Indonesia eyes export growth with South Korea via IK-CEPA

Jakarta (ANTARA) - The Indonesian government is aiming to expand exports to South Korea through the Indonesia-Korea Comprehensive Economic Partnership Agreement (IK-CEPA), which has been in effect for the past year.

At the Team Korea-Indonesia Economic Partnership Forum in Jakarta on Wednesday, Deputy Minister of Trade Jerry Sambuaga stated that coal has been Indonesia's main export commodity to South Korea, with the value of coal exports reaching US$2.2 billion in 2023, followed by petroleum gas at US$1.4 billion.

However, with the implementation of IK-CEPA, the export potential for other products such as motor vehicles, palm oil, ferronickel, and palm kernels has significantly increased.

The five main products imported by Indonesia from South Korea are petroleum oil, cars and motor vehicles, electronic integrated circuits (chips), and synthetic rubber.

"If you look at the trend, I am confident this will not just be limited to the five main products that Indonesia and Korea have traded but could expand beyond that," Sambuaga said.

He urged Indonesian business actors to take advantage of IK-CEPA. The trade agreement provides benefits such as the elimination of import duties on 95 percent of products traded between the two countries.

"With duty-free facilities, it is hoped that the trade volume between Indonesia and South Korea will continue to increase," Sambuaga said.

"As a partner country that has had diplomatic relations for 50 years, we want to send a clear message that there is still much to be explored between Indonesia and Korea, especially since IK-CEPA has only been in effect for one year," he added.

On the same occasion, the Deputy Ambassador of South Korea to Indonesia, Park Soo-Deok, stated that although Korea has become a major partner in economic cooperation with Indonesia, challenges such as geopolitical tensions and supply chain instability still need to be addressed.

For this reason, it is important to expand bilateral cooperation, including investments and business activities of Korean companies in Indonesia, to create jobs and boost Indonesia's economic growth, he said.

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South Korea is one of Indonesia's strategic trading partners. It ranked eighth as an export destination and sixth as an import origin in 2023. Data from Statistics Indonesia shows that the trade volume between Indonesia and South Korea in 2023 was recorded at US$20.8 billion, with Indonesia's exports amounting to US$10.3 billion and imports at US$10.5 billion.

While the total trade value between Indonesia and South Korea was substantial, Indonesia's trade balance with South Korea recorded a deficit of US$224 million.