Currency Crisis and Difficulties for Overseas Affiliates:A Case Study on the Restructuring of Korean Affiliates in Indonesia
Wan-Joong Kim

Indonesia's currency crises and political uncertainty have caused a decrease of FDI in Indonesia. Likewise Korean overseas direct investment in Indonesia has contracted(see Figure 1). While Korean firms in Indonesia regarded social, economic and political uncertainty as providing a negative environment for investment following the currency crisis of Indonesia, a cheap labor supply provides incentives to continue to do business in Indonesia(see Figure 2). Korean firms, therefore, could minimize the negative effects of the currency crisis in that they were largely export-oriented firms.

Figure 1. Korean Overseas direct Investment in Indonesia

Figure 2. Results of Survey concerning Indonesian InvestmentEnvironment following the Outbreak of the Financial Crisis
Korean firms participating in toy, clothing, and mining production in Indonesia have maintained a good business performance despite the currency crisis. However, the business performance of firms within the textiles, electronics and electricity, and automobiles industries have suffered during the same period. One of the reasons for the poor business performance of the latter group is the reduced number of overseas buyers of products from Indonesia as they fear political uncertainty. The decrease of global demand for such goods has also hurt such exports. In particular, Kia Motors' affiliate in Indonesia is currently experiencing difficulties due to the decrease of local demand for cars, revocation of tax favors from Indonesian government, and a halt of capital supply. As a result, prospects for the 'National Car Project' which Kia tried to enter as a joint venture with Tomy (former Indonesian president Suharto's third son) has become very uncertain.
In addition, the currency crises in Korea has caused great difficulties for firms established in Indonesia in raising needed capital. Thus, the withdrawal of Korean firms from Indonesia is more often due to the home country's economic conditions rather than host country's current situation. According to the author's survey, Korean firms that remain in Indonesia do not intend to withdraw from the country. Instead, some firms have plans to expand their production capacity in Indonesia as a result of improvements in export price competitiveness(see Figure 3).

Figure 3. Results of Survey concerning Coping Strategy of Korean Firms in Indonesia: Production Levels

Figure 4. Results of Survey concerning Coping Strategy of Korean Firms in Indonesia: Methods of Production, Marketing, Raising Capital, ets

Some of Korean firms which had relied on local demand have restructured themselves by reducing production capacity and number of local laborers. Many firms' restructuring process has been concentrated primarily on quality, such as increasing productivity, rather than focusing on quantity, such as decreasing the amount of labor and capacity. Other firms have changed their strategy to increasing target exports and the ratio of local procurement of raw materials(see Figure 4).

All Korean firms that were surveyed in Indonesia requested financial help from the Korean government to alleviate the difficulties of acquiring capital through banks. They have insisted that despite the political uncertainty which Indonesia is presently undergoing, there existed a good opportunity for increasing exports. However, these Korean firms are unable to capitalize on such opportunities as many of the Korean bank branches in Indonesia which Korean firms have been relied on for credit, have succumbed to the Indonesia crisis.

Korean firms in Indonesia have imported from Korea a large portion of raw material necessary for manufacturing. Therefore, exports of Korean firms established in Indonesia are closely connected to exports of Korean firms at home to Indonesia. Thus, Korean firms have requested the Korean government to provide desperately needed trade financing.

요약

Ⅰ. 序論

Ⅱ. 外換危機 이후 인도네시아의 投資環境 變化와 外國人投資 動向

1. 外換危機 이후 인도네시아의 經濟與件 變化와 展望
가. 最近 經濟與件
나. 危機克服 課題와 展望
2. 外換危機 前後 인도네시아의 外國人投資 政策 變化
가. 外換危機 以前의 外國人投資 政策
나. 外換危機 以後 인도네시아의 外國人投資 政策 變化
3. 外換危機 이후 인도네시아에 대한 外國人投資 動向
가. 인도네시아에 대한 外國人投資 動向
나. 인도네시아에 대한 韓國企業의 投資動向

Ⅲ. 인도네시아 進出 韓國企業의 外換危機 이후 事業環境變化에 대한評價와 部門別 運營實態 및 構造調整

1. 現地의 全般的인 事業環境 및 撤收 등 構造調整 決定要所에 대한韓國企業의 評價
가. 現地의 全般的인 事業環境 變化에 대한 韓國企業의 評價
나. 韓國企業의 構造調整 決定要素에 대한 評價: 企業內部的 要因
다. 韓國企業의 構造調整 決定要素에 대한 評價: 企業外部的 要因
라. 韓國企業의 撤收與否 및 構造調整 方向
2. 韓國企業의 部門別 運營實態와 構造調整
가. 玩具部門
나. 纖維 및 衣類部門: 봉제 중심
다. 신발부문
라. 飮食料部門
마. 資源開發部門
바. 電氣電子部門
사. 自動車部門
아. 其他部門

Ⅳ. 要約 및 示唆點

參考文獻