Dive into the Korean market with this quick shipping guide

Indonesia's trade relationship with South Korea has grown significantly, with a trade surplus of US$712.3 million recorded between January and October 2022, data from the country’s Trade Ministry revealed. Bilateral trade during this period reached US$20.58 billion, a 40.36% increase from the US$14.66 billion registered during the same period in the previous year. Indonesian exports to South Korea amounted to US$10.65 billion, while imports from South Korea stood at approximately US$9.93 billion. This thriving trade partnership is a testament to the profitability of the relationship between the two countries.

Indonesia is now the second-largest destination for South Korean foreign direct investment (FDI) in ASEAN, trailing only Vietnam, the ASEAN Briefing reported. The bond between Indonesia and South Korea has continuously strengthened since the implementation of the Korea‑Indonesia Comprehensive Economic Partnership Agreement (CEPA) negotiations on 1 January 2023. 

The CEPA has further boosted this trade relationship by reducing tariffs, making the Korean market an increasingly attractive export destination for Indonesian businesses. In this guide, we will explore the key aspects of shipping goods from Indonesia to South Korea, helping you ensure a smooth business expansion and delivery experience.

What is the free trade agreement between Indonesia and South Korea?

The CEPA is a free trade agreement between Indonesia and South Korea that seeks to bolster trade and economic cooperation. The agreement achieves this by eliminating import tariffs on 95.5% of Indonesia's exports to South Korea and 93% of South Korea's exports to Indonesia. This level of tariff reduction under CEPA’s trade policy is notably higher than the ASEAN-Korea Free Trade Agreement (AKFTA), which eliminated 90.2% and 80.1% of export tariffs from Indonesian and South Korean exports, respectively. With reduced trade barriers, Indonesian businesses enjoy lower costs when exporting to and importing from South Korea. This translates to increased competitiveness, market access and potential growth opportunities.

Top exports from Indonesia to South Korea

According to the ASEAN Briefing, Indonesia's main exports to South Korea include coal, copper, rubber, plywood, tin and other raw materials. These goods are essential for South Korea's manufacturing and construction industries, driving the demand for Indonesian products in the Korean market.

How to ship to South Korea from Indonesia

To smoothen the shipping and customs clearance process when shipping to South Korea from Indonesia, businesses must consider the following aspects:

1. Calculate shipping costs when exporting to South Korea

When exporting to South Korea, it is essential to consider the standard customs duties and taxes applied to your goods. The average import duty in South Korea is around 8% of the value of the items being shipped, with varying rates for specific products such as seafood, clothing and tobacco. The duty payable is determined by the Harmonised System (HS) code, a classification tariff schedule that allows customs to apply the appropriate duty rate.

In addition to import duties, South Korea imposes a standard 10% Value Added Tax (VAT) on all imports, which is a consumption tax levied at each stage of production. Some luxury and durable consumer goods are also subject to an excise duty of between 10% and 20%. Furthermore, alcohol imports are charged a liquor tax; for example, beer incurs a tax rate of 72% per litre. As a result, it's crucial for businesses to understand and factor in these costs when calculating the overall shipping expenses to South Korea.

That said, with the CEPA, you can enjoy further reduced tariffs as per the agreement’s schedule. However, do pay attention to any possible restrictions to the tariff eliminations. For instance, goods not originating from Indonesia may not qualify for full duty reduction.

2. Check for prohibited and restricted goods in South Korea

Before shipping goods to South Korea, it is essential to be aware of the country's prohibited and restricted items. Ensuring compliance with these import regulations will help prevent any delays or issues during the customs clearance process. It can also help you avoid unnecessary extra shipping costs.

Prohibited goods are strictly not allowed entry into South Korea and are immediately confiscated and disposed of by customs authorities. These products include:

• Narcotics and psychotropic substances

• Counterfeit goods, including currency and documents

• Pornographic or obscene materials

• Subversive or treasonous materials

• Explosives and fireworks without proper permits

• Weapons, ammunition and related items without authorisation

• Endangered species and their by-products, as per CITES regulations

• Radioactive materials

Restricted goods are those that require pre-approvals or licences before being allowed to clear customs, as per South Korea’s import regulations. These products include:

• Pharmaceutical products

• Medical devices

• Plants and plant products

• Animals and animal products

• Chemical substances and hazardous materials

• Alcohol and tobacco products

• Telecommunication and radio equipment

• Artworks, antiques and cultural properties

It is crucial to familiarise yourself with these lists and obtain any necessary permits or licences before shipping to the Korean market to ensure a smooth customs clearance process and avoid any potential issues or penalties.

3. Identify key shipping documents

Proper documentation is essential when shipping internationally. The key shipping documents when exporting overseas required include:

• Bill of lading or air waybill

• Commercial invoice

• Customs export declaration

• Export declaration of goods

• Packing list

• Export permit

• Insurance certificate

• Certificate of origin

Additionally, you may need specific documents when importing into South Korea for restricted goods, such as licences from the food and health regulatory bodies.

Export to South Korea with DHL Express

DHL Express has extensive experience in international logistics and delivery, ensuring the speedy and safe delivery of goods to South Korea. Our team of specialists can support you throughout the shipping process, from document preparation to customs clearance.

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