International Cooperation for Industrial Development in Indonesia


Jongil Kim and Mikyung Yun



Industrial development is crucial for creating employment and income growth in developing countries. Since the recognition of the importance of development effectiveness in addition to aid effectiveness at the recent G20 Seoul Summit and Busan High Level Forum on Aid Effectiveness, development cooperation in the field of industrial capability enhancement has received increasing attention from the international development community. As a country which achieved rapid development based on industrial competitiveness, Korea is now facing high demand from developing countries for development cooperation in building industrial capabilities.

Against this background, the present study has selected Indonesia, with which Korea is increasing economic cooperation, for the country case study in order to undertake an analysis of desirable forms of development cooperation in industrial capability enhancement. The study first explores general economic conditions and the level of industrial development in Indonesia, and Indonesia’s Masterplan for development. Then, the study examines how Korean ODA to Indonesia is currently conducted, especially with respect to industrial capability enhancement, and evaluates its performance. On the basis of such analysis, the study proposes possible development cooperation programs between Korea and Indonesia in the field of industrial capability enhancement. The reason for selecting Indonesia as a cases study is that, above all, Indonesia is one of the core countries that has received the largest proportion of Korean ODA. This trend has continued, with the total amount of Korean ODA going to Indonesia increasing even more during the 2000s. Not only that, increasing comprehensive economic cooperation between the two countries after 2012 is brightening the prospects for even greater industrial development cooperation between the two countries in the future.

Chapter 2 looks at Indonesia’s macroeconomic performance in general, explores the level of its industrial development and related policies, and critically examines its overall economic development Masterplan as to appraise Indonesia’s demand for ODA in the field of industrial development. Indonesia has successfully overcome the economic and political crisis caused by the Asian financial crisis, through democratization and sustained growth. It has achieved middle income country status in 2012 when it attained GDP per capita of more than 3,500 dollars. Despite bright prospects for growth in the long run, Indonesia has at present a great deal of structural problems to solve, before turning that prospect into reality. Deficient social infrastructure and private sector development, slow growth of the manufacturing sector and rising economic inequality along with issues of corruption, are among the most serious problems. Since the focus of this study lies in private sector development and strengthening industrial capability, when analysing the Indonesian economy, Chapter 2 devotes most of its effort on understanding the industrial structure and related policies.

In Chapter 3, the study looks at development cooperation in Indonesia in general, and then evaluates the performance of Korean ODA to Indonesia. Although Indonesia has attained middle income country status, ODA to Indonesia showed an increasing trend during the 2000s. Important bilateral donors in terms of total ODA amount are Japan, Australia, US, and Germany. Compared to those countries, Korea’s ODA in terms of absolute size is miniscule, for example, only 1/40th of Japan’s total ODA. Nevertheless, Indonesia is the fourth largest recipient of Korean ODA, and Korea’s share of total ODA going to Indonesia has continued to increase over the past ten years. Governance, energy and health sectors received the most ODA. Despite rising comprehensive economic cooperation between the two countries, development cooperation in the field of industrial sector has been minimal. According to Korea’s CPS for Indonesia, the three fields selected as the core focus of Korean ODA, considering Indonesia’s development needs and Korea’s comparative advantage, are public administration, economic infrastructure and management of environment and natural resources.

Chapter 4 continues with a more detailed study of specific development cooperation projects undertaken in the industrial sector by Korea’s three major ODA organizations: KOICA, EDCF, and KSP. Korean ODA organizations seemed to have specialized by concentrating their projects in the fields of information & telecommunication, and industrial energy, which are believed to be areas where Korea has a competitive edge. However, the strategy of specialization was not fully successful in that each of these projects were small grant aid, unrelated with each other in project substance. Such fragmented character of aid has greatly impaired development effectiveness. Whether Indonesia, already a high middle income country, should continue to receive grant aid predominantly should also come under review. For Korean ODA to become more effective in supporting industrial capability and infrastructure development in Indonesia, Korea must consider increasing the size of its aid in the form of loans, and integrating various small scale industrial projects into a closely-related, sector-based programs. KOICA’s technical cooperation in the textile industry, and industrial park feasibility study, if placed under an overall industrial sector development program, would be promising projects. They point to the right direction in the way of designing appropriate, specific development cooperation projects that can support strengthening the industrial capability of Indonesia.

Chapter 5 proposes new directions for Korea’s development cooperation in the industrial sector by suggesting four promising types of aid programs for industrial sector development: enhancing business development service (BDS) provision for SMEs, building global business partnership programs which embraces corporate social responsibility (CSR)-related activities to foster cooperation between large and small firms, assisting human resources development through connecting training programs with migrant labor programs, and supporting development of industrial parks. The programs proposed here are only rough schemes, requiring detailed feasibility studies and specific implementation plans or strategies. If the Korean ODA organizations decide to adopt the proposals made here and apply it to specific industrial sectors and regions in Indonesia, appropriate implementation plan for the sector or the region will need to be fully developed. The most important thing is not to lose sight of 1) making use of Korea’s comparative advantage in successfully implementing industrial capability enhancing policies in designing sufficiently specialized programs; 2) merging various small projects into a single, adequately-sized aid, linking loans and grants if necessary; and 3) complying with the overall development Masterplan and specific industrial policies of Indonesia.

제1장 서 론
1. 연구 배경 및 목적
2. 연구의 범위

제2장 인도네시아의 경제 현황과 산업분야 개발계획
1. 인도네시아의 거시경제 현황
2. 인도네시아의 산업 구조 및 정책
가. 산업구조
나. 산업정책
다. 중소기업정책
3. 인도네시아의 무역 구조 및 정책
가. 무역구조
나. 한국과의 교역 현황
다. 무역정책
4. 인도네시아의 투자환경
가. 외국인투자 현황
나. 한국기업의 진출 현황
다. 외국인투자정책
라. 투자환경
5. 인도네시아의 중장기 개발계획

제3장 대인도네시아 산업분야 개발협력 현황 및 평가
1. 인도네시아 ODA 수원 현황
2. 주요 공여국과 국제기구의 대인도네시아 ODA 현황과 지원전략
가. 일본
나. 호주
다. 세계은행
라. 아시아개발은행
3. 우리나라의 대인도네시아 ODA 현황과 지원전략
가. 대인도네시아 ODA 현황
나. 우리나라의 대인도네시아 ODA 전략
4. 우리나라의 대인도네시아 산업분야 개발협력 현황
가. 인도네시아 개발협력 전략과 산업분야 개발협력
나. KOICA
다. EDCF
라. KSP
마. 한ㆍ인도네시아 포괄적 경제협력 사업
5. 우리나라의 대인도네시아 산업분야 개발협력 성과 평가
가. 대인도네시아 개발협력에 대한 전반적인 평가
나. 산업분야 개발협력에 대한 평가

제4장 대인도네시아 산업분야 협력방안
1. 인도네시아 산업분야 개발협력 환경
2. 대인도네시아 산업분야 개발협력 프로그램
가. 중소기업을 위한 BDS 공급체계 역량 강화 지원 프로그램
나. CSR 활동을 통한 기업협력 프로그램: 글로벌 비즈니스 파트너십
다. 인력 도입사업과 연계한 직업훈련의 내실화 지원
라. 산업공단 조성 지원

제5장 결 론

참고문헌

부 록

Executive Summary