Jakarta - Indonesia’s parliament on August 30 passed a law cementing the country’s membership of the Regional Comprehensive Economic Partnership (RCEP), making it the latest Southeast Asian nation to join the world’s biggest trade bloc.

Illustrative image (Photo: China Daily)

The same day, lawmakers also ratified a bilateral trade pact with the Republic of Korea (RoK), hoping to attract investment to develop the electric vehicle and batteries industry in the Southeast Asian country.

Indonesian Trade Minister Zulkifli Hasan said the RCEP would boost trade, direct investment and increase the country’s GDP growth by 0.07 percentage point.

The RCEP is a free trade agreement (FTA) between the ten member states of the Association of Southeast Asian Nations (ASEAN) (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam) and its five FTA partners (Australia, China, Japan, New Zealand and Republic of Korea). It covers nearly a third of the world’s population and about 30% of its gross domestic product.

The deal was signed by leaders of the 15 member countries in November 2020, and entered into force on January 1 this year.

Meanwhile, under the bilateral agreement, Indonesia and the RoK will eliminate more than 92% and 95% of tariff lines, respectively. Indonesia will give preferential tariffs to support Korean investment in areas ranging from automobiles to apparel

Korean companies such as Hyundai Motor Group and LG Energy Solution are currently among top investors in the electric vehicle and battery industry in Indonesia.