JAKARTA (Reuters) - Indonesian and South Korea took a key step on Wednesday toward a bilateral agreement that is expected to help boost trade between the two nations by about 50% by 2022.
Indonesian Trade Minister Enggartiasto Lukita and his South Korean counterpart Yoo Myung-Hee signed a document marking the conclusion of talks in Jakarta toward the economic partnership.
The countries will move forward with “legal scrubbing” and translation before the official signing of the Indonesia-Korea Comprehensive Economic Partnership Agreement (IKCEPA), targeted for next month, Lukita told a joint news conference.
“The global economy has been facing rising uncertainty from the rising tide of protectionism in the last few years,” Yoo said, after the meeting on the sidelines of a trade expo.
“Korea, as one of the largest beneficiaries of free trade, and Indonesia, as leader of ASEAN, are signaling to the world our true support for free, open and rules-based trade in this very challenging time,” she said.
Yoo also said the partnership could boost two-way trade to more than $30 billion by 2022 with the removal of “many tariff barriers” and both South Korean and Indonesian companies would welcome improved market access.
Jakarta exported $9.5 billion worth of goods to South Korea last year and imported $9.1 billion, according to Indonesian government data. Its main exports included coal, copper, rubber, plywood and tin, while it buys synthetic rubber, flat steel products, electronic circuits and yarn, among other goods, from South Korea.
Iman Pambagyo, a senior official with the Indonesian trade ministry, told reporters tariffs for Korean steel-based car components would be among those to be cut, while Indonesian products that would gain greater market included fish, some farm produce and beer.
Talks on the bilateral trade and investment deal restarted after stalling in 2014 when Indonesian President Joko Widodo met South Korean President Moon Jae-in in Seoul in September 2018.
Before Wednesday’s announcement, outstanding issues included calls from both sides for a further reduction of tariffs and Jakarta’s demand that Seoul put an investment commitment into the automotive and smartphone sectors in the Southeast Asian country, according to Indonesia’s trade ministry website.
Indonesia has been seeking to expedite talks on free trade deals with many trading partners, hoping to attract more export-oriented investment by securing overseas market access.
Over the past year, it has signed free trade deals with Australia, Chile and the European Free Trade Association.
Jakarta is currently leading ASEAN in the China-led Regional Comprehensive Economic Partnership (RCEP) negotiations, which could become the world’s biggest free trade bloc of 16 Asia Pacific economies.
Additional reporting and Writing by Gayatri Suroyo; Editing by Muralikumar Anantharaman and Jacqueline Wong