Yoon’s trip to Indonesia, India to bolster ties in advanced industries

South Korean President Yoon Suk Yeol and First Lady Kim Keon Hee, who visited Indonesia to attend the Association of Southeast Asian Nations (ASEAN) summit, receive a bouquet from a ‘flower boy’ at a dinner meeting invited by Indonesian compatriots at a hotel in downtown Jakarta on Sep. 5 (local). [Photo by Yonhap]

South Korean President Yoon Suk Yeol departed for his seven-day trip to Indonesia and India on Tuesday, both of which mark the 50th anniversary of diplomatic relations with Korea this year.

The visits are particularly noteworthy as Korean manufacturers are eyeing these two countries as potential breakthroughs amid the intensifying U.S.-China tensions in advanced industries such as semiconductors and electric vehicles.

Yoon’s first destination is Indonesia, where he will attend the Association of Southeast Asian Nations (ASEAN) Plus Three summits scheduled for Wednesday.

Indonesia plays a pivotal role in the supply chains for EVs and secondary batteries. Led by the government and state-owned enterprises, the Southeast Asian nation is rapidly building its supply chain from the mining and refining of core battery material nickel to the production of anode materials, cathodes, battery cells, battery packs, and even battery recycling.

Synergies are expected in the supply chain cooperation between the two countries.

Korea can share its advanced battery manufacturing technology with Indonesia while benefiting from the country’s rich resources, especially those essential minerals for batteries.

This would enable Korean battery makers to significantly reduce their dependence on China and establish greater stability in the battery industry supply chain.

Leading Korean EV vehicle and battery companies have already ventured into Indonesia.

Hyundai Motor Co. began full-scale operations of its plant near Jakarta last year and is jointly building a battery cell factory with LG Energy Solution Ltd. in Karawang. POSCO Holdings Inc. plans to establish a nickel refining plant in Weda Bay Industrial Park.

In May, during his attendance at a forum organized by Maeil Business Newspaper in Jakarta, Indonesian Minister of Investment Bahlil Lahadalia suggested potential bilateral supply cooperation between the two nations.

He stated that the combination of Korea’s technological prowess and Indonesia‘s raw materials could empower the two nations to lead the EV industry and reduce their dependence on China.

Yoon’s next destination is India, where he is scheduled to pay a two-day visit over the weekend to the emerging global automotive production hub.

According to data from the Korea Trade-Investment Promotion Agency, India produced 4.4 million vehicles as of 2021, ranking fourth in the world after China’s 26 million units, the U.S.’s 9.16 million units, and Japan’s 8 million units.

Korean automakers are also expanding their production capabilities in India.

Hyundai Motor recently signed an agreement with General Motors Co.’s Indian subsidiary to take over its Talegaon plant.

Hyundai Motor has also increased its Chennai plant’s production capacity to 820,000 units in the first half of this year from 750,000 units, with total production capacity in India expected to increase to one million units.

“India is expected to surpass China and become our number one overseas production base by March next year,” said an official from the automaker.

This marks the first time in 11 years since 2013 that Hyundai Motor’s cumulative production in India will exceed that in China.

Its smaller sibling Kia Corp. established its Indian subsidiary in 2017 and began full-scale operations of its Anantapur plant in 2019.

India and Indonesia are also becoming increasingly significant export destinations for Korea.

According to data from the Korea International Trade Association, Korea’s exports to India increased significantly to $18.9 billion in 2021, up 21.1 percent from $15.6 billion in 2018.

Exports to Indonesia also increased by 15.9 percent to $10.2 billion from $8.8 billion during the same period. Exports to India and Indonesia amounted to $10.1 billion and $5.5 billion, respectively, in the first seven months of this year.

When examining Korea’s major export items by country, semiconductors, steel plates, synthetic resins, and automotive parts were prominent in exports to India while petroleum products, steel plates, synthetic resins, and semiconductors to Indonesia.

Yoon’s visit is also expected to serve as an opportunity to bolster defense cooperation between Korea and the two countries.

Indonesia is a major defense export market with close military ties and India is a world-leading arms importer, making it a crucial market for Korean companies.