SEJONG, November 25 (Yonhap) — South Korea has reached a free trade agreement with Indonesia as part of its recent efforts to expand its trade portfolio in the Southeast Asian market, as announced Monday by the Ministry of Commerce in Seoul. The EPA is synonymous with a free trade agreement, but it focuses on a broader framework of economic cooperation. They resumed their free trade negotiations in 2019, after a five-year hiatus. Because of its heavy dependence on the United States and China, which account for 40% of the combined exports of the Asian economy number 4, South Korea is a major victim of the long Sino-U.S. trade dispute. At the regional level, the two countries are working on a larger trade agreement with several countries. Under the agreement, Indonesian industrial, fishing and agricultural products will benefit from better access to the South Korean market. In return, Indonesia will purchase raw materials from South Korea to facilitate South Korean investment in the country. Central Statistics Agency (BPS) data in 2018 show that South Korea is Indonesia`s sixth largest source of export and import. The total value of trade between the two countries reached $18.62 billion last year. Of this total, Indonesian exports to South Korea amounted to $9.54 billion and imports from South Korea to $9.08 billion.
Experts said it would be the second most important trade agreement after the World Trade Organization and a crucial agreement for IndoPape`s economies, trying to rebuild regional ties that have been separated by the ongoing health crisis of COVID 19. In 2018, bilateral trade between the two countries amounted to $18 billion, a 14% increase over the previous year. Indonesia exports raw materials such as coal briquettes and oil to South Korea and imports things like machinery and processed metals. BUSAN/JAKARTA — South Korea and Indonesia concluded seven and a half years of negotiations on Monday for a free trade agreement with an agreement to eliminate tariffs on steel, cars and beer. With IK-CEPA, the total trade value between Indonesia and South Korea could reach $30 billion by 2022. In 2018, the Statistical Office found that the value of trade with South Korea was $18.62 billion, the country`s sixth-largest export destination and source of imports. The country has also begun discussions on preferential trade agreements with partners such as India and Mozambique. In addition to these concerns, the recent level of trade between Seoul and Tokyo poses another threat to the export-dependent economy. Both sides will formally sign the agreement early next year, after the agreement has been revised.
Once the agreement is signed, it will be ratified by each parliament in each country. When the South Korean EPA comes into force, 93% of the Indonesian market will be open to South Korea, up from the current level of 80.1%. The FTA`s conclusion was announced on the sidelines of the group`s extraordinary summit between South Korea and the ten countries of the Association of Southeast Asian Nations (ASEAN), currently underway in the port city of Busan, 450 kilometres southeast of Seoul. Iman Pambagyo, Director General of International Trade Negotiations at Indonesia`s Ministry of Commerce, said the IK-CEPA agreement will also provide a framework for cooperation and capacity building in various sectors, including industry, creative industries, health and labour.