Korea-Indonesia Industry & Tech Cooperation

1. Korea-Indonesia Industry & Tech Cooperation Dynamic Partner, Dramatic Prosperity

2. CONTENTS o Introduction o Trade o Investment o Current Focus Toward New o Industrial Tech Tie-Ups by Sector - Manufacturing - Energy & Resource Development - SOC - Others o Social Contribution o Conclusion

3. Introduction □ Showcasing Robust Growth in Economic Exchanges Two-Way Trade Two-Way Investment Visit or Exchange US$29.6 Bil. US$1.1 Tril. 100 Firms 3.9-Fold 66.6-Fold 5-Fold US$7.7 Bil. US$16.1 Bil. 20 2005 2012 2001 2012 2001 2012 □ Maximizing the Benefits of Complementarity • Indonesia.. • After China, the 2nd fastest • growing economy in G20 • -Growing purchasing power with rapid • increase of middle-class-income • population Korea.. Expertise in transforming from absolute poverty into world's 8th largest trading nation

4. Introduction □ Tremendous Synergy in Industrial Competitiveness o Beyond bilateral, emerging new horizon partner, evolving G20, ASEAN+3, APEC, etc. • Korea.. • High-quality pool of human resources • embracing policymakers, business • executives, engineers, researchers, • skilled workers, etc. • Powerhouse industries, having • a number of major global names such as • Samsung, Hyundai, LG, SK, etc. • Global positions: Automobile No. 5, • Shipbuilding No. 1, Displays: No. 1, • DRAM (Semiconductors) No. 1, etc. • Indonesia.. • Endowed with abundant natural resources • such as crude oil, coal, steel, • forests etc. • Emerging Asian production hub with • quick adaption to technology • competence; globally-recognized • aerospace competitiveness, etc.

5. Trade □ Tremendous Synergy in Industrial Competitiveness o Bilateral Trade Volume Exceeded US$38 Billion in 2012 - Partners aim to increase total trade to US$50 billion by 2015 & US$100 billion by 2020 - Korea is fourth largest trading partner for Indonesia, surpassing the U.S., India, Australia and others Key Facts & Statistics Two-Way Trade Trend Indonesia's Top Export Destinations in 2012 (Unit: US$ Mil.) Korean Exports to Indonesia Korean Imports From Indonesia Trade Volume Source : Indonesia Investment Coordinating Board Source : KOTRA

6. Key Facts & Statistics □ Showcasing Golden Complementarity in Economic Structure o Indonesia.. Major source of energy & raw material resources for Korea o Korea.. Reliable supplier of intermediary industrial goods to Indonesia Top 10 Trade Items Between Korea & Indonesia Source : KOTRA

7. Investment o Korea: Indonesia’s Third Largest Investor (2012) - US$1.94 billion, ahead of the U.S., China, others - Number of Korean companies having advanced into Indonesia has reached about 1,300 Key Facts & Statistics Two-Way Investment Trends in Indonesia (Unit: US$ Million) Amount Cases Source: KOTRA Data Source: Indonesia Investment Coordinating Board

8. Key Facts & Statistics Korean Investment Trends in Indonesia by Sector Primary Industries (Unit: US$1,000) Secondary Industries (Unit: US$1,000) Tertiary Industries (Unit: US$1,000) Total 100% Total 100% Agriculture 1,232 Construction2,225 Livestock 649 Processed Food 50,616 Nonferrous Metals13,000 Trade/Repair13,427 Forestry 0 Textiles164,577 Metals, Machinery & Electronics 626,843 Hotels & Restaurants750 Fisheries 0 Leather Goods & Footwear88,316 Medical & Precision Optical Machinery 0 Mining 6,500 Transport, Warehousing & Communication32,328 Timber7,384 Automobiles & Transportation Equipment5,920 Sub-Total 14,381 Paper & Printing1,610 Real Estate & Industrial Complexes500 Other Manufacturing Industries20,381 Chemicals & Pharmaceuticals117,023 Electricity, Gas, & Piped Water 0 Other Services609 Sub-Total1,154,507 Rubber & Plastics58,837 Sub-Total49,839 Source : KOTRA

9. Moving Toward New Horizon Promotion Status of Korea-Indonesia Economic Cooperation

10. Moving Toward New Horizon • Korea's Participation in MP3EI as Major Partner • ● Master Plan for Acceleration and Expansion of Indonesian Economic Development (MP3EI) • Indonesia's medium- and long-term plan (2011-2025) to become world’s 9th largest economy • ● Minister-Level Indonesia-Korea and Korea-Indonesia Joint Economic Cooperation Committee • Established in February 2012 • ● Ten Subcommittees Actively Advancing Joint Economic Cooperation • - Trade & Investment - Industries - Energy-Resources - Environment • - Construction/Infrastructure - Agriculture/Fisheries - Defense Industries • - Policy Development & Finance - Eco-Friendly Cars - Culture & Creativity • ● Joint Secretariat Established in Jakarta on February 28, 2012 • Korean officials dispatched from the Ministry of Trade, Industry & Energy, • Ministry of Strategy & Finance, Ministry of Environment, etc

11. Moving Toward New Horizon • Comprehensive Economic Partnership Agreement • ● CEPA Expected to Blossom into 1-Trillion-Rupiah Trade Era by 2020 • - Indonesia-Korea Summit Agreement to conclude CEPA by end 2013 • Goal: Enhance strategic partnership to expand the scope and depth in trade and other areas • ● Lower Tariffs on Korean Automobiles, Petrochemical Products, Ships, Steel and • Other Goods • ● New Investment and Greater Technological Cooperation for Indonesia from Korea Estimated Effects of CEPA (Joint Study Group) • ● Indonesia • - 0.03% increase in GDP • - US$800 million increase in welfare • Taking into consideration potential productivity increase in major • industries: 4.37% increase in GDP and US$1.6 billion • increase in welfare • ● Korea • - 0.13% increase in GDP • - US$1.5 billion increase in welfare

12. Moving Toward New Horizon Bilateral Currency Swap Arrangement • ●Practical Drive to Bolster & Accelerate Indonesia-Korea Economic Cooperation • ●Date/Venue: October 12, 2013, on the Sidelines of the IMF/World Bank General Assembly • ●Attendees: Finance Ministers and Governors of Central Banks of the Two Countries • ●Scale: Up to 115 Trillion IDR/10.7 Trillion KRW (equivalent to US$10 billion) • ●Period of facility: 3 Years • ●Expected Outcomes • - Boost trade and increase economic & financial cooperation • Strengthen regional financial safety net complementing • the Chiang Mai Initiative Multilateralization (CMIM)

13. Landscape of Cooperation by sector Manufacturing Textiles ■ Active Korean Textile Companies in Indonesia Reached About 400 in 2012 ●Cumulative Investment: US$5 Billion ●Employment: 450,000 ●Exports: US$7 Billion ●Indonesian Skilled Manpower Combined with Korean Expertise Maximizes Mutual Benefits Eco-Friendly Cars ■ MOU for Cooperation in Eco-Friendly Cars Signed at Indonesia-Korea Summit November 9, 2012 ● Prized cooperation and partnership in eco-friendly automotive sector expected to spread cooperation in entire automotive sector - Indonesian auto market scale exceeded 1 million vehicles in 2012 - Korean share of market stands at just 1.2%, dwarfed by Japan’s 90%

14. Landscape of Cooperation by sector • Steel • ■ POSCO Integrated Steelworks in Indonesia • ● Joint venture with PT Krakatau Steel • ● 3-million-ton annual capacity • ● Construction began in October 2010 with completion • targeted for December 2013 • ● Plant confirms POSCO’s position as major global steel maker and sets stepping stone • for the joint venture’s advance into Southeast Asian market with high growth potential • Aerospace & Defense • ■ Partners in Peace-Keeping and Disaster-Relief Operations • ●Defense Industry Cooperation • Indonesia acquired 17 KT-1 single-turboprop basic trainers • worth US$91 million from KAI (Korea Aerospace Industries) • ● Indonesia awarded DSME (Daewoo Shipbuilding & Marine Engineering Co., Ltd.) • a US$1.1 billion contract to build three 1,400-ton U-209 diesel-electric submarines • ● Indonesia, Korea signed letter of intent in 2009 concerning joint • development of KFX/IFX jet fighter program • ● Korea purchased four Indonesian CN 235 patrol planes for 120 billion won in 2008

15. Landscape of Cooperation by sector • Petrochemicals • ● Collaboration of Korea’s Expertise & Indonesia’s Resource-Based • Industry Advancement Drive • - Indonesia’s petrochemical imports: US$8 billion in 2012 • ●Lotte Chemical Launched US$5 Billion Investment Program • - Targeting new petrochemical complex in Banten Province • Currently awaiting assurances over additional land availability • ICT • ●Indonesia-Korea -- Emerging Potential as Frontier for ICT-Based Global Technology • - Indonesia -- Facebook’s fourth largest market & Twitter's third largest market • Korea is recognized worldwide as IT powerhouse, realizing US$81 • billion in IT exports in first half of 2013 • ● PT Samsung Electronics Cited as Success Story by BKPM • - Market leadership in TVs, smartphones, other segments • ● Indonesia-Korea MOUs for e-Government Partnership • - Realizing forward-looking vision for more innovative & transparent government

16. Machine Tools • ● Machine Tools, called Mother of Machines, to Fuel Indonesia’s • Drive to Advance its Manufacturing Sector • Facilitate automotive industry transition from assembly production • stage to processing stage • ● Korea Looking to Advance into Indonesia as the Emerging Manufacturing • Hub of Southeast Asia • Korea stands out as world’s 4th largest machine tool producer • at US$5.7 billion in 2012 • ● Bilateral Exchange Visits in Pursuit of Win - Win Cooperation Programs • - Designing roadmap for development of Indonesia’s machine tool industry • - Procuring Korean machine tools to support education & training programs • Shipbuilding & Offshore • ● Korea: Home to World's Top 6 Shipyards • ● Indonesia Targets Construction of Larger Vessels by 2015 • Up to 75,000dwt, with oil tankers as a priority as well as • CNG & LNG carriers • - Critical task is to enhance capacity & capabilities at 200 shipyards • ● Joint Government-Private Sector Efforts Underway Based on Win - Win Approach • ● Marine Equipment Sector Evolving Under Indonesia-Korea Shipbuilding & Offshore Cooperation Landscape of Cooperation by sector

17. Landscape of Cooperation by sector Energy & Resource Development ■ Representative Case of Combining Bilateral Complementarity ●Indonesia is Korea’s 7th Largest Mineral Product Import Source Korean Imports of Mineral & Mining Goods in 2012 Indonesia US$11.5 Billion (5.5%) Korea's On-Going Overseas Resource Projects Indonesia 61 Cases, 12% Total US$208.7 Billion (100%) Total 508 Cases (100%) ● Time-Honored Government Level Energy-Resource Cooperation Committee - The first country with which korea established a bilateral committee in 1979 - Converted into Bilateral Energy Forum with the dynamic participation of the private sectors.

18. Landscape of Cooperation by sector Major Korean Players in Indonesian Energy World • ● KIDECO • Established by Samtan of Korea • in 1982, focused only on resource development • Now, third largest bituminous coal • mine in Indonesia • Production volume reached over 200 million. • tons in 2010, supplying bituminous coal • to over 40 customers in 12 countries including • China, Japan & Hong-kong ●KOMIPO - Cirebon Thermal Power Plant - TanjungJati Thermal Power Plant (600MW x 2 Units) ㆍSupplying 9% of Java Island’s electric power - Wampu Hydropower ㆍIndonesian - Gov’t-guaranteed hydropower project • ● KOGAS • Starting with the first import of LNG from • Indonesia in 1986, KOGAS has become • the world's biggest buyer of LNG • Importing about 5 million tons of LNG • annually from Indonesia • CBM (Coal Bed Methane) Development • Tech Cooperation MOU signed with • SUGICO of Indonesia • ●KGS • MOU with MIGAS, Indonesia on • Gas Safety Management • ㆍGas safety technology standards, • consulting on gas refueling stations, etc. • Expanding tie-ups into service field besides • investment in oil & gas facilities

19. Landscape of Cooperation by sector Construction & Infrastructure ● Indonesia Focused on Quality Infrastructure to Support Dynamic & Sustainable Growth - Roads, Rail, Air, Maritime, Power Plants, etc. ●Indonesia’s 2011-2025 Development Plan Comprises Investment Reaching US$440 Billion ●Korea Ideally Positioned to Support Indonesian Infrastructure Development - As a main partner for Indonesia’s MP3EI - Accumulated experience & expertise in rags-to-riches legend based on SOC development A ●Rallying Behind Indonesian President SusiloBambangYudhoyono’s Initiatives - Strengthen Asia-Pacific connectivity through infrastructure development & promotion of infrastructure investment Indonesia-Korea Co-Authored JejuInitiative ● Identified 8 Large-Scale Cooperation Projects ● Combined Value of US$50 Billion ● Established Joint Commission & Working Groups

20. Landscape of Cooperation by sector Highlights of Jeju Initiative

21. Landscape of Cooperation by sector • Agro-Forestry, Distribution, & Creative Industries • Agro-Forestry • ● Bilateral MOU on Reforestation & Eco-Tourism • - Expanding scope of forest industry cooperation from plantations, forest biomass • - Natural recreation forests and healing forests • Culture • ●Bilateral MOU in Creative, Culture Industries • - Fueled by growing popularity of Korean pop music and films • Bolstering cooperation in movies, music, games, animation & digital content • development • Distribution • ●Greater Distribution Sector Opportunities in Snowballing Indonesian Consumer Markets • - Lotte Mart’s success story, operating 34 stores in Indonesia • Environment • ● Environmental Market Expanding in Line with Industrialization • - Indonesia-Korea Environmental Cooperation Center Opens in Jakarta

22. Social Contribution KOMIPO ● Establishment & Support of Three Elementary Schools in Remote Areas of Indonesia ● Establishment & Donation of Small Hydro-Electric Power Plants in Remote Area of Indonesia KIDECO ● Improving Local Infrastructure (Roads, Drinking Water, etc.) ● Health Care for Local Residents, Support for Various Leisure & Sports Activities, etc. KORINDO ● Scholarship Fund for Human Resource Development and Science & Technology Advancement ● Various Education & Welfare Support Programs Under the Motto “The World Along With Our Families & Neighbors”

23. Social Contribution Lotte Mart ● Facility Improvement Support for Two Elementary Schools Every Quarter ● Establishment of CSR Fraternity at Every Store to Provide Services for Regional Community Miwon ● Conducting “Help Regional Community” Drive with Variety of CSR Programs Including Blood Donation, River Restoration Projects, etc. KOTRA ● Opened Korea Win - Win Innotech Plaza in Jakarta in June 2013 to Combine the Excellence of Korean Enterprises’ CSR Activities and Indonesia’s “One Village, One Product” Program

24. Conclusion Thank You! Korea-Indonesia Jointly Developing a New Blue Ocean for mutual Prosperity & Beyond