JAKARTA (TheInsiderStories) – Indonesian government continues to boost the process of ratifying trade agreements with other countries. This year, the government intends to finalize the process the Indonesia-Korea Comprehensive Economic Partnership Agreement (IK-CEPA).
With this, the government targets the investment value of trade relations with South Korea to reach US$30 billion by 2022.
“This business forum was created to overcome various things that disrupt the trade and investment, so it was discussed in this forum,” said Minister of Trade Enggartiasto Lukita after signing the IK-CEPA in Jakarta, on Tuesday (02/19).
According to him, the increase in trade cooperation can reach all existing trade sectors, both services, goods, and investments, especially in the electronics and automotive sectors in formed cooperation.
Based on Indonesia’ Coordinating Investment Board data, the realization of South Korea’ investment from January to June 2018 has reached $1.2 billion, or around 7.5 percent of total foreign investment in Indonesia, below Singapore, Japan and China.
Meanwhile, Director General of International Trade Negotiations Iman Pambagyo, stated that the negotiations actually began in 2012. But, the negotiations had stopped in 2014. Finally, the signing of the agreement was held again today.
The negotiations faced a halt because South Korea refused to invest in Indonesia as a reciprocal for the release the number of goods from South Korea. At that time, the Government requested that they open markets for agricultural and fishery products but were not fulfilled.
However, the bilateral relations between the two countries that were familiar for the past 45 years were made in the visit of President Joko Widodo to South Korea in September 2018. There, Indonesia pocketed 15 Memorandum of Understandings and six investment commitments totaling $6.2 billion.
Explained, there were a number of things that were the focus of the IK-CEPA negotiations, namely if previously the negotiations used the Harmonized System code in 2012, now it had changed using the HS code 2017.
In addition, the opening of the ASEAN-Korea Free Trade Agreement (AK-FTA) was also discussed in the negotiations. It was stated that Indonesia had previously signed the protocol to amend AK-FTA through a Presidential Regulation.
In the AK-FTA agreement, there is still a closed room between the two parties because there are less than 92 percent of products open. In addition, bilateral negotiations also have fewer challenges than multilateral agreements.
Besides AK-FTA, Indonesia-Korea was also involved in the discussion of the Regional Comprehensive Economic Partnership (RCEP). This will become the basis for the IK-CEPA cooperation contract.
It was mentioned that in the AK-FTA the government would focus more on the application of industry 4.0 in the manufacturing sector and public services. It is expected that AK-FTA can enhance cooperation between the two countries in developing this.
Previously, the government had signed the ASEAN-Hong Kong Free Trade Agreement. The Parliament has approved the agreement and ratified it through a Presidential Regulation which will be issued in April or March 2019.
According to the provisions of AHKFTA, it only applies (entry into force) if it has been ratified by four countries. This AHKFTA will benefit importers to obtain cheaper ingredients, where Hong Kong will provide flexibility for residence permits for Indonesian workers.
Besides AHKFTA, Indonesia also still has not ratified the Indonesia-Chile Comprehensive Economic Cooperation Agreement (IC-CEPA). It also includes the Indonesia-Pakistan Protocol to Amend (IP-PTA), which will also be ratified through the Presidential Regulation and discussed in depth by the Parliament.
Written by Daniel Deha, Email: email@example.com