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RI still pushing for investment deal from S. Korea
As it hosts the sixth round of talks for a free trade deal with South Korea this week, Indonesia still maintains its stance to demand real investment commitment from its counterpart, an industry official says
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s it hosts the sixth round of talks for a free trade deal with South Korea this week, Indonesia still maintains its stance to demand real investment commitment from its counterpart, an industry official says.
'Our latest position as voiced by Industry Minister [MS Hidayat] is still 'no investment, no deal',' Industry Ministry director general for international industry cooperation Agus Tjahajana said on Tuesday.
'We really expect Korea to invest to strengthen industrial sectors where we are still weak, including petrochemical, electronics, machinery and automotive components. If there's no investment, we have no reason to rush,' he told The Jakarta Post in a telephone interview.
Officials from Indonesia and Korea are in Bali for five-day intensive talks on the comprehensive economic partnership agreement (CEPA) that will end on Friday. Both countries first launched the rounds of talks in July last year in Jakarta and aim to conclude the deal at the end of this year.
In September, Trade Minister Gita Wirjawan said that both parties might reach a consensus on a 'relatively small package' to help the conclusion stay on schedule.
Trade officials did not respond to the Post's inquiry into what key issues are being discussed in the ongoing negotiations.
Agus said that Indonesia still expected the latest round of talks would come up with a 'desirable result' with Korea offering new flexibility on Indonesia's proposal for investment.
The CEPA requires a higher level of liberalization from a free trade agreement that Indonesia and Korea signed under the ASEAN framework in 2006 and took effect through gradual tariff cuts in 2007.
Bilateral trade rose by 20.54 percent on average per year from 2008 to US$27.02 billion last year, with Indonesia exporting $15.05 billion and importing $11.97 billion.
From January to July this year, two-way trade dropped by 17.64 percent to $13.82 billion. Indonesia's exports plunged by 31.24 percent to $6.8 billion, while imports surged slightly by 1.84 percent to $7.03 billion.
Investment from Korea in Southeast Asia's biggest economy hit an all-time high last year at $1.95 billion, channeled into 421 projects, up 59.84 percent from 2011.
Indonesia is now Korea's seventh-biggest investment destination in the world and last year, it was the country's eighth-largest trading partner with bilateral trade valued at $29.6 billion, according to Korea's Ministry of Trade, Industry and Energy as reported by Korean news agency Yonhap.
Last month, Korean firms signed seven investment memorandums of understanding (MoUs) settling at more than $10 billion in a wide range of sectors, including agriculture, energy, infrastructure, manufacturing and transportation during the state visit by South Korean President Park Geun-hye.
Supporting Indonesia's demand for investment in the negotiated deal, Hendri Saparini, the executive director of the Center of Reform on Economics (CORE) Indonesia, said that the investment should be oriented toward the upstream sector and that the country badly needed to cut its dependence on imports.
'What we need to encourage is investment in the upstream sector of which raw material is abundant in our country. The output of the upstream sector will help supply material in the downstream sector,' Hendri told the Post.
'If new investment flows into the downstream sector while the upstream sector is not ready to supply, it will only increase imports of raw material and intermediate goods,' she went on.
