|President Park Geun-hye speaks at a business forum held in Jakarta on Friday. Yonhap News|
JAKARTA -- South Korea and Indonesia on Saturday agreed to conclude a comprehensive economic partnership agreement by the end of this year to prop up their shared vision for mutual growth and prosperity.
During their summit, President Park Geun-hye and her Indonesian counterpart Susilo Bambang Yudhoyono made the agreement that capped her eight-day “sales diplomacy” efforts to cement ties with geostrategically crucial, resource-rich Southeast Asian nations.
“Sharing the view that the CEPA would help the two countries achieve our trade goal, and institutionalize bilateral economic cooperation, our leaders agreed to conclude the negotiations by the end of this year,” Park said during a joint press conference after their talks.
The CEPA is a more comprehensive deal than a free trade agreement. It stipulates not only the level of market opening, but also bilateral industrial cooperation and investment.
Through the CEPA, South Korea expects a higher level of trade liberalization than what its free trade agreement with the 10-member Association of Southeast Asian Nations mandates. Analysts forecast the CEPA would lower tariffs on South Korean automobiles, petrochemical products, ships, steels and other goods.
Indonesia is expected to see more investment and technological cooperation from South Korea as the two sides seek to create a win-win partnership through the deal they have talked over since July last year.
Seoul and Jakarta had yielded little progress during their negotiations until recently as Seoul could benefit more from the deal in terms of trade than Jakarta, whose main exports are mostly mineral resources. During the negotiations, Jakarta was said to have focused on areas of investment and industrial cooperation with Seoul, sources said.
With the world’s fourth-largest population of nearly 250 million, Indonesia has emerged as one of the most promising markets in the ASEAN region. The resource-rich country -- the only ASEAN member of the Group of 20 -- is South Korea’s eighth-largest trading partner with two-way trade volume reaching nearly $30 billion last year.
After the summit talks, the two countries signed four agreements on cooperation in developing special economic zones, forest recreation and ecotourism and the creative content industry, and expanding financial support for Indonesia’s development projects.
The agreement on ecotourism aims to deepen and widening their forest development cooperation, which has so far been focused on wood resources and biomass energy.
These agreements came a day after South Korean firms signed a series of agreements on issues including technology sharing in energy and natural resources; power plant construction; joint exploration and development of resources; and establishing energy-related infrastructure.
During the summit, Park also asked the Indonesian leader to support South Korean firms’ participation in the country’s infrastructure construction projects. The firms have eyed projects such as constructing the Sunda Straits Bridge, Karian Dam and Soekarno-Hatta International Airport.
Park arrived in Jakarta on Thursday night for a three-day state visit after attending the Asia-Pacific Economic Cooperation summit in Bali and several forums with 10 Southeast Asian nations and other regional partners in Bandar Seri Begawan, Brunei.
Indonesia is the destination for Park’s fourth overseas trip after the U.S., China and Vietnam.
Since the two countries established diplomatic relations four decades ago, their trade volume has increased 150-fold to $30 billion last year from $200 million in 1973. Annual people-to-people exchanges also rose during the period to 450,000 last year, from 3,000 40 years earlier.
Based on their evolving economic ties, the two countries aim to increase trade volume to $50 billion by 2015 and $100 billion by 2020. In 2006, they established a strategic partnership to expand the scope and depth of their relationship.
Park is to return home on Sunday.
By Song Sang-ho
Korea Herald correspondent