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S Korea, Indonesia announce agreement on free trade deal

Nov '19
Pic: Shutterstock
Pic: Shutterstock
Indonesia and South Korea yesterday completed negotiations—which continued for seven and a half years—on a free trade deal by declaring an agreement to remove tariffs on steel, textile and autos. The two sides signed a joint announcement on the completion of the South Korea-Indonesia Comprehensive Economic Partnership Agreement (CEPA) at their bilateral summit.

Both the countries will officially sign the agreement early next year after reviewing it after which it will be subject to ratification by the parliaments in both sides, according to global newswires.

The summit was part of the Republic of Korea-Association of Southeast Asian Nations (ASEAN) Summit, which South Korea hosted in the port city of Busan.

If the South Korea-Indonesia CEPA goes into effect, 93 per cent of Indonesia's market will be open to South Korea, up from current level of 80.1 per cent.

Indonesia has agreed to lift tariffs on South Korean textiles, steel, autos, auto parts and machine parts, while the latter will exempt tariffs on bunker C oil, sugar and beer from the former.

Indonesia's minister of trade Agus Suparmanto added in a statement that the deal will provide Indonesia with ‘wider access’ to the South Korean market compared to what has been provided through ASEAN-Korea Free Trade Agreement, Indonesian media reported.

The two countries' bilateral trade stood at $18 billion in 2018, up 14 per cent over the previous year. Indonesia exports raw materials like coal briquettes and petroleum to South Korea, and imports such things as machinery and processed metals.

South Korea has also risen as a major investor in Indonesia. It was the eighth largest investor in the archipelago in the nine months ended September, with realised foreign direct investment reaching $638 million.

In December last year, Korean-Japanese conglomerate Lotte Group has pledged to invest at least $3.5 billion in what is to be Indonesia's largest petrochemical plant.

Fibre2Fashion News Desk (DS)

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