Indonesia will sign an investment agreement with South Korea's Hyundai Motor Company regarding the electric vehicle (EV) industry in the country. The company is expecting to invest around US$1 billion for the project.

"Hyundai wants to invest around US$ 1 billion in the electric car industry near Karawang (West Java). The land is around 600 hectares," Luhut Binsar Pandjaitan, co-ordinating minister for maritime and investment affairs, told mediapersons.

As planned, he would accompany President Joko Widodo to visit South Korea to meet the management of Hyundai. The minister continues, the signing will be probably on Nov. 25 or 26. He expect the investment will enter Indonesia as soon as possible.

"I have asked them to use materials from Morowali. Then car tires, airplanes, rubber also from us. Now Dunlop (Aircraft Tires) has already (commit to build factory in this country)," he asserted.

On February 20th, Panjaitan has announced that Hyundai Motor Corp want to immediately invest in Indonesia with a value around US$ 269 million. Beside Hyundai, he added, Grab also wanted to invest in Indonesia.

The former coordinating minister for politics, law and security affairs stated that Hyundai and Grab now looking a business partnership for the projects in the field of electric cars. But Grab's investment is not certain yet as it is still in the discussion stage with its CEO Grab Anthony Tan, he said.

Since 2018, Hyundai has explored and negotiated with the government regarding the possibility of establishing an EV factory in the country. The progressive step is part of the company's investment worth US$ 880 million.

The manufacturer has chosen Indonesia as the location of the EV plant because the nation has a large reserves of laterite nickel ore. The availability of these raw materials is so important because it is needed to produce lithium-ion batteries as the main power source of electric cars.

It is estimated, with the investment, Hyundai will build an assembly plant with a production capacity of 250,000 units per year, including for electric vehicles. Hyundai has been active for 15 years in Indonesia through PT Hyundai Mobil Indonesia Motor since 1995.

In 1997, the car maker established a joint venture company under the name Bimantara Hyundai Indonesia. The company make Hyundai products in Indonesia with right hand drive (right hand drive) which then exported to the Asia Pacific region.

Beside Hyundai, other large Korean companies that have invested in Indonesia included Hankook Tyre Indonesia, Indo Lotte Makmur and Samsung Electronics Indonesia.

It was reported that the trade value of the two countries (Indonesia-Korea) in 2017 has reached US$ 16.31 billion, an increase compared to 2016 with US$ 13.68 billion. The value of Korean investment in Indonesia also increased from US$ 1.06 billion in 2016 to US$ 2.2 billion in 2017.

South Korea itself is Indonesia' seventh largest trading partner with a fairly balanced trade balance. Korea is also ranked fifth as the biggest investor in 2017 with 3,274 projects worth US$ 2.2 billion.

Therefore, to accelerate the flow of investment, Hyundai requested that Indonesia must eliminate obstacles such as licensing and land acquisition issues. Licensing and land acquisition is still a problem in Indonesia and if the problem persist, investors will probably find other countries to invest.