In several attempts, people can find out there are repetition phrases that informally appeared from 5 years ago until now related to South Korea-Indonesia relations, it is the label “special strategic partnership”. Initially it happened during South Korea’s former president, Moon Jae-in, official trip to Indonesia in 2017. Cited from Indonesia’s Foreign Ministry Press Briefing in Jakarta Globe site, the visit means to upgrade the bilateral relations level from strategic partnership into special strategic partnership, especially to accelerate industrialization in Indonesia.
The labels seem relevant as both governments agreed to continuing the discussion related to Indonesia-South Korea Comprehensive Economic Partnership Agreement (IK-CEPA) in 2018 that had been postponed in 2014 due to the shifting government. The agreement is likely to eliminate 95,54% post tariffs on the Korea side, while Indonesia does 92,06% post tariffs. Indonesia would get bigger market access in several sectors such as fisheries, agriculture, and other national industrial products, while South Korea is more accessible in several service sectors such as online game, construction, and healthcare service.
The agreement is barely ratified by Indonesia’s parliament at the end of August 2022 and the Parliament is also warning the executive branch to pay attention to keep the national interest & to be aware of the competitiveness in liberal market post-agreement since many countries are facing the post-pandemic recovery complex recently.
Besides the mentioned agreement, Indonesia and South Korea have several finished and ongoing strategic projects. Start with an ongoing joint-program on Boramae jet fighters in which Indonesia shares 20% and South Korea holds the rest of production cost. The program aims to reach mass production in 2027 and could have a competitive feature to US-made F-15, but likely less than the F-35 model. Besides that, South Korea is also involved in an Indonesia-owned submarine project for the 209/1400 type which is named KRI – Nagapasa 403 and KRI – Ardadedali 404, both respectively arrived in Indonesia in 2017 and 2018.
If the means of upgrading the relationship level to be a special one by holding the IK-CEPA, Boramae project, and other projects related to strategic necessity of the countries, then it seems Indonesia really has been treated as South Korea’s “Special Strategic Partner”. The mentioned projects aren’t covering all the government-to-government or business-to-business projects that can be classified to assert the upgraded relationship level such as Hyundai-LG investment on electric vehicle ecosystem in Karawang, West Java.
Is Indonesia the only one “Special Partner”?
To answer the question’s sub-headline, we may look back at the trade balance between South Korea and its several bilateral partners in southeast Asia, including Singapore, Vietnam, and Indonesia, for around 5 years. South Korea & Singapore had established the free trade agreement then put into force in 2006. The Korea’s import trade value from Singapore in 2006 is around $5,886,680,000 then in 2007 was risen around 16,5%, but 2017-2021 reports Singapore’s deficit trade with South Korea around $3,457,218,000 with Korea’s major deficit from importing parts of nuclear machinery & mechanical appliances.
Meanwhile, South Korea & Vietnam had signed similar agreements and were activated in 2015. Vietnam’s export values to Korea moderately rose from $9,804,831,000 in 2016 to $12,495,154,000 in 2017. However, as the same interval trade reports as Singapore, Vietnam is also facing deficit trade around $32,762,826,000. Meanwhile, South Korea itself faces big deficits in several of Vietnam’s competitive commodities such as articles of apparels & clothing, furniture, and fisheries commodities.
Now, let’s take a look at South Korea-Indonesia trade activity. As Indonesia just barely ratified the IK-CEPA in August 2022, it’s hard to set the significance of the IK-CEPA effect on both countries’ trade. However, Indonesia-South Korea trade performance benefited Indonesia for the interval 2017-2021 with Korea Custom Service noting the surplus for Indonesia is equivalent to $8,121,555,000. South Korea’s major deficits come from Indonesia’s prominent commodities such as mineral fuels & oils and other metal & mining products that are heavily demanded by Korea’s domestic industry.
Worth noting that even though the 3 mentioned countries may have their own bilateral economic agreement with South Korea, the countries are members of ASEAN and ASEAN itself has particular economic agreement under ASEAN-South Korea Free Trade Agreement (AK-FTA) which also benefited the 3 countries. In conclusion, the countries have so much leverage during trade with South Korea under several agreements.
Indonesia is relatively one of key partners for South Korea since both countries share a significant number of demands in particular industry commodities. However, South Korea’s trade volume with Indonesia isn’t as big as with Vietnam which shares 4.4% of Korea’s imports and 9.04% of Korea’s exports in 2020. Indonesia only shares 1.62% of Korea’s imports and 1.23% of Korea’s exports as OEC displayed. In conclusion, Indonesia moderately played a significant role for South Korea and recently both countries really upgraded their ties by holding many mutual projects, but we can’t be blind that Vietnam was way forward in captivating South Korea’s market as it reflected by the bilateral trade volume and one of the earlier Asian countries to established a bilateral trade agreement with South Korea.
Regardless of the “Special Strategic Partnership” label, Indonesia should seize the moment once the IK-CEPA applied in both countries by pushing diverse products to be exported, not merely relying on mineral & mining commodities. The government and Indonesia’s corporation must swiftly be aware of the Korean domestic market demands and its opportunities to make sure the IK-CEPA wouldn’t become boomerang which will hurt Indonesia’s domestic market since the market becomes more liberal & South Korea has a relative competitive advantage above Indonesia and its product highly demanded by huge number of Indonesians. The government can support the micro, small, and medium enterprises (MSMEs) to grasp the moment to export their product not only by providing them credit assistance but also information & legality aspects to fulfilled the necessity of exporters which somehow people aren’t aware of and facing complexity administration.
