After more than eight months of negotiations, agreement has been reached on the substantive aspects of the proposed Indonesia-South Korea Comprehensive Economic Partnership Agreement (CEPA).

However, it is important to note that a formal Indonesia-South Korea CEPA has yet to be officially signed – it is expected that this will take place in November at the 30th ASEAN-Korea Commemorative Summit in Busan, South Korea.

The substantive agreement was inked by Indonesia’s Minister of Trade, Mr. Enggartiasto Lukita, and South Korea’s Minister of Trade, Industry and Energy, Ms. Yoo Myung-hee, witnessed by Indonesia’s Vice President, Yusuf Kalla, at a ceremony in Tangerang, Banten, on Wednesday, Oct 16.

The signing follows on from the tenth round of negotiations between the two sides in Bali on Oct 7-10.

Negotiations on the deal commenced in 2012, but ground to a halt in 2014 before recommencing in February 2019.

Under the agreement, Indonesia will obtain greater market access for its industrial, fisheries and agricultural products in South Korea, and in return will further open its market to South Korean industrial products and investment.

Indonesia’s Director General of International Trade Negotiations, Mr. Iman Pambagyo, said that the agreement should see bilateral trade between the two countries reach USD 30 billion by 2022.

According to Indonesia’s Central Statistics Bureau (Badan Pusat Statistik / BPS), South Korea is Indonesia’s sixth largest trading partner, with two-way trade between the two countries standing at USD 18.62 billion in 2018. Of this figure, Indonesian exports to South Korea amounted to USD 9.54 billion, while imports from South Korea stood at USD 9.08 billion, giving Indonesia a trade surplus of USD 460 billion.

Indonesia’s principal exports to South Korea in 2018 consisted of coal, copper, natural rubber, plywood and lead, while the country’s main imports from South Korea included synthetic rubber, sheet steel, electronics and synthetic fibers.