New Agreement to Boost Indonesian Exports to South Korea
Exports to South Korea to support strategic relations with Indonesia
Indonesia and South Korea are forging a more robust economic partnership to commemorate their five decades of diplomatic ties. The Indonesia-Korea Comprehensive Economic Partnership Agreement (IK-CEPA) comes into force as of January 2023. It will mutually benefit both the parties while boosting exports to South Korea.
The agreement aims to reinforce and enhance the ongoing strategic trade and investment relationship between Indonesia and South Korea. The two country’s 2021 total trade value stands at USD 18.41 billion. Of this, exports and imports to South Korea total USD 8.98 billion and USD 9.43 billion, respectively.
With a surplus of USD 712.3 million, Indonesia’s economic data for 2022 are encouraging. The trade value between South Korea and Indonesia until the third quarter of 2022 totals USD 20.6 billion. This indicates a month-on-month increase of 40.36% from the previous third quarter figure of USD 14.6 billion. Indonesia’s exports and imports to South Korea for the same period total USD10.6 billion and USD9.9 billion, respectively.
Mutual Benefit to Parties
According to Indonesia’s Ministry of Trade, IK-CEPA is a window of opportunity that will bring greater prospects and advantages. The implementation of the agreement will do away with import duty tariffs for certain exports to South Korea. More than eleven thousand or 95.5% of relevant Indonesian goods will benefit from easier access to South Korean markets. This includes select textiles, processed fish, vehicle accessories, etc., and will enhance overall economic competitiveness by enabling lower production costs.
The agreement also benefits human resource development and other trade and industry cooperation agendas. In particular, service opportunities have the potential to grow with more foreign investment and diversity in the talent pool.
This, in turn, will improve overall trade and investment prospects while rolling out sustainable economic cooperation programmes. Sectors that will benefit from long-term investment include chemical and renewable energy, automotive industries, agriculture, etc.
Indonesia as a Global Hub
With an increase in exports to South Korea, the IK-CEPA continues to enhance economic activities for both countries. The agreement is of particular importance to Indonesia, with its potential to turn the country into a production hub. This will facilitate Indonesia’s regional and international economic market penetration.
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