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SK Group upbeat on Indonesia, ASEAN fintech and EV batteries

South Korean conglomerate also confident on Malaysia digital bank license

Ken Choi, a top SK Group executive, says the South Korean conglomerate is keen to explore investment opportunities in Indonesia. (Source photos by courtesy of SK Group and Reuters) 

KUALA LUMPUR -- SK Group, South Korea's third-largest conglomerate by assets, is aiming to increase its footprint in Southeast Asia by moving into Indonesia from existing bases in Malaysia and Vietnam, a top executive told Nikkei Asia.

SK Group will be setting up an operation in the region's largest economy to scout investment opportunities, said Ken Choi, executive president of its SUPEX Council, which is in charge of global business development.

"We plan to expand investments in Southeast Asia beyond the existing Malaysia and Vietnam ecosystem by establishing an Indonesian office this year," Seoul-based Choi said in an interview, referring to the three countries that are part of the 10-member Association of Southeast Asian Nations, or ASEAN.

"In addition to the existing sectors that SK Group has already invested across Southeast Asia like fintech, consumer, retail and life science, we plan to expand investments into the green sector such as renewable energy, including subsegments like EV batteries and hydrogen, both of which SK has invested [in] heavily globally," he said

SK Group, which boasts a market capitalization of about 170 trillion won ($141 billion), has interests ranging from chemicals, gas, oil and energy to memory chips and telecoms, among others.

The looming award of digital banking licenses in Malaysia -- for which SK Group has applied via a consortium with AirAsia subsidiary BigPay -- will also fuel its financial technology presence in the region, said Choi.

SK Group committed over $700 million in investments in Malaysia last year, including funding of up to $100 million in BigPay. SK joined a consortium comprising BigPay, financial institution Malaysian Industrial Development Finance and private equity fund Ikhlas Capital to apply for the digital banking permit.

Malaysia's central bank received a total of 29 applications, from which up to five licenses are to be announced by March.

SK Group subsidiary SK Nexilis announced an investment of 2.3 billion ringgit ($547 million) to set up a copper foil manufacturing facility in the state of Sabah on the island of Borneo -- which will be part of SK Group's electric vehicle value chain. The plant aims to start operation in the first half of 2024 and plans to produce 50,000 tons of copper foil for batteries per year.

Choi said that SK remains confident of securing a digital banking license in Malaysia and aims to dominate the Southeast Asian fintech market by providing BigPay with artificial intelligence, data analysis know-how and expertise in the sector.

"BigPay is our very first investment into a fintech company from Malaysia. It is a testament to the ability of [a] Malaysian fintech company to grow beyond the country, and BigPay's digital growth aspiration," he said.

"Given the growth of BigPay in the last three months, with more than one million carded and transacting customers now, and its expansion plans into one to three more countries in Southeast Asia this year, it has received significant interests from international investors who have been impressed with BigPay's potential to be a fintech leader across Southeast Asia," Choi added.

Meanwhile, Choi said that SK Group's car-sharing subsidiary SoCar Malaysia has raised more than $55 million from EastBridge Partners and Malaysia-based conglomerate Sime Darby to further expand in the country and into the region at large.

Based on the fundraising, SoCar Malaysia plans to operate more than 1,000 electric vehicles within the next two years and also expand its operations into Indonesia.

"The car-sharing sector builds on the asset-light trend among the more conscious users from the young generation," Choi said. "As the ESG trend accelerates, there will be efforts to reduce the number of vehicles on the road, as well as conversion into EVs," he added. ESG refers to environmental, social and governance issues.

Additional reporting by Kim Jaewon in Seoul.

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