Indonesia and South Korea continue to strengthen their economic cooperation as both countries have ratified the Indonesia-Korea Comprehensive Economic Partnership Agreement (IKCEPA) and the Regional Comprehensive Economic Partnership (RCEP) agreement.
IKCEPA is a form of commitment from the leaders of the two countries who agreed to increase the status of the partnership to become a “special strategic partnership”. In 2012, Indonesian President Susilo Bambang Yudhoyono and Korean President Lee Myung-bak initiated the IKCEPA cooperation. After seven rounds of negotiations, Indonesia and Korea suspended the bilateral trade agreement negotiations in 2014. On February 19, 2019, the two countries agreed to resume the IKCEPA negotiations. Both parties successfully signed the IKCEPA on December 18, 2020 in Seoul. The cooperation covers the fields of economy, trade and investment.
Previously, Indonesia’s House of Representatives (DPR) already approved the draft law on the IKCEPA to become a law on September 30, 2022. Minister of Trade Zulkifli Hasan said that the RCEP would make it easier for Indonesia to export because it would be exempted from taxes.
A Joint Committee on Economic Cooperation (JCEC) forum marks the bilateral relationship. The forum regularly holds meetings at the ministerial level and among senior officials. Indonesia’s Coordinating Minister for the Economy and Minister of Trade, Industry and Energy of South Korea attended the Indonesia-Korea JCEC forum to discuss and agree on cooperation in various fields as reflected in the four working groups, namely investment and trade, industry, energy and mineral resources and e-commerce.
In terms of bilateral economic relations, the total trade between Indonesia and Korea in 2021 was US$ 18.4 billion, or a 37.8% increase compared to the same period in 2020. Korea also ranked 7th as Indonesia’s largest investor in 2021 with a total FDI (foreign direct investment) worth about US$ 1.6 billion.
