A Base for Advancing into Southeast Asia
Major Korean companies are ramping up their investments in Indonesia, which they regard as a base for advancing into Southeast Asia. Korean companies' investments are made in diverse sectors, including electric vehicles, batteries, petrochemicals, and biotechnology. The Indonesian government is also attracting Korean companies, using its rich resources and a large population of 280 million.
One major Korean investor is Lotte Chemical, which plans to further accelerate the Line Project. Lotte Chemical and its Malaysian subsidiary Lotte Chemical Titan will jointly build a mega-scale petrochemical complex in Banten of Indonesia. The two companies will invest US$3 billion (about 4.7 trillion won) in the Line Project, the largest overseas investment since Lotte Chemical's establishment. The petrochemical complex is expected to produce one million tons of ethylene, 520,000 tons of propylene (PL), and 250,000 tons of polypropylene (PP) annually.
Hyundai Motor Co. has established its first vehicle production base in the ASEAN region in Indonesia. It invested US$1.55 billion to build the Indonesian plant, which was completed in March this year on a site of 777,000 square meters. The Korean automaker accounted for 98 percent of electric vehicle sales in Indonesia in May. In addition to the car plant, Hyundai Motor will partner with LG Energy Solution to build a 100 GWh battery plant in Indonesia.
Indonesia is a geographically and demographically attractive market. In particular, at a time when the global supply chain crisis is deepening, the abundance of raw materials such as nickel, crude oil and tin is a factor that accelerates companies’ investment in Indonesia.
LG Energy Solution is promoting a consortium with LG Chem, POSCO Holdings, and LX International to build an electric vehicle battery value chain in Indonesia. This project will require an investment of 11 trillion won.
The Indonesian government is keen to attract investment from Korean companies. Last year, the Indonesian Ministry of Investment held an investment briefing session only for Korean companies, and this year, the Indonesian vice minister of trade flew into Korea to discuss investment and trade. Last year, Korea’s investment in Indonesia swelled by 107 percent compared to the previous year.
Indonesia is moving to strengthen local manufacturing by taking advantage of its rich resources. The country has banned exports of major minerals such as nickel, tin, and copper, forcing foreign companies in need of these minerals to invest in Indonesia.
In response, Taiwanese Foxconn, which manufactures iPhones for Apple, will invest about US$7.8 billion in Indonesia to produce parts such as batteries for electric vehicles. Following the establishment of a battery production plant in Taiwan, Foxconn is expanding its electric vehicle-related ecosystem overseas.
Foxconn Chairman Liu Yangwei met with Indonesian President Joko Widodo on June 25 and disclosed its investment plan. Foxconn will build a plant in Central Java to produce electric vehicle batteries and products.