which expired on 9
Under the MOU, placement of workers should only be carried
out by the government. In Indonesia it is organized by government institution
named BNP2TKI. To replace the role of recruitment agencies, a special committee
in Korea has been set up to handle the placement and protection of migrant
MOU arrangement for Korean Language Training was signed on 8
December 2008 between BNP2TKI with HRD Korea. The objective is to organize a
Korean language training and its test as a requirement for workers to go to
Foreign workers market in Korea is still promising, given
the country's need for labor cannot be filled by the domestic force. Korean
government has worked with 15 countries, including Indonesia, to fill the needs
of approximately 100,000 jobs each year. Indonesia get a quota of an average
9,000 per year. All migrant workers working in formal sectors categorized as 3D
jobs (dirty, dangerous, difficult) such as textile factory, automotive and
spare parts, construction, electronics, food industry, household appliances,
As of 2015, Indonesian citizens in Korea has reached
approximately 41 thousand with more than
95 percent is workers. The rest are students, professionals and housewives.
Indonesian workers scattered throughout Korea with some concentration in Ansan,
Suwon, Bucheon, Taegu, Taejon, Uijeongbu, Ulsan and Busan.