By: Fitri Nur Arifenie
JAKARTA. South Korea and Indonesia has completed the negotiation of Comprehensive Economic Partnership Agreement (IK-CEPA). The signing of the IK-CEPA substantial settlement was carried out by the Ministry of Trade, Industry and Energy of South Korea, Yoo Myung Hee and the Minister of Trade of Indonesia, Enggartiasto Lukita on Wednesday (10/16/2019). Both of the countries agreed to increase the trade value to the level USD 30 billion in 2022.
IK-CEPA creates framework for South Korea and Indonesia to unlock the vast potential of the bilateral economic partnership. The negotiation consist of six working groups, namely trade in goods, trade in services; investment; provisions on origin of goods, customs procedures and trade facilitation; corporations and capacity development, as well as legal and institutional issues.
By way of this negotiation, South Korea will get market access for raw material industry and capital goods such as machinery as Indonesia wants to draw more investment as well as shift the economy from natural base to manufacturer base. Meanwhile South Korea has agreed to open the market of the industry, fisheries and agriculture for Indonesia's product.
The agreement had been negotiated since 2012, but was halted in 2014. Later, both of the government settled to continue the negotiation on February 2019.
Both of the countries had acknowledged the urge to complete the negotiation. The President Moon Jae In has implemented the New Southern Policy which brings Indonesia as one of the important partners for South Korea to expand its economy. Meanwhile, the President Joko Widodo has committed to boost the exportation come through the free trade agreement
Indonesia – South Korea Trade in Brief
The Ministry of Trade recorded the total trade volume for Indonesia - South Korea in 2018 reached USD 18.63 billion with an export value of USD 9.54 and import value of USD 9.09 billion or increased 14.15% compared to 2017. The trade total trend of both of countries
for the past five years (2013 - 2018) has been negative trend of 3.52%. The value of trade between the two countries reached its peak in 2014 which was USD 22.45 billion.
This year, total volume of trade value was USD 10.54 billion until August. This figure declined 13.93% over the same period last year which was recorded USD 12.24 billion. The Ministry of Trade noted that Indonesia export USD 4.97 billion and import USD 5.57 billion towards South Korea during the period January to August 2019. It means that Indonesia experienced trade deficit USD 597.22 billion in the first eight month this year.
Indonesia main export commodities to Korea are: mineral and oil (fuel); iron and steel; ores, slag, ash; wood; fats and oils; electrical machinery; rubber; tin; etc.
While from South Korea, Indonesia imports several commodities such as: mineral and oil (fuel); electrical machinery; machinery; iron and steel; plastics; knit fabrics; rubber; organic chemicals; etc.
Source: KOTRA Jakarta
Picture: The Ministry of Trade of Republic Indonesia