First of all, I would like to deliver a warm welcome to the President of and all delegate members of Kyungnam University of Masan, South Korea.

Indonesia and the Republic of Korea have made a cooperation for more than three decades, based on good understanding, friendship and mutual benefits. The recent achievement in the two countries relation, particularly in economic exchanges and investment are very good, and we all here want to continue the next cooperation in economic as well as in other fields, toward better prosperity both in Indonesia and South Korea. I hope, through blossoming relationship between Kyungnam University and Gadjah Mada University over years, and with this seminar, we can find together the new possibilities and prospects for future cooperations.

Since 1990 South Korea has been becoming one of important countries in Indonesia¡¯s economic development. In 1993, South Korea was the fourth largest trading partner to Indonesia, and Indonesia was the sixth largest to South Korea (Shin, 1995). The bilateral trade between two countries was growing faster in 1990s, interrupted only in 1998 when two countries were severely hurt by economic crisis. However, the trade resumed again with positive growth in the following years and South Korea became the fourth largest export destination to Indonesia in 1999. This position seems to be stable to present.

South Korea foreign direct investment in Indonesia also showed a significant increase during 1990s and this made Korea the eighth largest FDI contributor during 1967-June 1999 in the term of approved value amounted to US$ 10,263 million. During 1990-1999 the approved value of South Korean FDI in Indonesia reached US$ 7,801 million or four percent out of total approved FDI (BKPM, 2000). At the same period, South Korea FDI was only a third of Japanese FDI, in which Japan is the top investor country of Indonesia,. However, due to Japan has been experiencing economic recession since 1990 and nobody knows when Japan can escape from her economic difficulty, the role of South Korean investment in Indonesia will become more important. Moreover, we heard that South Korea has an intention to compete with Japan in Indonesia (Kompas daily, 20/3/2001). It can be expected that such rivalry between Japan and South Korea in Indonesia¡¯s domestic market will improve competitive environment and reduce Indonesia economic dependency to certain countries.

As far as I study, South Korean investment has several advantages which can create benefits for Indonesian economy. For example, technology of South Korean companies as well as their capability to expand export market are higher than that of Indonesia. These advantages can be transferred to Indonesia through establishing joint venture companies and sharing management with Indonesian, transferring higher technology and skills to local staffs, assisting market development abroad, etc. South Korea¡¯s small and medium companies can share their experiences to Indonesia¡¯s small and medium companies along with the recent program of Indonesian government to promote small and medium firms. The relative similarity of industrial structure between Indonesia and South Korea can give another opportunity to establish ¡°horizontal industrial cooperation¡± in economic cooperation, instead of the Western countries¡¯ ¡°vertical industrial cooperation¡± in which tends to exploit developing countries.

As Mr. Suk-ho Kim writes in his paper, the cooperation between Indonesia and South Korea is still sub-optimal. I share his view, and I suggest that the cooperation should be increased in the future both in government and private level. Not only in bilateral basis, but also in regional basis such as ASEAN+3. And not only in national level, but also local level. Why? Since 1999 Indonesia has been promoting decentralization, however local development fund are very limited and the central government also has limited fund. Unfortunately, local government is banned to borrow loans from international financial institution. Hence, for the sake of sustainable local development and democratisation in Indonesia, we hope that South Korean government would like to help our local development projects. It can be conducted, among others, through development assistance, local government training on good governance, grants for educational improvement of local people. In the past decades, Indonesia carried out centralization of economic development in which investment and development were concentrated only at certain cities or regions or island, with the expense of development of other regions or islands. Establishing, for example, twin city or sister city/sister province in outer of Java Island with city/province of South Korea, may promote local development and spread off economic prosperity between two countries.

We are very glad to see that South Korea is success in carrying out her economic recovery program after 1997 financial crisis. It should be a lot of lesson from South Korean experiences to deal with the crisis. Indonesia also can learn from South Korea experiences in doing her economic development. Before Asia Crisis 1997, South Korea is known not only for her status as the ¡°New Industrialising Countries¡± in Asia, but also the ¡°New Democratising Country.¡± Hence, Indonesia can learn from South Korean experiences in establishing democracy, too. Indonesia and South Korea has been experiencing the similar stages of democratisation, from stage of authoritarianism, political liberalisation stage and transition to democracy stage. Even though South Korean democracy has not yet reach democratic consolidation stage (which is believed as the final stage), indeed South Korea is at some steps ahead Indonesia toward democratic consolidation. Indonesia can study South Korean experiments in developing civil society, strengthening the rule of law, promoting good governance, etc. as the requirements to develop economy and society with the better way.

In the years ahead, regarding changes in international community, Indonesia-South Korea cooperation can be more assured in ASEAN+3 framework and ASEAN Regional Forum. ASEAN+3 and ARF may increase prosperity in ASEAN countries and improve regional security and stability as well. As we know, there is no prosperity without security and stability. On that account, continuing and strengthening Indonesia and South Korea cooperation within ASEAN+3 framework and ARF may contribute to greater prospeity in Asia region. Such inter-regional cooperation will bring another opportunity, for instance, the possibility of ASEAN+3 become the embryo of Asia Economic Integration, to balance this region with the progress of economic integration in Europe and North America. It is possible too, according Prof. Yang Seung-yoon of Hankuk University, that ASEAN with South Korea, Japan and China emerge together as the center of APEC and ASEM in 21st century.

Finally, sustainable cooperation between Indonesia and South Korea and the would be Asia Economic Integration do not only need support from the head of states in Asia, business communities, or regional organisations, but also from their future leaders, among others, who is now being student. I hope Indonesian and South Korean students, together with other students in Asia, will continue making contact, good friendship and cooperation in many fields, and share ideas about the future of Asia. We all hope it can happen, supported by the¡±PEOPLE¡¯s UNIVERSITY¡± spirit of Gadjah Mada University and the ¡°TRUTH, FREEDOM, CREATION¡± spirit of Kyungnam University.

Once again, welcome to Universitas Gadjah Mada of Indonesia. Thank you very much for the good cooperation. Kamsahamnida. ***

* Presented in seminar on ¡°Cooperation between Korea and Indonesia: New Possibilities and Prospects¡±, held by the Graduate School of Kyungnam University, Masan, Korea and the Center for Korean Studies of Gadjah Mada University, Yogyakarta, Indonesia, October 18, 2001
** The writer is Researcher in Center for Asia and Pacific Studies of Gadjah Mada University. She was the student of Graduate Program of Economics, Gadjah Mada University (1998-2001). One of founders of and vice chairman of Graduate Student Legislative Board, 1999-2000.