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International Journal of Korean History > Volume 29(3); 2024 > Article
인도네시아-한국의 쌀 외교의 배경과 전개과정, 1977-1992*

국문초록

인도네시아와 한국의 외교 관계는 2023년에 50주년을 맞이하였다. 그 기간 동안 양국 사이에 여러 외교적 사건이 있었다. 1977년에 인도네시아는 해충과 가뭄으로 인해 쌀이 부족해지자 위기를 극복하기 위해 한국으로부터 쌀을 대여받았다. 본 연구는 쌀 대여 사건을 한국과 인도네시아의 초기 외교 교류로 보고 이를 분석하였다. 본 연구는 역사적 방법을 통해 양국의 외교사료를 분석하였다. 쌀 대여는 인도네시아와 한국간의 우호 관계를 구축하기 시작한 출발점으로 볼 수 있다. 이 사건 이후로 양국의 경제 협력과 외교적 이익이 증가하였다. 30년 동안 우호 관계를 유지한 양국은 이제 전략적 파트너가 되었다.


Abstract

Relations between Indonesia and South Korea reached 50 years in 2023. During this time, several diplomatic episodes occurred between the two countries. In 1977, Indonesia faced a rice shortage due to pests and drought. To overcome this crisis, Indonesia made various efforts, including borrowing rice from South Korea. This study analyzes the rice borrowing event as an early diplomatic exchange between South Korea and Indonesia. The study adopts the historical method and uses the diplomatic archives of both countries as data sources. The loan of rice was found to be the starting point for Indonesia to start building friendly relations with South Korea. This is evidenced by the increase in economic cooperation and diplomatic benefits in both countries. After three decades of maintaining friendly relations, these two countries have become strategic partners.


Introduction

Rice is a staple food for most of the population of Indonesia. As a result, rice plays a crucial role in the country’s economy and politics. To maintain stable rice supplies and prices in the market, every government has made various interventions. The successful management of rice has become a key indicator of a government’s success.1
In 2023, the Indonesian government appointed Bulog (Logistics Affairs Agency), through the Bapanas (National Food Agency), to import 2 million tons of rice by the end of the year. This decision was made due to Bulog’s failure to meet the target absorption rate of local farmers’ rice. Bulog was expected to absorb 2.4 million tons of rice from local farmers, but by March 2023, only 48,513 tons had been realized. The government’s decision to open the import tap was aimed at preventing a spike in the price of rice.2
The current conditions differ greatly from those of Indonesia 40 years ago. In 1984, Indonesia was recognized by the Food and Agriculture Organization (FAO) as food self-sufficient. The New Order government (1966–1998) had made various efforts to achieve this goal and had focused on ensuring food security for the people as its main priority. The Five-Year Development Plan (Repelita) I–IV relied on the agricultural sector, as reflected in efforts such as the biological engineering of superior rice seed varieties and the chemical engineering of agricultural fertilizers.3
Rice (and food issues more generally) can have a significant impact on a country’s political stability. The New Order government learned from the previous government’s failure to control market food prices. In 1965, at the end of the Old Order (1945–1966), Indonesia’s GDP was 52.4% based on agricultural products. Inflation was rising, partly due to the scarcity of rice. Indonesia’s economy declined due to the scarcity of rice and the corresponding rising prices. In 1965–1966, the inflation rate reached 650%. The Old Order government subsequently faced the September 30 movement, where, in 1966, people took to the streets to convey three demands. The Tritura (Three People’s Demands) consisted of: the dissolution of the PKI (Partai Komunis Indonesia-Indonesian Communist Party), the reshuffle of the Dwikora Cabinet, and the reduction of food prices.4
Under President Soeharto’s leadership, the New Order government rose amidst Indonesia’s economic weakness and political instability. The new government’s slogan of lowering food prices was appreciated, as food prices, particularly rice, had become a burden. As a commodity that controls people’s lives, rice played a strategic role in restoring economic stability. Therefore, the New Order focused on restoring the availability of rice at the beginning of its administration.5
Rice production issues are not limited to the political or economic conditions that affect national output. Uncontrollable factors, such as pests and prolonged droughts, can significantly impact rice production. For instance, Indonesia experienced a long drought and planthopper infestation in 1975, which resulted in national rice production from August to December 1975 being reduced to only 27% of the comparative production from January to July of the same year. In 1976, food procurement was 78% of the procurement in the previous year. Additionally, rice production in Java fell by 24% in July, causing a 27% increase in rice prices from August to December 1975.6
Bulog implemented multiple measures to reduce the price of rice in the market, including importing rice to stabilize the national rice stock. In 1977, Indonesia imported 2.3 million tons of rice, which accounted for 20% of the world’s rice trade. To facilitate these imports, Bulog collaborated with the Ministry of Foreign Affairs to establish relationships and communication with other rice-producing countries in Asia. The two countries of the Korean Peninsula, North and South Korea, were under consideration for this import scheme. This diplomatic initiative resulted in Indonesia securing rice from both Koreas: In 1977, Indonesia received 70,000 metric tons of rice from South Korea and 50,000 metric tons from North Korea.7
South Korea provided rice to Indonesia through a loan scheme due to low rice stocks in South Korea that year. The loan had a deadline of five years, after which Indonesia gradually returned the same quantity of rice, with interest, over a period of up to 10 years. It might be said that Indonesia borrowed rice from 1977 to 1982, and that it only began returning it from 1983 to 1992.8 For that reason, this article limits its period from 1977 to 1992 following the completion of the rice loan agreement.
The decision to lend rice to Indonesia was not made in a vacuum. The South Korean government considered several factors in reaching their decision. The primary considerations were the potential economic impact on South Korea and the possibility of strengthening its relationship with Indonesia. It is also pertinent to consider the potential for competition with North Korea in the Southeast Asian region. North Korea had established diplomatic relations with Indonesia and Vietnam in the 1950s, whereas South Korea only established diplomatic ties with Indonesia and Vietnam in 1974 and 1992, respectively. Thus, Seoul sought to rapidly establish and enhance its relations with Southeast Asian states before shifting its focus to ASEAN (The Association of Southeast Asian Nations).9
The Korean economy began to develop following the ascendance of Park Chung Hee (Pak Chŏng-hŭi) to power. The nation witnessed the emergence of a new political leadership that was wholly dedicated to economic advancement. Furthermore, economic development was a crucial factor in establishing legitimacy for Park’s coup in 1961. Park was compelled to demonstrate to the South Korean people that the coup was a necessary measure to improve the country’s circumstances.10 This strategic objective also prompted the Park administration to pursue economic diversification and expand its market presence in Southeast Asia, particularly in Indonesia. Indonesia was the inaugural country with which South Korea initiated diplomatic relations following Park’s ascension to leadership.
This study examines the relationship between the rice crisis in Indonesia and South Korea’s economic development efforts during the Park regime (1961–1979). Loan of rice from South Korea marked the beginning of friendly relations between the two countries. This relationship subsequently led to the establishment of various economic collaborations between the two countries. Moreover, broader motivations influenced South Korea’s decision to provide rice to Indonesia despite its own rice shortage. The research questions are as follows: (1) Why did Indonesia choose to borrow rice from South Korea? (2) What were the reasons behind South Korea’s willingness to lend rice? (3) How did the rice loan improve relations between the two countries?
Numerous scholars have researched rice imports and the New Order’s efforts to achieve food security. For instance, Njoman Suwidjana11 compared the New Order’s rice crisis management policy to that of the Old Order. Chris Manning12 complemented Njoman’s findings by emphasizing that the New Order’s overhaul was closely linked to national political stability: The New Order aimed to achieve national stability by ensuring food availability. According to I Ketut Nehen,13 the New Order made various efforts to achieve self-sufficiency and food security by developing a stronger agricultural system. This was achieved through the implementation of extensification and intensification policies. Both policy serves as an introduction to the success of the New Order’s self-sufficiency program. Jamie S. Davidson14 compared the implementation of food security during the New Order era with Indonesia’s situation after reformation (1998-now). The current government faces several challenges compared to New Order Government, with structural, economic, and international factors affecting Indonesia’s food fulfillment.
A general study of diplomatic relations between Indonesia and South Korea has been conducted by Seung-Yoon Yang (Yang Sŭng-yun).15 This study examines a range of facets pertaining to the diplomatic relations between the two countries, including economic, social, political, military, and cultural aspects. Meanwhile, Poppy Winanti’s16 thesis compares the economic development of Indonesia and South Korea, specifically under the leaderships of Park and Soeharto. Winanti’s research is relevant to this study on the cooperation between two countries, although it does not address the rice borrowing process in detail. Ardhitya Yeremia and Muhamad Arif17 have recently conducted research exploring how Indonesia’s domestic sources were utilized in conducting diplomatic relations with both Koreas simultaneously. However, this study also fails to discuss the rice borrowing event as the initial step in forming Indonesia’s close relationship with South Korea.
Several researchers have also conducted studies on the relationship between South Korea and Southeast Asia. Yoon-Hwan Shin (Sin Yun-hwan) and You-Il Lee (I Yu-il)18 provide a detailed account of South Korea’s foreign direct investment activities in various Southeast Asian countries. Meanwhile David Steinberg’s19 edited volume comprises 14 articles that address the evolution of South Korea’s relations with countries in Southeast Asia. These studies also do not address the impact of the rice loans and the food crisis in Indonesia on the development of relations between Indonesia and South Korea. This research therefore represents a novel contribution to the field in terms of its thematic focus, scope, perspective, and utilization of research sources.
This study applies the historical method, which aims to reconstruct past events in a specific time and space objectively. The process of reconstructing historical events follows four essential steps, as outlined by Louis Gottschalk:20 finding sources, criticizing sources, interpreting sources, and writing a historical narrative. This study follows these four steps to ensure an accurate and reliable analysis. The process began with visiting various archive storage centers in Indonesia and South Korea. The data were then interpreted through the analytical lens of structurism, as outlined by Christopher Lloyd. Lloyd21 states that a central theme repeatedly addressed by historians and theorists working within the structurist tradition is the role of human agency in social structuring processes. Lloyd clarifies that the term “agency” has two distinct meanings. First, it denotes the capacity of an entity or component within a system to initiate and influence change. Second, it signifies the ability of an individual to act on behalf of another to achieve a desired outcome in accordance with a specified mandate or guidance. In this case study, political decisions made by institutions such as parliaments or parties cannot be divorced from individual political behavior. In other words, nation-states do not act; rather, their leaders make decisions following their human agency. In this research context, Suharto, Indonesia’s highest leader, made decisions regarding rice loans through various political channels, such as Consul General L.B. Moerdani (often referred to as Benny Moerdani) and Ambassador Sarwo Edhie Wibowo. Park Chung Hee, as the leader of South Korea, also had a significant personal role in this loan agreement. By examining the roles of these figures in facilitating the process of lending rice from South Korea, we can clearly discern the motives behind this decision.22

The Establishment of Indonesia – South Korea Relations

Relations between Indonesia and South Korea began with negative precedents. After the Korean War ended in 1953, Indonesia attempted to avoid involvement in the issues of the Korean Peninsula during the Cold War. However, South Korea’s foreign policy attitude toward Indonesia during the Rhee Syngman (I Sŭng-man) era (1948–1960) caused concern. President Syngman Rhee expressed his willingness to aid the PRRI (the Revolutionary Government of the Republic of Indonesia), a rebellion movement led by Syafruddin Prawiranegara that opposed the Indonesian government under Soekarno.23
President Syngman Rhee chose to implement the Hallstein Doctrine, which limited South Korea’s foreign relations to countries that were anti-communist. This meant that South Korea did not establish diplomatic relations with countries that had established relations with communist countries or with third-world countries that were leaning toward communism. Between 1953 and 1960, South Korea established only 22 embassies and consulates abroad. It means South Korea actively avoided establishing embassies with countries that had diplomatic relations with North Korea.24
South Korea’s foreign policy transformed when Park Chung Hee assumed power. Domestically, Park’s primary focus was on economic rebuilding after years of stagnation. To achieve this, Park required significant foreign funding. Consequently, Park prioritized improving South Korea’s relations with the outside world. Park immediately introduced three foreign policies: enhancing diplomatic relations with non-aligned countries, advocating for active South Korean economic diplomacy, and normalizing diplomatic relations with Japan.25
According to Koo,26 there was a significant increase in the number of Korean representatives abroad in 1973, from 22 to 85, which coincided with Park’s presidency. In the subsequent 12 years, Park’s administration successfully established diplomatic relations with numerous countries, effectively ending South Korea’s isolation from the international community.27 Additionally, the Park government made overtures to Indonesia. Contact between South Korea and Indonesia formally began in 1962, shortly after Park Chung Hee took over the government. In April of that year, the South Korean government sent a delegation led by I Sang-baek to discuss the possibility of establishing diplomatic relations. Indonesia, along with India and Burma, was considered a priority country for establishing such relations.28
In 1962, the South Korean ambassador to Thailand established a close relationship with the Indonesian ambassador to Thailand. In a secret cable exchanged between the two embassies in Thailand, Indonesia expressed its interest in importing rice directly from South Korea. This was due to Indonesia’s high rice consumption. The South Korean ambassador to Thailand highlighted the significance of fostering economic and cultural ties as a precursor to advancing bilateral relations between the two nations. The Park administration acknowledged that Indonesia may have been exercising caution in establishing relations with South Korea, possibly due to the unfavorable precedent set by the previous Rhee government. To promote positive relations between South Korea and Indonesia, the Park administration, under the guidance of Foreign Minister Choi Deok Shin (Ch'oe Dŏk-sin), directed the South Korean ambassador in Thailand to convey to the Indonesian government that the current administration would nullify all decisions made by the Rhee government in support of the PRRI rebellion in 1958.29
The relationship between Indonesia and South Korea was strengthened by a series of formal visits by Indonesian officials. A delegation from President Soeharto’s special staff, led by Brigadier General Slamet Danusudirdjo, visited Seoul on July 17–29, 1967; Achmad Sjaichu, Chairman of the Indonesian DPR-GR, visited Korea on October 12–16, 1967. This series of visits was further strengthened by Indonesia’s decision to open a Consulate General in Seoul on June 1, 1968.30
The development of Indonesia – South Korea relations was facilitated by the economic priorities of the New Order government. The government aimed to prioritize the welfare of the people, which was reflected in the early Soeharto administration’s foreign policy direction. This direction sought to establish relations with economically prosperous countries in the Western bloc for the primary purpose of meeting domestic needs. This approach also seemed to extend to Indonesia’s relations with both Koreas, as noted by Sukma.31
The establishment of the Consulate General paved the way for cooperation in several areas. In 1969 and 1970, President Soeharto sent his personal assistant for economic and trade affairs, Lieutenant General Soedjono Hoemardani, to South Korea to explore opportunities for economic cooperation between the two nations. During this mission, Soedjono discussed opportunities for direct investment in Indonesia with South Korean investors. He and his entourage met with President Park and conveyed greetings and praise from President Soeharto for the success of South Korea’s economic development. The visit led to an agreement on economic and technical cooperation and trade development between the two countries, which was signed on April 24, 1971.32 This agreement was the first official cooperation between the two nations: It aimed to offer opportunities for citizens of both countries to invest their capital directly in the other country. Indonesia also sent Consul General Benny Moerdani to Seoul. Benny Moerdani was directly appointed by Ali Moertopo (President Suharto’s right-hand man) to improve relations between Indonesia and South Korea. Before leaving, Ali told Benny (as summarized by Julius Pour):
“The Indonesian government will continue the legacy of the Soekarno government’s foreign policy. In this way, the Indonesian government continues to give diplomatic recognition to the Democratic Republic of Korea, North Korea. In fact, it was in Pyongyang that the Indonesian government placed its ambassador as a high ranking official. At that time, it was held by Marine Lieutenant General Hartono, former commander of TNI-AL KKO (Indonesian National Military-Naval Force). However, in accordance with the new policy direction that is being established, the Indonesian government intends to gradually improve its friendly relations with the Republic of Korea. In this regard, Benny was asked to participate in efforts to improve relations. At the very least, the government in Seoul should be willing to receive Indonesian diplomatic representatives, which will later be increased to match those assigned to Pyongyang. In this sense, it can be expected that Jakarta will, in time, send someone equivalent to those serving in Pyongyang to serve in Seoul.”33
This message shows that the Indonesian government saw South Korea as one of its potential strategic partners, a view supported by the opportunity offered by South Korea’s economic progress under Park’s government. Capitalizing on this situation, Benny continued to open political doors in South Korea, from the rank and file to the highest levels. Within two years, Benny had managed to improve Indonesia’s diplomatic relations with South Korea, resulting in his promotion to the level of chargé d’affaires. In 1973, he was appointed Ambassador of the Republic of Indonesia to South Korea. His military background and willingness to learn Korean enabled him to easily influence high-level South Korean officials, including President Park himself. Benny once said34: “I don’t know why. But every time I come, President Park is especially friendly.” On January 15, 1974, Benny Moerdani was recalled to Indonesia, and the ambassadorial seat in Seoul was filled by his junior, Sarwo Edhie Wibowo.35 As Salim Said said36: “Sarwo really respects President Park Chung Hee because of his background as a military leader of an anti-communist country.” The appointment of Sarwo as Indonesia’s ambassador to South Korea meant that the Indonesian government had clearly shown its willingness to reach out to the Seoul (Sŏul) government.37
Before rice loan, South Korea’s imports are dominated by wood products. Meanwhile, Indonesia imports more cement, crude oil processing products, and iron processing products. The Indonesian government saw an opportunity to increase the amount of trade between the two countries and expand the list of products traded between the two countries. With this mission, the Indonesian government, through Radius Prawiro, the Minister of Trade, visited South Korea on November 13–16, 1977.39
During Radius’ visit in November 1977, he met with South Korea’s Minister of Commerce Chang Ye-jun and discussed: (1) diversifying export and import products between the two countries, (2) shifting trade from third parties (Hong Kong, Singapore, and Japan) to direct trade between the two countries, and (3) increasing the amount of capital invested in Indonesia by South Korean entrepreneurs.40
These three points suggest that since 1971 until 1977, trade between Indonesia and South Korea was focused on specific non-food products, with limited cooperation in the food sector. It appears that the issue of cooperation in the food sector was only discussed during Radius’ visit in November 1977 between Trade Minister Radius Prawiro and South Korean Prime Minister Choi Kyu-Hah (Ch'oe Gyu Ha). In 1976, Indonesia experienced a depletion of domestic rice stocks due to drought and planthopper pests from the previous year. To address the situation, the Indonesian government decided to import rice from various countries, including South Korea. Following a meeting between Radius and Choi Kyu-Hah, South Korea agreed to loan 70,000 tons of rice to Indonesia. The loan for rice served as the starting point for cooperation between the two countries in subsequent years.41 The next chapter will discuss how the rice crisis in Indonesia occurred and rice diplomacy was conducted with South Korea.

The Indonesian Rice Crisis of 1976 and Rice Loans From South Korea

1) Background of the Negotiations

In the second half of 1975, Indonesia was hit by drought and planthopper pests. This caused the national harvested area to shrink. In the period from August to December 1975, national rice production reached only 27% of the production achieved in the period from January to July. As a result, the food supply in 1976 was threatened. By July 1976, the national food supply was only 78% of the supply achieved by the previous July. Moreover, in July 1975, rice production on the island of Java fell by 24%. As a result, rice prices rose by as much as 27% between August and December 1975.42
Table 2 shows that the total harvested area decreased by over 126,000 hectares between 1975 and 1976. This reduction strongly affected rice production and the national rice stock. In 1977–1978, Indonesia experienced a shortage of 1.7 to 2 million tons of rice, which was addressed by importing rice from other Asian rice-producing countries. Between 1977 and 1978, the Indonesian government acquired 270,000 tons of rice from Thailand and Japan. The Thai government shipped 70,000 tons of rice in November–December 1977, while the remaining 200,000 tons were shipped in 1978. The Japanese government agreed to ship 100,000 tons of rice in December 1977. In October, the Indonesian government attempted to import rice from North Korea, which resulted in the successful importation of 50,000 tons of rice between November 1977 and January 1978.44
Indonesia also attempted to import rice from South Korea. An application to purchase rice from South Korea was submitted by the Indonesian government to the South Korean Ministry of Agriculture on November 9, 1977. However, the South Korean government did not respond to the application. In 1977, the Indonesian Minister of Trade Radius Prawiro met with the South Korean Prime Minister on November 13–16 to discuss the rice purchase issue. During the meeting, the South Korean Prime Minister expressed willingness to further discuss the matter. South Korea considered its limited domestic rice stock and the comparatively low price of rice offered by Indonesia when compared to the market price in South Korea at the time.45
This request was brought to the attention of President Park, who decided to offer rice to Indonesia through a rice loan program. The loan program was linked to rice sales, with the expectation that South Korea could use the same program for other raw materials such as rubber, crude oil, coal, and timber in the future.46
The South Korean government agreed to provide a long-term loan of 70,000 tons of rice, which included Tongil and Yushin rice produced in 1976. The loan had a repayment period of 10 years, with a deadline of five years from the time of the loan. The loan period for the rice started in 1978. Indonesia was granted a five-year grace period until 1983 to repay the rice loan and was required to pay 2% interest on the loan during that time. Beginning in 1983 and continuing until 1992, Indonesia was obligated to repay the principal along with 3% interest. Additionally, Indonesia was responsible for covering shipping costs from ports in South Korea. The repayment of rice loans had to be made with Indonesian rice that was deemed to be of equivalent quality to the South Korean rice that was lent.47

2) Lobbying and Agreement Implementation

After the loan decision was made, the Indonesian Government, represented by Ambassador Sarwo Edhie Wibowo, conveyed their gratitude on behalf of President Soeharto to President Park for his assistance. The rice loan agreement was approved and signed by the Minister of Foreign Affairs of South Korea, along with the Indonesian Ambassador to the Republic of Korea. During the negotiation process, a high-ranking Bulog official named Sanjoto was sent by the Indonesian government to Seoul on November 26, 1977. An additional 30,000 tons of rice were proposed by Sanjoto, bringing the total loan to 100,000 tons. Indonesia also requested that the interest incurred from 1978 to 1983 be paid during the principal interest payment period, which began in 1983. Rice shipments were expected to arrive in Indonesia in December 1977.48
The agreement signing was postponed, and negotiations continued on November 25–28, 1977. In the end, due to the poor wheat harvest in the summer and fall of 1977, South Korea decided not to increase the amount of rice to be lent. As rice is a staple food in South Korea, the South Korean government needed a large reserve of rice. To meet domestic needs, South Korea decided to import an additional 485,000 tons of wheat to ensure sufficient military and emergency food supplies. Furthermore, South Korea agreed to combine the interest calculations for the 1978–1983 period with the principal interest repayment period, starting in 1983, as requested by Indonesia.49
After several days of negotiations, a consensus was reached on several additional agreements. The loan agreement was set to be signed by the Minister of Agriculture from South Korea and the Indonesian Ambassador to South Korea, outlining the shipment of 40,000 tons of rice in December 1977 and the remaining 30,000 tons in January 1978. The shipping cost of the rice, totaling USD 385,000, was to be paid by Indonesia to South Korea by December 15, 1977.52
On the afternoon of November 30, 1977, the agreement was signed by the Indonesian Ambassador to South Korea, Sarwo Edhie Wibowo, and the South Korean Minister of Agriculture and Maritime Affairs, Choi Gak Kyu (Ch'oe Gak-kyu). Wibowo expressed gratitude for the loan provided by the South Korean government, which was seen as a sign of the continued positive development of relations between the two countries. In December 1977, South Korea sent 40,000 tons of Tongil rice through several ports, as stipulated in the agreement.53 In January 1977, the South Korean Government sent the remaining 30,000 tons of Yushin rice to three ports: Jakarta, Cirebon, and Palembang.54

3) Implications of the Rice Loan Agreement

Several factors led to Indonesia’s decision to partner with South Korea in rice borrowing. Firstly, during the 1976 rice crisis, the most pressing concern was the replenishment of national rice stocks. The Indonesian government sought to utilize all available channels to replenish these stocks. Secondly, Benny Moerdani and Sarwo Edhie Wibowo advocated for this relationship in 1971–1977, which contributed to Indonesia becoming South Korea’s preferred partner. This was demonstrated by the consistent growth in the volume of trade between the two countries over 1971 to 1977 (see table 1).55
Thirdly, the success of this agreement was influenced by South Korean needs. The Indonesian Trade Minister Radius Prawiro talked to South Korean Prime Minister Choi Kyu-Hah, who then conveyed the message directly to President Park, who granted Indonesia’s request via cable from the Office of the Presidential Secretary to the Embassy in Indonesia. However, President Park suggested that rice should not be bought and sold on a commercial basis, but rather through a loan agreement. President Park hoped that if South Korea experienced a shortage of food or other essential products, such as wood, coal, or crude oil, it could borrow these from Indonesia through the same scheme. This demonstrated South Korea’s commitment to viewing Indonesia as a reliable partner that could provide aid during difficult times.56 Finally, the competition between South Korea and North Korea indirectly influenced the outcome. In October 1977, North Korea agreed to provide Indonesia with 50,000 tons of rice, which prompted South Korea to also contribute to solving Indonesia’s rice problem.57
These factors also indicated a historical explanation as intended by Lloyd58. According to Lloyd, a historical explanation must be approached from a dual perspective of action and structure. Methodological structurism approaches explanation by developing concepts of the separate real existence yet mutual interdependence of individuals and institutional structures. The rice problem in Indonesia is a consequance of the country's economic, political, geographical and social structure. This situation then prompted Indonesia to pursue solutions in various ways. One of them is through diplomacy, whereby relations between countries fostered through the intermediary role of individuals. In the context of Indonesia-South Korea relations, there are figures such as Benny Moerdani, Sarwo Edhie Wibowo, Radius Prawiro, Park Chung Hee, and Choi Kyu Hah who have played a pivotal role in strengthening bilateral ties. This exemplifies how structural issues can be addressed through diplomatic engagement at the individual level, a concept that Lloyd terms "mutual interdependence".
The rice loans provided by South Korea to Indonesia did not have a significant impact on overcoming the rice crisis in Indonesia, particularly when considering the extended period of up to 15 years for Indonesia to return the rice. Nevertheless, this rice loan was an important initial milestone for cooperation in other areas, particularly trade between the two countries. The agreement between South Korea and Indonesia sought to enhance economic relations between the two nations, with a particular focus on wood, crude oil, and coal. Table 4 reports the growth of export and import volumes generally for South Korea to Indonesia in 1978–1992.
The trade volume increase over this period was accompanied by increased cooperation between the two countries across various fields. After the rice loan, the relationship between Indonesia and South Korea continued to grow closer and resulted in various memoranda of understanding. Sectors such as finance, education, transportation, culture, technology, and the military all saw growth in both countries.
After the loan, a significant bilateral agreement was concluded between the two governments regarding oil exploration efforts in Madura, East Java. The agreement was reached in 1981, with an estimated exploration period of six years. The exploration yielded the discovery of crude oil reserves of approximately 133 million barrels, which were scheduled for production over a 30-year period until 2011. In 1985, Soeharto presided over the inauguration ceremony of the first oil refinery, which had a production rate of 15,000 barrels per day. This was one of the most significant forms of cooperation between Indonesia and South Korea during the New Order.60
In addition to its involvement in the energy sector, South Korea also participated in several investment projects in Indonesia. In October 1978, following the implementation of the rice loan agreement, South Korea, in a joint venture with PT. Jasa Marga, constructed the Muara Bungo–Jambi highway in Sumatra. A year later, the project continued with the construction of the Teluk Betung–Bakauheuni section and the Teluk Betung–Lubuk Linggau section. These construction projects were valued at USD 2 million.61
In 1979, Indonesia was requested by the United States and South Korea to serve as a mediator for issues on the Korean peninsula. Indonesia’s amicable relations with both Koreas were deemed sufficient for Indonesia to act as a mediator in the conflict between the two countries. Indonesia, through Benny Moerdani, delivered a message and invitation on June 30, 1979 to hold a high-level meeting between the two countries. However, this invitation was not taken seriously by North Korea.62
The strengthening economic ties between the two countries also had a notable influence on their political relations. A planned visit by President Park to Indonesia in 1979 was canceled due to his assassination in October of that year. President Chun Doo Hwan (Chŏn Du-hwan) visited Indonesia on June 25, 1981, as a continuation of Park's plan to visit Indonesia. In return, President Soeharto visited Seoul on October 16–19, 1982; this was the first visit by an Indonesian president to South Korea. In 1988, President Roh Tae Woo (No T'ae-u), who had taken over from President Chun Doo Hwan, visited Indonesia and met with President Soeharto at the State Palace on November 9, 1988.63
These visits by heads of state suggested a shift toward a strategic partnership for cooperation in various fields. This progress resulted in positive outcomes by increasing exports and imports between the two countries, as well as to encourage foreign direct investment by South Korean entrepreneurs to invest directly in Indonesia from the 2000s to the present.

Conclusion

The rice crisis that occurred in Indonesia in 1976 prompted the country to seek multiple ways to meet its needs, including purchasing and borrowing rice from its economic partners. One such partner, South Korea, generously lent 70,000 metric tons of rice despite its own food difficulties. While South Korea’s rice lending amount may not be as significant as that of other countries, such as Thailand and Japan, the impact of this rice loan on the trade and investments between the two countries was substantial.
The relationship between Indonesia and South Korea evolved following political changes in both countries. Following a series of diplomatic initiatives spearheaded by Benny Moerdani. Moerdani was warmly welcomed as Indonesia’s diplomatic representative in South Korea. Additionally, Moerdani played a significant role domestically due to his proximity to President Soeharto. In addition to domestic needs, Indonesia’s decision to borrow rice from South Korea was influenced by the close relationship between Benny Moerdani, the New Order, and the Park military regime.
The Republic of Korea, for its part, perceived considerable potential in developing its relationship with Indonesia. Following Park’s ascension to leadership, South Korea shifted its focus toward domestic economic development. Park sought to validate his 1961 coup by fostering economic growth and enhancing the well-being of the population. Indonesia was one of the countries in Southeast Asia that was deemed politically strategic due to its significant natural resources. The provision of rice loans by South Korea to Indonesia was intended to strengthen the relationship between the two countries, benefiting South Korea’s industrialization process. South Korea required a significant amount of wood, fuel, rubber, and various agricultural products produced in Indonesia. Therefore, both economic and political motives underscored South Korea’s provision of rice loans to Indonesia.
South Korea’s ongoing competition with its neighbor, North Korea, increased the need for economic expansion into third-world countries outside the two major world blocs. South Korea’s expansion into Southeast Asia may be perceived as motivated by ideological concern and also pragmatical economic issues. Indonesia also experienced a similar experience. Following the transition from Old Order to New Order government, Indonesia placed a significant emphasis on economic development. This opened up various opportunities for Indonesia to cooperate with countries such as South Korea.
After the rice loan, the volume of exports and imports of various important commodities between the two countries continued to increase. Memoranda of understanding and agreements for cooperation in various areas continued to be signed. South Korea became a significant investor in several national strategic projects in Indonesia. South Korea expanded its involvement in the Indonesian construction sector, including the development of several highways. Additionally, South Korea was engaged in the exploration of oil reserves in Madura, which resulted in the discovery of significant crude oil reserves. This collaboration reinforced South Korea’s position as an investor in Indonesia. Political relations between the two countries continued to improve, as marked by the state visits of President Chun in 1981 and President Roh in 1988. President Suharto reciprocated this diplomatic visit by visiting Seoul in 1982. This demonstrates that the 1977 rice loan agreement had a positive effect on the development of diplomatic relations between the two countries and fostered their strategic partnership in the following years.

Notes

1  Fachry Ali, Imam Ahmad, Abdul Hamid, I Ketut Mardjana, and Kholid Novianto, Beras, Koperasi Dan Politik Orde Baru: Bustanul Arifin 70 Tahun [Rice, Koperasi and New Order Politics: 70 Years of Bustanul Arifin] (Sinar Harapan, 1995).

2  CNN Indonesia, “Indonesia Bakal Impor Beras 2 Juta Ton Hingga Akhir 2023 [By the End of 2023, Indonesia Will Import 2 Millions Tons of Rice],” CNN Indonesia, March 27, 2023.

3  Beddu Amang and M. Husein Sawit, Kebijakan Beras Dan Pangan Nasional [National Rice and Food Policy] (IPB Press, 1999); Francis Wahono, “Dinamika Ekonomi Desa Sesudah 25 Tahun Revolusi Hijau [The Economic Dynamics of the Village after 25 Years of the Green Revolution],” Prisma, March no. 3 (1994):7.

4  Ali et al., Beras, Koperasi Dan Politik Orde Baru

5  Ali et al., Beras, Koperasi Dan Politik Orde Baru

6  Ali et al., Beras, Koperasi Dan Politik Orde Baru

7  National Archives of Korea, “Indonesia Ssaldaeyŏ [Rice Loan to Indonesia],” No. DA0034358, n.d.; Ali et al., Beras, Koperasi Dan Politik Orde Baru.

8  National Archives of Korea, “Indonesia Ssaldaeyŏ”

9  Nur Shahadah Jamil, “ASEAN and the Two Koreas: Bilateral and Multilateral Nexus,” in Contemporary Korea-Southeast Asian Relations (Routledge, 2023), 33–48.

10  Il, Sakong, Korea in World Economy (Washington: Institute for International Economics, 1993).

11  Njoman Suwidjana, “Indonesia’s Rice Policy: Development Patterns, Accomplishment and Problems,” Southeast Asian Affairs (1981):146.

12  Chris Manning, “Public Policy, Rice Production, and Income Distribution: A Review of Indonesia’s Rice Self-Sufficiency Program,” Southeast Asian Journal of Social Science 15, no. 1 (1987):66.

13  I Ketut Nehen, “Technology, Farmers’ Organization and Rice Self-Sufficiency in Indonesia,” Southeast Asian Journal of Social Science 17, no. 1 (1989):88.

14  Jamie S. Davidson, “Then and Now: Campaigns to Achieve Rice Self-Sufficiency in Indonesia,” Bijdragen Tot de Taal-, Land-En Volkenkunde 174, no. 2–3 (2018):188.

15  Seung-Yoon, Yang, 40 Tahun Hubungan Indonesia-Korea Selatan [40 Years of Indonesia-South Korea Relations] (Gadjah Mada University Press, 2005).

16  Poppy Sulistyaning Winanti, "A Comparative Political Economy of Development of Korea and Indonesia: Historical-Structuralists Explanation" (master's thesis, KDI School of Public Policy and Management, 2002).

17  Ardhitya Eduard Yeremia and Muhamad Arif, “The Domestic Sources of Indonesia’s Relations With North and South Korea: Pragmatism, Leadership and Regime Legitimacy,” in Contemporary Korea-Southeast Asian Relations: Bilateral and Multilateral (Routledge, 2023).

18  Yoon Hwan Shin and You-Il Lee, “Korean Direct Investment in Southeast Asia,” Journal of Contemporary Asia 25, no. 2 (1995):179. https://doi.org/10.1080/00472339580000111.

19  David I. Steinberg, Korea’s Changing Roles in Southeast Asia: Expanding Influence and Relations (ISEAS Publishing, 2010).

20  Louis Gottschalk, Understanding History, a Primer of Historical Method (Alfred A. Knopf, 1950).

21  Christopher Lloyd, The Structures of History (Blackwell Publishers, 1993).

22  Mohtar Masoed, Studi Hubungan Internasional: Tingkat Analisis Dan Teorisasi [International Relations Studies: Levels of Analysis and Theorization] (UGM Press, 1989).

23  Chosŏn Ilbo, “Innijŏnt'u Han'gukkun P'agyŏn [South Korean Soldiers Are Ready to Be Deployed to Indonesia],” April 2, 1958.

24  Yang, 40 Tahun Hubungan Indonesia-Korea Selatan; Byung Joon Ahn, “South Korea and Communist Countries,” Asian Survey 20 (1980).

25  Youngnook, Koo, “The Conduct of Foreign Affairs,” in Korean Politics in Transition, ed. Edward R. Wright (University of Washington Press, 1975).

26  Ibid.

27  Ahn, “South Korea and Communist Countries.”

28  Ministry of Foreign Affairs of the Republic of Korea. “Ch'insŏnsajŏldanIndonesia Pangmun [South Korea’s Delegation Visits Indonesia].” No. C-0008-16/823/724.61 IN. 0001-0033, n.d.

29  National Archives of Korea, “Cheoe Konggwan Sŏlch'i-Indonesia [Establishing Diplomatic Missions Abroad-Indonesia],” No. BA0880983, n.d.

30  Ministry of Foreign Affairs of the Republic of Korea “Sjaichu, H. Achmad Indonesia Kukhoeŭijang Panghan [Sjaichu, H. Achmad, Visit of Indonesian National Assembly Speaker to Korea].” No. C-0023-04/2162/724.52IN/0001-0066, n.d.; Ministry of Foreign Affairs of the Republic of Korea “Danusudirdjo, Slamet Indonesia T'ŭksa Panghan [Visits of Indonesia Special Delegation].” No. C-0023-02/2160/724.42IN/0001-00068, n.d.; National Archives of Korea, “Cheoe Konggwan Sŏlch'i-Indonesia [Establishing Diplomatic Missions Abroad-Indonesia].”

31  Rizal Sukma, “The Evolution of Indonesia’s Foreign Policy: An Indonesian View,” Asian Survey 35, no. 3 (1995): 304–315.

32  Ministry of Foreign Affairs of the Republic of Korea “Hoemardani Soedjono Indonesia Taet'ongnyŏng Kyŏngjedamdang Susŏkpisŏgwan Panghan [Visits of Secretary to the President of Indonesia for Economic Affairs to Korea].” No. M-0014-07/3286/761.422IN, n.d.

33  Julius Pour, Benny Moerdani Profil Prajurit Negarawan [Benny Moerdani: A Profile of a Statesman Soldier] (Yayasan Kejuangan Panglima Besar Sudirman, 1993).

34  Julius Pour, Benny Moerdani Profil Prajurit Negarawan

35  Julius Pour, Benny Moerdani Profil Prajurit Negarawan; Yang, 40 Tahun Hubungan Indonesia-Korea Selatan.

36  Yang, 40 Tahun Hubungan Indonesia-Korea Selatan.

37  Julius Pour, Benny Moerdani Profil Prajurit Negarawan

38  Korea International Trade Association, “South Korean Export-Import Volume (to and From Indonesia),” November 24, 2023.

39  Ministry of Foreign Affairs of the Republic of Korea. “Prawiro, Radius Indonesia Muyŏkchanggwan Panghan [Visits of Indonesia’s Minister of Trade to Korea].” No. 2007-0057-07/11028/765.422IN, n.d.

40  Ibid.

41  National Archives of Korea, “Indonesia Ssaldaeyŏ [Rice Loan to Indonesia].”

42  Ali et al., Beras, Koperasi Dan Politik Orde Baru.

43  Food and Agriculture Organization of the United Nations, “Indonesia’s Cropland 1970–1980,” November 24, 2023.

44  National Archives of Korea, “Indonesia Ssaldaeyŏ [Rice Loan to Indonesia].”

45  Ibid.

46  Ibid.

47  Ibid.

48  Ibid.

49  Ibid.

50  The use of metric tons refers to the units used in this agreement.

51  Ibid.

52  Ibid.

53  Ibid.; Kyŏnghyang Shinmun, "Inni Ssaldaeyŏ Ch'ŏt Sŏnjŏk [First Shipment of Indonesian Rice]," November 30, 1977; Tonga Ilbo, "7man T'on' Gyumo Taeinni Ssaldaeyŏ Hyŏpchŏngch'egyŏl [70,000-ton rice loan agreement signed with Indonesia]," November 30, 1977; Chosŏn Ilbo, “Inni Ssaldaeyŏ Kyeyak Ch’egyŏl [Rice Loan Agreement Signing Ceremony for Indonesia],” December 1, 1977.

54  National Archives of Korea, “Indonesia Ssaldaeyŏ [Rice Loan to Indonesia].”; Maeil Business Newspaper, "Taeinnidaeyŏ Ssall 1ch'abun 4mant'on Inch'ŏnhangsŏ Sŏnjŏk [40,000 tons of rice for loan to Indonesia shipped at Incheon Port]," December 10, 1977.

55  Pour, Benny Moerdani Profil Prajurit.

56  National Archives of Korea, “Indonesia Ssaldaeyŏ [Rice Loan to Indonesia].”

57  Ibid.; Pour, Benny Moerdani Profil Prajurit Negarawan.

58  Lloyd, The Structures of History.

59  Korea International Trade Association, “South Korean Export-Import Volume (to and From Indonesia).”

60  Diplomatic Archives of the Republic of Korea MOFA No. 2014-0083/7207/763. 52, “KODECO ENERGY(chu)ŭi Indonesia sŏ Madura Yujŏn Kongdonggaebal 1980–84 [Joint Development of Madura Oil Field in Indonesia with KODECO ENERGY Co., Ltd., 1980–84],” n.d.

61  Diplomatic Archives of the Republic of Korea MOFA No. 2008-0066-02/12232/761.71IN, “Han'guk Torogongsa·Indonesia Torogongsa Kanŭi Hapchagunyŏng, 1978 [Joint Operation between Korea Expressway Corporation and Indonesian Expressway Corporation, 1978],” n.d.

62  Wan-bŏm, I, K'at'ŏ Sidaeŭi Nambukhan [North and South Korea in Carter Era] (AKS Publisher, 2017).

63  National Archives of the Republic of Indonesia, “Pidato Presiden Soeharto Menyambut Presiden Roh Tae-Woo [Speech by President Soeharto Welcoming President Roh Tae-Woo],” Archives Inventory of the State Secretariat RI President Soeharto’s Speech No. 197.1, 197.2, n.d.

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Table 1
South Korean export and import volumes (to and from Indonesia) in USD for 1971–197738
Year Export Volume Import Volume
1971 8,530,000 40,946,000
1972 21,467,000 64,040,000
1973 32,380,000 153,288,892
1974 55,157,000 165,369,279
1975 51,359,000 146,809,369
1976 48,552,000 238,642,612
1977 68,887,000 353,672,564
Table 2
Indonesia’s cropland in hectares in 1970–198043
Year Area
1970 8,135,080
1971 8,324,320
1972 7,897,640
1973 8,403,600
1974 8,508,600
1975 8,495,100
1976 8,368,760
1977 8,359,570
1978 8,929,170
1979 8,803,564
1980 9,005,065
Table 3
Calculation of the principal and interest on rice loans in metric tons50 51
Year Principal Interest Total
During loan period During repayment period
1983 7,000 1,400 2,100 10,500
1984 7,000 1,400 1,890 10,290
1985 7,000 1,400 1,680 10,080
1986 7,000 1,400 1,470 9,870
1987 7,000 1,400 1,260 9,660
1988 7,000 1,050 8,050
1989 7,000 840 7,840
1990 7,000 630 7,630
1991 7,000 420 7,420
1992 7,000 210 7,210
Total 70,000 7,000 11,550 88,550
Table 4
South Korean export and import volumes (to and from Indonesia) in USD in 1978–199259
Year Export Volume Import Volume
1978 102,992,000 407,828,000
1979 195,095,000 591,988,000
1980 365,637,000 484,525,000
1981 365,033,000 384,792,000
1982 382,917,000 682,520,000
1983 251,720,000 387,203,000
1984 254,039,000 652,840,000
1985 195,492,000 668,610,000
1986 178,942,000 428,442,000
1987 240,693,000 825,307,000
1988 402,131,000 905,298,000
1989 666,811,000 1,135,184,000
1990 1,078,636,000 1,600,252,000
1991 1,349,105,000 2,051,845,000
1992 1,934,667,000 2,291,970,000
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