A growing number of Korean companies are looking to move their regional headquarters from Singapore and Kuala Lumpur to Jakarta, said Moon Jae-do, deputy minister for international affairs at Korea’s Ministry of Knowledge Economy.

“Many large Korean companies are moving their regional headquarters to Jakarta,” he said. “Indonesia is a big market, and it’s growing fast and can become a manufacturing base for Korean companies.”

According to Moon, Korean companies plan to invest $12 billion in Indonesia over the coming years in industries such as steel, retail, finance and infrastructure. This figure includes the funds to be contributed by steelmaker Posco under its $6 billion deal with state-owned Krakatau Steel.

The joint venture to build one of the largest steel plants in the region broke ground in December. The first phase of construction is expected to be completed by the end of 2013.

“Posco is investing in steel plants in order to add value,” said Moon. “Korean companies are looking to bring new technology to Indonesia as they see that Korean technology can complement Indonesia’s natural and human resources.”

In May, Indonesia and South Korea signed a memorandum of understanding on economic cooperation in Bali. The countries agreed to foster partnerships in seven sectors, including industry, energy, agriculture and defense.

The deal was the first concrete action from Seoul following President Lee Myung-bak’s commitment to contribute to the Acceleration and Expansion of Indonesia’s Economic Development 2011-2025 (MP3EI) plan, which involves establishing six economic corridors, each with a specific focus.