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View all search resultsMaintaining momentum in Indonesia-Korea economic agenda
Indonesia’s 2024 elections will provide a fresh test for how Jakarta and Seoul can carefully navigate any resulting changes in Indonesia’s political priorities.
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President Joko “Jokowi” Widodo (left) talks with his South Korean counterpart President Yoon Suk-yeol, at the Presidential Office in Seoul on July 28, 2022. (Presidential Secretariat's Press Bureau/Laily Rachev)
The Indonesia-South Korea relationship turns 50 this year, and celebrations have already begun.
In January, Indonesia’s Foreign Ministry held an event in Jakarta at which senior officials highlighted progress toward deep political and economic partnership.
In a recorded address, Korean Foreign Minister Park Jin called Indonesia an “indispensable partner” for Seoul’s regional strategy (The Jakarta Post, Jan. 27, 2023). And in mid-February, the Indonesian Embassy was among the organizers of a bilateral business forum in Seoul attended by around 100 local business and finance leaders.
This semi-centennial anniversary has been themed Closer Friendship, Stronger Partnership, reflecting the mutual desire for a continuation of these expanded ties.
Indonesia and Korea have overlapping strategic concerns about regional security and the careful management of great power competition. But for both sides, the success of the relationship over the next decade will be measured primarily in economic terms.
The Indonesia-Korea economic agenda is centered around a new bilateral free-trade agreement, known as the IK-CEPA, that officially came into force on Jan. 1 this year. It involves the elimination of more than 95 percent of tariffs for bilateral trade, a commitment to further economic cooperation in priority areas such as industry and agriculture and a broadening of opportunities for foreign investment. Notably, negotiations for the IK-CEPA were the quickest that Indonesia has ever concluded for a deal of this kind.
Building on this foundation, Indonesian Ambassador to Korea Gandi Sulistiyanto met with Bank of Korea Governor Rhee Chang-yong last month to discuss new trade facilitation measures, including a potential won-rupiah currency settlement system. This policy, which Indonesia has already implemented with other major trading partners such as China, Japan, Malaysia and Thailand, would boost and secure trade and investment by removing the need for the two countries to use US dollars as an intermediary currency in their bilateral transactions.
