South Korea (hereafter Korea) and Indonesia celebrate their 50th anniversary of diplomatic relations in 2023. Since establishing a strategic partnership in 2006, the two countries have developed close ties based on mutual trust and respect. In recognition of the growing common interests and strategic values perceived by each other, Korea and Indonesia elevated their bilateral relations to a “special strategic partnership” in 2017. Indeed, amid intensifying strategic competition between the U.S. and China, Indonesia has emerged as a major partner for Korea to diversify its economic and diplomatic relations. And with the Russia-Ukraine war adding to the woes in the global supply chain already disrupted by the Covid-19 pandemic, Indonesia has become a key partner for Korea to expand its supply chain cooperation. From Indonesia’s perspective, Korea is considered a major economy that can contribute to the modernization of its manufacturing industry, relocation of the capital city and the growth of its defense industry. Among other things, as middle powers in the Indo-Pacific region, the two countries share the common goal of promoting inclusive regional order amid the increasing Sino-U.S. rivalry. Against this background, this study evaluates 50 years of Korea- Indonesia relations and analyzes what opportunities and challenges lie ahead for upgrading bilateral cooperation. Based on the above analysis, the study provides policy recommendations for further strengthening strategic partnership between Korea and Indonesia.
Chapter 2 reviews the development of diplomatic and security partnership between Korea and Indonesia. The two countries gradually increased diplomatic exchanges after the Cold War and set out to intensify their partnership in the late 1990s in line with Korea’s enhanced cooperation with ASEAN. In particular, defense industry cooperation – where mutual interests are identified – has been the primary driver of enhancing strategic bilateral ties in the field of defense and security cooperation. Since the 2000s, Korea has established itself as a major arms importer for Indonesia and defense cooperation between the two sides has led to the joint development of fighter jets. Based on the trust built up through close cooperation in the defense industry, Korea and Indonesia have expanded bilateral defense cooperation through high-level personal exchanges and multilateral joint exercises. The two countries have also continued to cooperate on diverse regional security issues, including those surrounding the Korean Peninsula, through the ASEAN-led multilateral dialogue platforms. Notably, Indonesia has been the most active ASEAN member in supporting inter-Korean dialogue. In addition, Korea and Indonesia, as members of both the G20 and MIKTA, have developed a middle power partnership on a wide range of global challenges. The opportunities and areas where the two countries can collaborate have recently been expanded further. Above all, amid growing strategic competition surrounding the Indo-Pacific region, Korea and Indonesia share the common goal of shaping inclusive regional order and securing strategic autonomy. Indonesia played a pivotal role in rolling out the ASEAN Outlook on the Indo-Pacific (AOIP), with which Korea’s new Indo-Pacific strategy shares a similar stance. Given the growing importance of Indonesia as Korea’s strategic partner, Indonesia is expected to play a key role in pushing ahead with Korea’s new Indo-Pacific strategy and its new policy towards ASEAN – the Korea-ASEAN Solidarity Initiative (KASI). There is sufficient room for further enhancing strategic ties between the two sides, but the different key interests held by each other – promoting peace in Korean Peninsula for Korea and securing its independent and active (bebas aktif) foreign policy for Indonesia, respectively – are challenges to be addressed. It is important that the two countries continue to strengthen strategic dialogues and thereby deepen their understanding of respective core interests and develop mutual trust as a reliable security partner.
Chapter 3 assesses Korea-Indonesia economic cooperation over the past 50 years, with the provision of future directions for upgrading the bilateral partnership. Since the establishment of diplomatic ties, Indonesia has been a major supplier of natural resources – particularly wood, crude oil and liquefied petroleum gas (LNG) – for Korea. Korea has maintained a trade deficit in trade with Indonesia, but given how the raw materials imported from Indonesia contribute to the growth of Korea’s manufacturing industry, it can be seen that the two countries have developed a complementary form of economic cooperation. Korea’s investment in Indonesia, which originally began with mining and labor-intensive manufacturing, has recently expanded to high-tech manufacturing and financial sectors with the gradual growth of the Indonesian economy. In particular, Indonesia’s rich natural resources and fourth-largest domestic market in the world have attracted large-scale investments from Korea in areas such as steel, automobiles, petrochemicals and electric and electronics. Despite the economic downturn caused by the Covid-19 pandemic, Korea’s direct investment to Indonesia reached a record high of 183.2 million USD in 2021. This large-scale investment to Indonesia can largely be attributed to Indonesia’s policy to support growth in the high value-added manufacturing industry, for example through the “Making Indonesia 4.0” initiative announced in 2018. In fact, Korea is increasingly seen by Indonesia as an important partner for promoting its industrial policy aimed at becoming a “high-tech manufacturing powerhouse.” As supply chains have emerged as a critical issue since the Covid-19 pandemic, there is a growing consensus in Korea that Indonesia is not just a raw material importer but a strategic partner to cooperate for the establishment of stable supply chains. In particular, as Indonesia attempts to develop downstream manufacturing, capitalizing on its position as a key provider of critical minerals, large-scale investments from Korea have recently been made in electric vehicles and battery production. In addition, infrastructure development has emerged as one of the most promising areas of cooperation between the two countries as the Indonesian government embarks on building a new capital city in East Kalimantan. On the occasion of President Yoon Suk-yeol’s visit to Bali in November 2022, Korea and Indonesia reaffirmed their mutual desire to strengthen economic cooperation with a series of MoUs signed in the field of supply chains for critical minerals, strategic cooperation in high-tech sectors and various development projects for the new capital city. As Indonesia, the world’s top 10 carbon emitter, pledges ambitious carbon emission cuts, room for bilateral cooperation on climate change is increasingly growing. Given that the Land Use, Land Use Change and Forestry (LULUCF) sector takes more than half of Indonesia’s Nationally Determined Contribution (NDC) target, and that Indonesia accounts for 75% of Korea’s overseas afforestation projects, cooperation on forestry management is also promising. Yet, the instabilities in the global supply chain and Indonesia’s resource nationalism are considered challenges for enhancing strategic partnership between the two countries.
Chapter 4 reviews the socio-cultural partnership between Korea and Indonesia, with an analysis on the achievements and limitations of their bilateral exchanges. Although the two countries established diplomatic ties in 1973, it was not until the 2000s that the bilateral people-to-people exchanges began in earnest. Mutual exchanges between the two peoples have gradually increased over the past 20 years, but are yet to show impressive achievement compared to other ASEAN members such as Vietnam and the Philippines. Furthermore, the outbreak of the COVID-19 pandemic has dramatically reduced the number of people migrating or traveling between the two countries for both short-term visits and long-term stays. The pandemic led to a dramatic drop in people-to-people exchanges with all ASEAN member countries, but it is worth noting that Indonesia’s rate of reduction was particularly high against the overall decline rate of ASEAN people living in Korea. This implies that Korea is not a preferred country to live in for Indonesians. The low public perception of cultural diversity in particular creates an unfavorable environment for Indonesian Muslims to reside in Korea. In order to recover the bilateral people-to-people exchanges which dropped due to the Covid-19 pandemic, more efforts are required by Korea to increase public awareness of cultural diversity. Meanwhile, we have witnessed dramatic development in cultural exchanges between the two countries over the past 20 years, as the Korean Wave has sparked the public interest in Korean culture and language within Indonesia. It is important to note, however, that the level of understanding regarding the Indonesian culture and language still remains relatively low within Korea. Similarly, while the popularity of Korean studies is growing in Indonesia, awareness of Southeast Asian studies, including Indonesian studies, is still low in Korea. Such asymmetrical and unbalanced cultural exchanges are the major challenge for Korea to overcome in strengthening socio-cultural ties with Indonesia.
Based on the above analysis, Chapter 5 provides policy recommendations for further upgrading the Korea-Indonesia strategic partnership. Under the vision of forging a comprehensive strategic partnership for a peaceful, inclusive and prosperous Indo-Pacific, this study suggests four major objectives to strengthen bilateral relations: 1) strengthening the basis of cooperation; 2) realizing major advances as a trusted partner in addressing regional and global challenges; 3) consolidating an open, future-oriented and mutually beneficial economic partnership; and 4) promoting sustainable people-to-people exchanges and raising mutual awareness. First, in order to advance the special strategic partnership, it is necessary to strengthen the basis of trust as key strategic partners. As vigorous summit meetings have played a critical part in deepening bilateral relations, it is important to hold regular summit exchanges to enhance mutual trust. Intensifying high- level strategic dialogues will also help the two countries share key issues faced by each other and maintain consistency in their cooperation regardless of leadership change. For key areas of cooperation identified through summit talks and high-level dialogues, the establishment of a joint committee or working group is required to put relevant agendas into action. In addition, 1.5 and 2-track dialogues should be held more actively so that expert groups of Korea and Indonesia can gain better understanding of each other. Second, in order for the two countries to strengthen their status as strategic partners, Korea and Indonesia should more actively cooperate on addressing each other’s key security agendas, as well as promoting stability in the Indo-Pacific region and global peace. In particular, the two countries should closely work together to enhance ASEAN centrality and promote peace on the Korean Peninsula, which are the core interests of Indonesia and Korea, respectively. In addition, building upon their close partnership at the United Nations and MIKTA, Korea and Indonesia should strengthen their cooperation on tackling various global challenges. Most importantly, the two countries should step up efforts to address complex security challenges in the Indo-Pacific such as maritime security, counter-terrorism, and humanitarian and disaster relief (HADR). Finally, as defense industry cooperation has been a key driver of growth in their bilateral defense partnership, the two countries should solidify their status as key defense industry partners by establishing a win-win strategy to boost defense industry ties. Third, capitalizing on the growing opportunities of cooperation, the two countries should build a mutually beneficial economic partnership. Apart from boosting trade and investment further, the two countries should seek to strengthen supply chain cooperation on key minerals in particular. Furthermore, Korea and Indonesia need to strengthen cooperation in the fields of electric vehicles, batteries, digital economy, and start-ups, while expanding cooperation in sustainable infrastructure, including the new capital construction project. It is also necessary to bolster bilateral cooperation for renewable energy and forestry, while enhancing partnership in maritime environmental management. Fourth, as the transition to a digital society is a key factor to facilitate more people-to-people and cultural exchanges between the two countries, Korea should support the development of science and technology in Indonesia, as well as foster talented youths that can lead Indonesia’s creative industry. Most importantly, more efforts should be made to increase awareness between the two peoples through various cultural and educational programs – for example, the establishment of an Indonesian cultural center in Korea and the promotion of Korean studies in Indonesia, and vice versa.