Korea-Indonesia Cooperation Fund Limit to Increase from $600 Million to $1.5 Billion over 5 Years

Results of the 5th Integrated Policy Consultation on Official Development Assistance (ODA)

[Image source=Yonhap News]

[Sejong=Asia Economy Reporter Moon Chaeseok] South Korea and Indonesia have agreed to significantly increase the limit on Economic Development Cooperation Fund (EDCF) loans from the current $600 million to $1.5 billion over five years starting next year.

The Ministry of Economy and Finance announced that the two governments held the "5th Korea-Indonesia Integrated Policy Consultation on Official Development Assistance (ODA)" via video conference on the 24th and reached this agreement. South Korea was represented by Lee Jong-hwa, Director General of Development Finance Bureau at the Ministry of Economy and Finance, along with officials from the Ministry of Foreign Affairs, Office for Government Policy Coordination, Ministry of Land, Infrastructure and Transport, and Ministry of Environment. Indonesia was represented by Schneider Siahaan, Deputy Minister of National Development Planning, as the chief representative, along with officials from the Ministry of Finance, Ministry of Public Works and Housing, and Ministry of Foreign Affairs.

The two countries focused on discussing mid- to long-term ODA policy directions, renewal of the EDCF basic agreement, identification of candidate projects for support, and cooperation methods for grant aid. The EDCF refers to a long-term low-interest loan fund that supports economic and social infrastructure development projects in developing countries, with the principle of participation by Korean companies.

Director Lee said, "Indonesia's concessional and grant ODA has continuously expanded since 1987 based on the strong friendly relations between the two countries, with cumulative achievements reaching $760 million," adding, "The Korean government and companies plan to pool their capabilities as 'Team Korea' to support Indonesia's COVID-19 response and sustainable development."

The two countries agreed to increase the loan support limit under the EDCF basic agreement to $1.5 billion over five years from next year through 2026. This is 2.5 times the previous amount of $600 million for 2016-2021. The Indonesian government requested the increase and renewal, which the Ministry of Economy and Finance accepted. The ministry judged that Indonesia, as a key partner in the New Southern Policy, has abundant potential for economic cooperation. They also considered the active ODA cooperation in green, digital, and health sectors, as well as Indonesia’s high demand for large-scale infrastructure development cooperation, including the government’s capital relocation policy.

The government identified 22 candidate EDCF loan support projects to assist domestic companies' entry into Indonesia in the Korean New Deal and large infrastructure sectors. Notably, the "Government Integrated Data Center Construction Project" in the digital New Deal sector plans to invest $180 million over four years starting next year to share Korea’s e-government system related to Indonesia’s capital relocation policy. Additionally, the "Jakarta Electric Vehicle Infrastructure Construction Project" in the green New Deal sector plans to invest $120 million over three years starting in 2023 to establish electric vehicle charging infrastructure throughout Jakarta.

They also agreed to strengthen cooperation on grant ODA projects worth about $35 million currently implemented by 16 agencies as of this year. In Indonesia, a key health cooperation country in the New Southern region, a "Comprehensive Support Program" will be implemented to carry out multifaceted projects for COVID-19 response and continue humanitarian aid. Furthermore, future major ODA strategies of the Korean government, such as "Green New Deal ODA" and "Science and Technology/Information and Communication Technology (ICT) ODA," will be identified and promoted in connection with cooperation strategies with Indonesia.

An official from the Ministry of Economy and Finance said, "Following this Indonesia ODA policy consultation, the government plans to hold policy consultations with New Southern countries such as Cambodia early next year," adding, "We will continue to promote emergency COVID-19 response support and discover overseas expansion projects for domestic companies in the green and digital New Deal sectors."

This content was produced with the assistance of AI translation services.