IK-CEPA to unlock trade potential of Indonesia, Korea: top envoy

The Indonesia-Korea Comprehensive Economic Partnership Agreement entered into effect earlier in January, two years after the deal was signed on Dec. 18, 2020 in Seoul.

IK-CEPA is an overarching agreement that would build a stable global supply chain in the critical industrial sectors of Indonesia and Korea, according to Sulistiyanto.

"In line with (President Yoon Suk Yeol)’s Korea-ASEAN solidarity initiative, I firmly believe that the Indonesia-Korea partnership will deepen even further," said Sulistiyanto.

Citing Korea as Indonesia’s seventh-largest trading partner after China, Japan, the US, Singapore, India and Malaysia, Sulistiyanto hopes to explore untapped opportunities to strengthen the supply chain for commodities, goods and services.

According to Sulistiyanto, Indonesia's total trade with Korea reached $22.6 billion, up 36.38 percent from the same period in 2021, when the total trade volume was $16.5 billion.

Indonesia’s trade with Korea contributed to 4.65 percent of Indonesia’s total trade with the world in 2021, he said.

"It’s an exciting trend compared to figures in the year 2021, which were 4.2 percent," Sulistiyanto noted.

Assessing 50 years of bilateral relations, the top envoy applauded Korea for its support to Indonesia in achieving economic development and offering technical assistance, grants, and loans for projects ranging from infrastructure to education and health.

"Likewise, Indonesia would always step forward for a friend in need," Sulistiyanto stressed, mentioning Indonesia’s help during Korea’s industrial urea crisis in early 2021.

Indonesia also remains the only country in Southeast Asia that has a special strategic partnership with South Korea, according to Sulistiyanto.

A special strategic partnership indicates that the two countries are equal; neither is higher or lower than the other, Sulistiyanto emphasized, noting the significance of leveling up diplomatic relations in 2017.

Indonesia and Korea agreed strengthen their bilateral relations from a strategic partnership to a special strategic partnership in 2017.

Private-sector partnership key to forging stronger ties

Indonesia offers raw materials, talented human resources and a business-friendly environment, and remains the world's 16th-largest economy, said Sulistiyanto, formerly a business professional for 39 years who served as managing director of Sinar Mas Group, one of the largest conglomerates in Indonesia.

Sulistiyanto, however, suggested that Korean companies forge partnerships with local partners to navigate Indonesia's regulations, gain market insight and access the market easily.

According to Sulistiyanto, Indonesian partners can help Korean companies understand Indonesian culture, customs and local languages.

Sulistiyanto said that many Korean companies have taken part in construction projects in Indonesia’s new capital in East Kalimantan, further contributing to bilateral cooperation.

Moreover, Korea's foreign direct investment in Indonesia is expected to total $1.66 billion by the third quarter of 2022, making the country the fifth-largest investor after Singapore, China, Hong Kong and Japan.

Indonesia and Korea’s investment cooperation will continue to grow in 2023, Sulistiyanto said, as the Indonesian government is improving the investment climate for foreign direct investment inflows through the Online Single Submission system, easing the issuance of business permits from 17 ministries under one roof with faster service, said Sulistiyanto.

Also, Indonesia's abundant natural resources and population of over 260 million, with more than 45 percent of that working-age population, attest to the country's potential for Korean companies to do business and reap benefits, according to Sulistiyanto

"It’s not just G-to-G (government to government) or B-to-B (business to business) ties; it’s P-to-P (people to people) ties that would develop closer friendship and mutual understanding," highlighted Sulistiyanto.