The Indonesian Investment Coordinating Board (BKPM) and the Korean Embassy last Thursday organised a conference which promoted investment opportunities in Indonesia for Korean infrastructure companies.
The Indonesian initiative, which comes amid a recent increase in Korean investment in the country, underscores a broader will on the part of the North Asian nation’s larger institutions to seek better yielding returns overseas.
Korea Eximbank, Korea’s export credit agency, last month announced alongside two Korean private banks and two Korean mutual aid associations that it had reached a first close on its first Global Energy & Infrastructure Fund at KRW132.5 billion (€114 million; $121.39 million). The vehicle has a mandate to invest in sectors including global energy, infrastructure, and small and medium-sized companies.
“Korea Eximbank launched the fund to support Korean enterprises conducting business overseas and meet the enlarged financing needs of Korean businesses looking to expand abroad,” an officer of the credit export agency recently commented to Infrastructure Investor.
Korea ranks fourth as a country of origin of FDI targeting Indonesia but inflows have been slowing down since 2012.
The Indonesian government has sealed a $7.2 million in equity investment from Korea Eximbank in Java island’s Semangka Hydroelectric Power Plant Project, awarded to a consortium led by developer Posco Engineering, in October last year.
The deal marked the institution’s first equity investment since an amendment to the Korea Eximbank Act that eased restrictions on such deals in 2013. The capital pledged was topped by $132.9 million in project financing which included a loan and a guarantee.
At the conference last week, John Prasetio, Indonesian Ambassador to Korea, emphasised the will of the 255 million people-strong nation to welcome foreign investment and resume free trade agreements that had been suspended over the last couple of years.
The investment board promoted its recent work on streamlining the investment license process through the recently set-up National One Stop Service system, which integrates procedures at the national and local levels. The programme also offers incentive packages to foreign investors that include tax holidays and allowances as well as import duty facilities.
Korean investors were encouraged to look outside of central island of Java for their investments, with particular attention given to Eastern Indonesia where maritime and power connectivity are high on the list of priorities.