Indonesia, South Korea to Boost Economic Bilateral Cooperation
Date 6 April 2020
In a bid to strengthen bilateral cooperation in handling the COVID-19 crisis, Coordinating Minister for Economic Affairs Airlangga Hartarto on Monday (6/4) made a courtesy call to South Korean Minister of Trade Yoo Myung Hee.
Various issues were discussed during the virtual meeting, including South Korea coronavirus updates and Indonesia-South Korea potential collaboration against COVID-19 with the assistance from the South Korean Government and its private sectors.
For the record, the two countries have maintained positive economic relations, especially in the investment, trade, and tourism sectors.
As of January, total bilateral trade between the two countries amounted to US$1,311 million. Indonesia has also become a supplier of raw materials and energy resources for South Korea.
Indonesia is one of the biggest investment destinations for a number of South Korean companies. In the previous year, it was recorded that South Korea was the ninth-largest investor in Indonesia with the investment value totaling US$ 1.1 billion (2,952 projects), which fell by 33% from US$1.6 billion (2,412 projects).
Regarding the fight against the COVID-19 pandemic, the Coordinating Minister said that the current situation would unite the whole countries experiencing the pandemic. According to him, there is stronger cooperation from all countries to prevent the spread of the virus and to mitigate its impacts on the economic and social fields.
The Minister went on to say that in Extraordinary Virtual G20 Leaders’ Summit on COVID-19, Indonesia is committed to implementing the results of the summit and stressed the importance of collaboration between countries in handling the COVID-19 outbreak.
Airlangga also said that South Korea has succeeded in pushing down the curve of COVID-19 victims, adding that the number of new cases has dropped significantly, while the number of patients recovered has increased, making South Korea the role model for handling the pandemic.
“I requested a special report from the Regional Economy and Policy Institute (REPI) located in Daegu on South Korea’s measures to contain COVID-19. The report shows that the key is the South Korean Government’s decision to implement massive rapid tests that enabled them to track and respond quickly to the spread of the coronavirus,” Airlangga said.
The rapid tests conducted by South Korea were also supported by the massive production of coronavirus testing kits that were developed by two South Korean biotechnology companies Seegene Inc and Kogene Biotech Co. Ltd.
According to Airlangga, it is expected that the two companies can produce testing kits together with companies in Indonesia. Personal Protective Equipment will also be produced together that raw materials from South Korea that will be manufactured in Indonesia, he added.
“We are also grateful to the South Korean Government for deciding to provide in-kind assistance to the Indonesian Government worth US$500,000 to support our efforts to fight the COVID-19 outbreak,” Airlangga added.
On that occasion, Airlangga also said that the assistance from the South Korean Government consisted of COVID-19 testing kits and rechargeable battery power sprayers. To date, there are 300 sprayers that will be sent to Indonesia, while the technical delivery of the COVID-19 testing kits is still being prepared, he said.
The Korea International Cooperation Agency (KOICA) was appointed by the South Korean Ministry of Foreign Affairs for the technical implementation of sending aids to Indonesia.
In the South Korean private sector, the LG Group will contribute 50,000 COVID-19 diagnostic kits (RT-PCR machine) and Hyundai Motor will also contribute 40,000 Personal Protective Equipment.
In the meantime, South Korean Trade Minister Yoo Myung Hee said that the South Korean Government has placed Indonesia as one of the priority countries for the export of medical devices and quarantine, besides the United States and the United Arab Emirates (UAE).
On the other hand, the current pandemic situation has encouraged each country’s governments to take measures to secure global financial system through a currency swap scheme.
Therefore, Indonesian Coordinating Minister for Economic Affairs and South Korean Minister of Trade welcomed the signing of a renewal bilateral local currency swap arrangement (BCSA) between the Bank Indonesia and the Bank of Korea on Sunday (5/3). The ceiling is worth KRW10.7 trillion or equivalent to Rp115 trillion, which is effective from 6 March 2020 to 5 March 2023, it can be extended according to the agreement.
In addition, Indonesia also encourages other financial schemes called Local Currency Settlement with Appointed Cross Currency Dealers (LCS ACCD) to use local currencies for bilateral trade transactions that is carried out in the jurisdiction of respective regions.
The LCS scheme requires the appointment of Appointed Cross Currency Dealers from banks that will facilitate the LCS scheme through opening currency accounts of partner countries in their countries.
The ACCS LCS is carried out to encourage the wider use of local currencies in trade settlement to reduce the pressure of the US Dollar on the local currencies.
“I hope the scheme can provide a safety net for financial transactions between the two countries because I believe that the current global economic situation is the main reason for us to strengthen our cooperation in maintaining financial and monetary stability in our respective countries,” the Minister said. (Ministry of Economy / EN)
Translated by: Syarifah Aisyah
Reviewed by: M. Ersan Pamungkas