[Reporter’s Notebook] ‘Domestic Priority’ at Southeast Asian Corporate Sites

"Sometimes, it seems like South Korean companies care only about profits." This was the candid opinion of an official I met in Jakarta, Republic of Indonesia, who spoke on the condition of anonymity about local perceptions of South Korean companies. According to this official, South Korean companies tend to avoid situations in negotiations where they might incur even minor losses. This attitude is not limited to a few firms; even some major conglomerates behave this way. The official claimed that one large domestic company promised to participate in every stage of a project during the bidding process, but later, during detailed negotiations, demanded only the most lucrative parts, leading to the project being scrapped.
When I asked, "Isn’t it natural for companies to pursue profit?" the official replied, "Chinese companies are different." Even if a project is not immediately profitable, Chinese companies will actively participate if the Republic of Indonesia government requests it. After Donald Trump’s tariffs forced supply chains to move to neighboring countries, Chinese companies—known for their strict cost-benefit calculations—have been actively bidding on projects despite short-term losses. Of course, this is backed by substantial subsidies and support from the Chinese government.
Southeast Asian countries, long considered the 'El Dorado' of South Korean manufacturing, are changing. South Korean companies, which have used cheap labor and various incentives to re-export most of their output, are now seen as not contributing to local development. Vietnam has recently moved to revise its Advanced Technology Law, while the Republic of Indonesia has begun imposing requirements such as the Domestic Component Level (TKDN), making increasingly demanding requests. Companies operating locally are finding these changes challenging. Both countries have made it clear that, in the future, incentives for foreign companies will be based on their contribution to the development of domestic industries.
Domestic companies feel this is unfair. Many large South Korean companies operating locally are engaging in social contribution activities that go beyond legal requirements, and are working to transfer technology and train local skilled workers to foster coexistence with local supply chains. However, because local companies with weak manufacturing bases often fail to meet their own standards, they cannot be integrated into the supply chain. Nevertheless, local authorities are strongly demanding that South Korean companies incorporate local suppliers and produce items such as Artificial Intelligence (AI) and advanced semiconductors.
With Southeast Asian countries striving to avoid the middle income trap and South Korean companies doing their utmost under the circumstances, a disconnect is likely to persist for some time. An industry representative lamented, "After achieving rapid growth thanks to South Korean companies, these countries now expect us to help them overcome the middle income trap. It’s frustrating to wonder just how much responsibility a single foreign company should bear."
rejune1112@fnnews.com Reporter