Indonesia, the 4 th most-populous country and the 16 th largest economy in the world, is becoming an increasing important country for South Korean businesses

most-populous country and the 16 largest economy in the world, is becoming an increasing important country for South Korean businesses A total of USD 7.3 Billion has been invested by South Korea since 2014 in a wide range of industries, including submarine technology and the construction of electric vehicles

South Koreans in Indonesia form a well-organised network of expatriates, who are greatly respected and admired by the locals due to their mastery of Bahasa Indonesia and familiarity with local customs

Photo by Jeon Han

South Korea and Indonesia are two countries which one does not typically associate with each other. One is a wealthy East Asian country known globally for its technological prowess and mesmerising Pop Culture, while the other is a developing nation in Southeast Asia known for its Muslim-majority and its abundance of natural resources. They don’t seem to share much in common.

Yet despite these differences, both nations have had contact with each other for centuries. What’s more, the influence of South Korea in Indonesia is only set to grow thanks to ever-increasing business ties. It is no wonder then that South Korea ranks among the top 10 FDI sources for Indonesia, investing a total of 7.3 billion US dollars since 2014.

For instance, Hyundai Motors has recently pledged to invest USD 1.55 Billion to build an electric car factory in Indonesia, the first of its kind in Southeast Asia.

However, the relationship between the two countries does not limit itself to economics alone. There has been a recent intensification of cultural contact between South Korea and Indonesia – and it goes both ways.

Indonesians aren’t simply embracing the hallyu like everyone else. Many South Koreans are learning Bahasa Indonesia and choosing to live in Indonesia as well. But how did we get here?

Relations Before The 21st Century

Long before there was a unified South Korea, there were the Three Kingdoms, one of which was Silla. And long before there was Indonesia, there was the Buddhist Kingdom of Srivijaya, whose capital was located in the island of Sumatra.

Srivijaya was renowned internationally as a centre of Buddhist studies, so foreign East Asian monks would routinely spend some time in Sumatra studying Sanskrit before continuing their pilgrimage to India.

Hyecho, a monk from Silla, may have stopped by Srivijaya, but he did not stay long in order to focus on his journey to India in AD 723.

A more concrete example of Korea-Indonesia relations can be found in the 15th Century. Back then, the Kingdom of Majapahit, which many Indonesians consider to be the spiritual predecessor of their country, was the dominant power in the Indonesian archipelago. Chen Yen-Xiang, an ethnic Chinese official working for the Majapahit Court appeared in Korean records from 1406.

Back then, it was common for Southeast Asian Kingdoms to employ ethnic Chinese envoys as the leaders of trade and diplomatic missions to China and other East Asian countries.

Chen’s delegation, which mainly consisted of subjects of Majapahit, was likely attacked by Japanese pirates when his ship was sailing near Korean territory. Although many members of his crew were either killed or captured, Chen along with 40 crew members managed to escape.

They were well-received in the Korean Court, which also provided them with a small ship for their return journey. Chen later expressed his gratitude to the Koreans in 1412 telling them in a letter that he would send his grandson to the Korean Court to convey the Majapahit Empire’s appreciation.

While these episodes of Korea-Indonesia interactions happened centuries ago, there have also been more modern examples.

During the Japanese Occupation, the Japanese would often employ ethnic Korean soldiers in their overseas campaigns. In 1942, a soldier named Yang Chil-Sung was stationed in Indonesia as a prison guard.

When Japan surrendered in 1945, the Indonesians and Koreans took this opportunity to declare their independence. However, the Dutch who were Indonesia’s colonial masters before the Occupation, refused to grant Indonesia its independence, and launched a brutal war of re-conquest.

Yang Chil-Sung who by then had become fond of the Indonesians, took on a local name, Komaruddin, and helped the Indonesians in guerrilla warfare until he was executed by the Dutch in 1949. He is remembered by both the governments of Indonesia and South Korea for his heroic sacrifice.

South Korean Investments In Indonesia

With the horrors of the Second World War over, South Korea could finally focus on industrialising and developing their country. The Miracle on the Han River transformed South Korea’s economy into one of the Asian Tigers.

Soon, South Korean companies began expanding into Indonesia. In 1973, Miwon Specialty Chemical Co., Ltd opened up a factory in East Java. Various other South Korean companies would follow suit during the 70s and 80s. These investments also brought with them the first wave of South Korean expatriates who would go on to settle in Indonesia.

It is not hard to see why South Korean companies would be especially interested in Indonesia. It is the largest economy in Southeast Asia, with more than USD 1 Trillion in nominal GDP, and it is forecast to join the top 5 economies in the world by 2030 as measured in PPP, with a GDP of USD 10 Trillion.

South Korea’s recent investments in Indonesia include the building of a Light-Rail Transit as well as cooperation in the transfer of technology to procure Chang Bogo-class submarines for the Indonesian navy. With South Korea’s recent focus on its “Southern Strategy” to engage more with its Southeast Asian neighbours, we can be sure to expect more cooperation with Indonesia.

Photo by RHK111

Cultural Interactions

Besides the economic aspect of South Korea-Indonesia relations, it is also important to take a look at the cultural aspects. Usually, the relationship is seen one way, where South Koreans export their K-Pop music and K-Dramas to other countries that gobble them up with enthusiasm.

However, it is interesting to note that Indonesians themselves seem to have captured the hearts of some South Koreans as well.

Many South Koreans study in Indonesian universities and many of them master the local language of Bahasa Indonesia. There are instances of both children of long-time South Korean expatriates as well as recent arrivals from South Korea who go to local universities and plan to stay after graduation.

Some South Koreans have found success by making YouTube channels and vlogging about Korean and Indonesian culture too. And there are even some rare instances of Koreans embracing Islam after spending some time in Indonesia. As a result of these exchanges, Korean expatriates are one of the most respected nationalities in Indonesia.

The South Korea-Indonesia relationship is certainly an interesting one. It has had humble beginnings, but it has now grown to be a mutually beneficial relationship. For now, Indonesia’s biggest investors are still Singapore, China, and Japan, but we can expect Korea’s contribution to become even bigger, especially as Korea seeks to edge out its traditional rival, Japan.

For investors in the region, it would be wise to pay attention on how this unique relationship will develop further in the future as Korean businesses and expatriates gain more influence in Indonesia.

By Lin Lintaro

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