INDONESIA: S. Korea to Make Indonesia Production Base in ASEAN with IK-CEPA

JakartaGlobe-Jan 26

South Korea intends to make Indonesia a production base in ASEAN, now that both countries are eliminating most of their tariffs, including on auto parts and steel, according to its government official on Thursday. The Indonesia-Korea Comprehensive Partnership Agreement (IK-CEPA) came into force early this year. The IK-CEPA eliminates 95.5 percent of South Korean tariffs. Indonesia has agreed to remove 92 percent of its tariff posts. With the agreement in effect, both countries are expected to enjoy broader market access, among other things, according to Oh Hyun, the deputy director for free trade agreement at South Korea’s Trade Ministry. “South Korea is interested in making Indonesia a new production base in ASEAN, and a production hub to enter the region’s market and the world. The elimination of tariffs on steel, auto parts, and petrochemical products through the CEPA are vital means,” Oh Hyun told a conference commemorating the golden jubilee of Indonesia-South Korea ties in Jakarta on Thursday. Oh Hyun added that IK-CEPA’s tariff eliminations would pave the way for a more robust bilateral value chain, particularly on nickel, through greater trade and investment. Nickel is a mainstay for batteries, and Indonesia’s production of the mineral is the largest globally. “Indonesia has become one of the vital chain suppliers to Korea, considering that it is the largest producer of nickel in the world,” Oh Hyun said. Automaker Hyundai is one of the most noteworthy South Korean investors in Indonesia. Hyundai invested a whopping $1.5 billion to build its first manufacturing hub in ASEAN in Kota Deltamas, Cikarang. The Cikarang plant produces petrol-fuelled cars, as well as electric vehicles (EVs) such as the Ioniq 5. A Hyundai-LG Energy Solution consortium, in collaboration with the Indonesia Battery Corporation (IBC), is also building a $1.1 billion EV battery cell plant in Karawang, West Java. Read more at: https://jakartaglobe.id/business/s-korea-to-make-indonesia-production-base-in-asean-with-ikcepa