[FTA HONG] Summary of the Korea-Indonesia CEPA (FTA utilization rate, FTA utilization by industry, and summary of highlights)

 

Indonesia is the world's fourth most populous country and the largest economy in Southeast Asia, so it's a huge potential market.

Korea has an ASEAN-Korea FTA and RCEP with Indonesia, but as a separate FTA (CEPA), the Korea-Indonesia CEPA came into effect on January 1, 2023.

In the case of the Korea-Indonesia CEPA, there will be more favorable items compared to ASEAN or RCEP, based on the content of product concessions.

 

In the case of the Korea-Indonesia CEPA, the content of the product concessions is expected to be more favorable than in ASEAN or RCEP.

 

In addition, unlike the ASEAN-Korea FTA, the Korea-Indonesia CEPA allows for Self - Issued of certificates of origin. However, the Korea-Indonesia CEPA also has a basis for self-issued certificates of origin, but it is not currently applicable.

 

Article 3.15: Proof of Origin   1. Goods originating in a Party shall, on importation into the other Party, benefit from preferential tariff treatment under this Agreement on the basis of a Proof of Origin.   2. Any of the following shall be considered as a Proof of Origin: (a) a Certificate of Origin issued by an issuing body referred to in Article 3.16; (b) an Origin Declaration made out by an approved exporter; and (c) an Origin Declaration by an exporter or producer.   6. The Parties may implement the Proof of Origin referred to in paragraph 2(b) and 2(c) after both Parties conclude negotiations on regulations and formats through the Committee on Customs and Trade Facilitation referred to in Article 4.12 (Committee on Customs and Trade Facilitation) within two years from the date of entry into force of this Agreement, unless otherwise agreed by the Parties.

 

The Korea-Indonesia CEPA went into effect on January 1, 2023, so there is no data on FTA utilization in 2022.

 

However, as of the first quarter of 2023, the export utilization rate of the Korea-Indonesia CEPA is 67.8% and the import utilization rate is 45.1%. In terms of FTA utilization by industry, chemical industrial products are the highest at 79.8% for exports and minerals are the lowest at 0.2%. In imports, minerals have the highest level of utilization at 99.1%, while electronic and electrical products and miscellaneous products have the lowest utilization rate at 0%.

 

(Unit: Thousands of dollars)

Category	FTA	total amount	FTA preference eligible exports and imports	Apply actual FTA preferential tariffs	utilization rate(%)
			amount	amount
Export	Korea-Indonesia CEPA	140,965	1,385,113	939,394	67.8
Import		131,163	218,263	98,378	45.1

 

 

A brief summary of the provisions of the Korea-Indonesia CEPA related to trade in goods is as follows. However, it is intended as a guide only and companies should refer to the Agreement for the exact Agreement-specific interpretation.

 

Category		Contents
into force date		2023. 01. 01.
Agreement other party		Indonesia
Certificate of Origin	Issuing Modality C/O	Authority – Issued or Self – Issued(Not currently available)
	Issuer	Authority – Issued	the producer or exporter or, under his responsibility, by his authorized representative.
		Self - Issued	Approved Exporter
			exporter or producer
	Government Authorities	Indonesia (Ministry of Trade) Korea (Customs and Korea Chamber of Commerce and Industry(KCCI))
	Form of Certificate	Authority – Issued	Uniform Certificate (Annex 3-B-1, Annex 3-B-2)
		Self - Issued	unregulated
	Validity Period (yrs)	1
	Submission Exemption	the customs value of the importation does not exceed US$200 FOB or the equivalent amount in the currency of the importing Party, or such higher amount as may be established by the importing Party
Value- Content Rule	Requirement	RVC(Regional Value Content)
	Product Price	FOB
	Calculation Modality	Build-down Method, Build-up Method
Origin Verification	verification method	Principles : Indirect verification (Request to the issuing authority of the exporting party, If the customs authority of the importing Party considers necessary, it may require additional information relating to the origin of the good)   Exceptions : Direct verification (Verification visit (in exceptional cases))
	Replied within	Indirect : two months (four months after the date of receipt of the request)   Indirect : 30 days (written consent)
	Replied by	the customs authority of the exporting Party (indirect) importer, exporter, or producer (direct)