ERIA and Former Republic of Korea Ambassador to Indonesia Discuss Semiconductor and Digital Development in Asia

Former Republic of Korea Ambassador to Indonesia, Professor Lee Sun-Jin, and Counsellor and Economic Section Chief Yang Seokhwan visited the ERIA office to discuss the development of semiconductors and digital technology in Asia. Professor Lee initiated the conversation by inquiring about how Indonesia’s semiconductor policies compare to those of Malaysia, Singapore, and Viet Nam.

Dr Lili Yan Ing, Senior Economist at ERIA, provided an overview of the semiconductor landscape in the region. She explained that Singapore is progressing towards semiconductor fabrication, while Malaysia and Viet Nam are focusing on assembly, testing, and packaging, leveraging the booming semiconductor industries in Taiwan and the Republic of Korea. In contrast, Indonesia has yet to develop substantial policies for its semiconductor sector and remains focused on exporting natural resources such as coal, palm oil, and processed nickel to generate revenue.

Dr Lili also highlighted significant challenges Indonesia faces in developing a semiconductor industry, including a shortage of highly skilled personnel, which is crucial for driving innovation. She noted the enormous financial investment required to establish a competitive semiconductor industry, a barrier that Indonesia currently struggles to overcome.

Adding to the discussion, Dr Doan Thi Thanh Ha, ERIA economist, provided insights into Viet Nam’s semiconductor sector. While Viet Nam has successfully attracted foreign direct investment (FDI) since 2007, she observed that technology spillovers from the Republic of Korea have been limited. Dr Doan mentioned that Viet Nam’s Ministry of Industry and Trade, with support from ERIA, has recently developed an ‘Industrial Development Law’ aimed at enhancing semiconductor development.

Professor Lee and Dr Lili also discussed digitalisation efforts, particularly the Republic of Korea’s focus on advancing digital infrastructure in transportation and its partnership with Indonesia in the electric vehicle sector. This collaboration, involving HLI Green Power, leverages Indonesia’s rich supply of electric vehicle battery materials. The partnership aims to combine the Republic of Korea’s technological expertise with Indonesia’s natural resources, creating opportunities for innovation and growth in the electric vehicle industry.

The meeting underscored the significant challenges Indonesia faces in developing its semiconductor industry and explored the potential for regional cooperation to overcome these obstacles. The discussion concluded with a focus on the importance of leveraging East Asian integration to foster semiconductor cooperation in the region. Professor Lee emphasised that Indonesia and ASEAN could benefit from greater collaboration with East Asian countries, particularly in technology and investment, to build a stronger semiconductor industry and drive economic growth in the region.