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Jakarta, March 27, 2023 - Currently, one of the fervors among young Indonesian society is related to cosmetics, clothing, electronics, and travel products from South Korea. Known as the "Korean Wave," it has become so widespread that many businesses from the land of ginseng are eyeing Indonesia as their target market.
According to research conducted by the Korea Foundation for International Culture Exchange (KOFICE) in 2022, 46.8 percent of Indonesian people are projected to be interested in using products and services from South Korea. On the other hand, if Indonesian people are enthusiastic about South Korean products, can Indonesia also develop its local product market in that country?
Starting from January 1, 2023, a new phase of economic cooperation between Indonesia and South Korea has begun with the implementation of the Minister of Trade Regulation No. 57 of 2022 concerning the "Rules of Origin for Indonesian Goods and the Issuance of Certificates of Origin for Indonesian Goods based on the Indonesia-Korea Comprehensive Economic Partnership Agreement (IK-CEPA)." The continuation of IK-CEPA provides greater opportunities for local entrepreneurs to market their products globally, especially in South Korea.
One of the advantages available is the preferential trade tariff between the two countries. Nirwala Dwi Heryanto, the Director of Communication and User Guidance at the Directorate General of Customs and Excise of the Ministry of Finance, explained that South Korea will liberalize 95.5 percent of the 12,232 tariff lines, while Indonesia will liberalize 92 percent of the total 10,813 tariff lines. These tariffs provide a "discount" for Indonesian goods to be exported to South Korea and vice versa. With more affordable tariffs, entrepreneurs can reduce production costs and make their products more competitive in the target country.
Budi Santoso, the Director General of Foreign Trade at the Ministry of Trade, revealed that this opportunity should be seized by all Indonesian businesses, including micro, small, and medium enterprises (MSMEs), to penetrate the South Korean market without import duties, thereby increasing their export volume.
The opportunity to export local products to South Korea is also welcomed by Lembaga Pembiayaan Ekspor Indonesia (LPEI) or Indonesia Eximbank to enhance the enthusiasm of exporters in the country.
"This policy needs to be maximized by businesses, especially MSMEs, to market their products in South Korea. As a Special Mission Vehicle of the Ministry of Finance, we can provide assistance in the form of financing, mentoring, insurance, consultancy, and guidance for businesses. We want to ensure that they can become sustainable exporters in the long run," said Chesna F. Anwar, the Director of Institutional Relations at LPEI.
Previously, LPEI successfully helped local entrepreneurs export to South Korea, including Palem Craft with home decor products worth USD 29,599 and UD Berkah Alam with coffee products worth USD 15,357. Both of them managed to export their products to South Korea after participating in the Coaching Program for New Exporters (CPNE), an educational program provided by LPEI for new exporters, as well as the Marketing Handholding (MH) Program for market expansion.
"We never expected to export our products to South Korea. This is a great opportunity to expand our business scale and portfolio in the future. This success boosts our confidence as entrepreneurs because it turns out that our products are also in demand by foreigners," said Firda, the Owner of Palem Craft.
"Of course, we greatly appreciate LPEI for helping us through the entire process until the successful export. We hope that LPEI's presence can inspire other entrepreneurs in Indonesia," concluded Lulu Thoriq, the Owner of UD Berkah Alam.
Media Contact
Chesna F. Anwar Corporate Secretary – Lembaga Pembiayaan Ekspor Indonesia
Ph.: (021) 39503600
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