South Korean Steel Company Appreciates The Success Of Krakatau Steel Turning The Company's Condition From Loss To Profit

President Joko Widodo (Jokowi) during a visit to the Krakatau Steel factory. (Photo: Doc. Antara)

JAKARTA - The Indonesian government welcomes the interest of a South Korean steel producer, Posco, who wants to invest USD 3.5 billion or approximately IDR 52.2 trillion, which is expected to strengthen an integrated national steel ecosystem.

Minister of State-Owned Enterprises (BUMN) Erick Thohir assessed that the investment from Posco would further strengthen the vision of PT Krakatau Posco, a joint venture between PT Krakatau Steel and Posco, to become the largest steel player in Southeast Asia.

"This MoU is a real step for SOEs in supporting the strengthening of the steel and automotive industry ecosystems in Indonesia," he said in a statement in Jakarta, quoted by Antara, Friday, July 29.

On July 28, 2022, President Joko Widodo and Erick Thohir witnessed the signing of a memorandum of understanding (MoU) between Investment Minister Bahlil Lahadalia, Krakatau Steel President Director Silmy Karim, and Posco President Director Kim Hag Dong in Seoul, South Korea.

Erick conveyed that the investment value would be realized in the form of increasing automotive steel production capacity for the electric vehicle industry to the Nusantara Capital project. Erick said that this cooperation also strengthens the integrated national steel ecosystem.

According to him, Posco knows that Indonesia has large natural resources for the development of the electric vehicle industry plus a large market niche that provides an opportunity for Indonesia to become a global player in the steel industry.

In addition, Posco also saw the success of the transformation of Krakatau Steel which successfully reversed the company's condition from loss to profit, from a conventional company to a modern one, and was even able to suppress imports, as well as strengthen the nation's resilience.

"Posco appreciates the transformation of Krakatau Steel through debt restructuring, improved cash flow, efficiency, and good business processes," said Erick.

For Erick, increasing investment cooperation will not only strengthen the competitiveness of SOEs, but also be able to become a catalyst for economic growth.

He wants SOEs to be at the forefront of improving the economy and opening up job opportunities for the community, considering that a third of Indonesia's economic power is in SOEs.

"Of course, there will be no meaning if our natural resources and large market do not contribute to economic growth and job creation. This is a joint commitment between Krakatau Steel and Posco," said Erick.

For Erick, increasing investment cooperation will not only strengthen the competitiveness of SOEs, but also be able to become a catalyst for economic growth. As a third of Indonesia's economic power, Erick wants SOEs to be at the forefront of improving the economy and creating job opportunities for the community.

"Of course, there will be no meaning if our natural resources and large market do not contribute to economic growth and job creation. This is a joint commitment between Krakatau Steel and Posco," said Erick.

Besides Krakatau Steel, the Indonesian government also opens opportunities for South Korea to invest in the health sector. Indonesia is serious about building a special health economic zone (SEZ) in Sanur, Bali, with the full support of state-owned enterprises in the hospital and pharmaceutical sectors.

"Sanur SEZ will become a health and fitness tourism center with international standard facilities," said Erick.

Not only that, but the Indonesian government also opens up opportunities for cooperation between the Telkom Group and South Korea.

He further said that Indonesia has the largest digital economy potential in Southeast Asia and is predicted to reach IDR 4.500 trillion in 2030 or eight times greater than gross domestic product.

"Telkom is currently focused on developing digital infrastructure and Telkomsel is focusing on being an aggregator for creative content. Of course, South Korea also has the same interest in the prospect of the digital economy," said Erick.